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(Updated as of March 2022)

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Sanctions and effects

By means of Law 5/2022, of 9 March, amending Law 27/2014, of 27 November, on Corporate Income Tax, and the revised text of the Law on Non-Resident Income Tax, approved by Royal Legislative Decree 5/2004, of 5 March, in relation to hybrid asymmetries, the legal regime of infringements and penalties for the information return (Form 720) has been amended to adapt to the Judgment of the Court of Justice of the European Union (CJEU) of 27 January 2022, in case C-788/19.

The penalty regime applicable to the information return (Form 720) is the general regime established in Articles 198 and 199 of Law 58/2003, of 17 December, General Tax Law.Its regulatory development is contained in Articles 14 and 15 of Royal Decree 2063/2004, of 15 October, approving the General Regulations on the Tax Penalty Regime.

These articles (both in the Law and in the Regulation) regulate respectively the tax offence of not submitting self-assessments or returns on time without causing financial damage to the Treasury, and the tax offence of incorrectly submitting self-assessments or returns without causing financial damage to the Treasury.

These penalties are applied separately for each of the three reporting obligations contained in the information return Form 720, as each of them constitutes a separate reporting obligation.

In this specific case, the failure to file the information return (Form 720) would be subject to the tax offence of failing to file self-assessments or returns on time without causing financial damage to the Treasury (regulated in Articles 198 of the General Tax Law and 14 of the General Regulations on the Tax Penalties Regime).

Regulations:

Articles 198 and 199 of Law 58/2003 of 17 December 2003 on General Taxation (Articles 14 and 15 of the General Regulation on Tax Penalties) establish the tax offences applicable to the information return Form 720.

This regime of infringements and penalties is established separately for each of the three reporting obligations.

Each of the blocks of information below is a different reporting obligation:

  • Accounts in financial institutions abroad. This information obligation is regulated in article 42 bis of the General Regulations on tax management and inspection actions and procedures and on the development of the common rules for tax application procedures, approved by RD 1065/2007, of 27 July 2007.

    (In form 720, it corresponds to the value of the 'Type of asset or right code' 'C').

  • Securities, rights, insurance and income deposited, managed or earned abroad.This reporting obligation is governed by Article 42 ter of the above-mentioned General Regulations approved by Royal Decree 1065/2007, of 27 July.(In form 720, it corresponds to the values of the field 'Type of asset or right code' 'V', 'I' and 'S').

  • Immovable property and rights to immovable property located abroad.This reporting obligation is governed by Article 54 bis of the General Regulations approved by Royal Decree 1065/2007, of 27 July.(In form 720, it corresponds to the value of the 'Type of asset or right code' 'B')

    Articles 42a, 42b and 54a of Royal Decree 1065/2007 of 27 July 2007 also establish the definition of the concepts:"data' and 'data set' for the purpose of imposing penalties for the commission of tax offences.

In this case, Article 199 LGT and 15 of the General Regulations of the Tax Penalties Regime are applicable, which regulate the tax offence of incorrectly submitting self-assessments or declarations without financial damage to the Treasury.

This regime of infringements and penalties is established separately for each of the three reporting obligations.

The provisions of Articles 42 bis, 42 ter and 54 bis of the RGAT, which set out each of the three reporting obligations contained in the information return (Form 720) and also establish the definition of the concepts, must be taken into account:"data' and 'data set' for the purpose of imposing penalties for the commission of the tax offence referred to.