The sentence of Court of Justice of the European Union (CJEU) against the sanctions established for non-compliance with the declaration of goods or rights located abroad Through the so-called model 720, it opens several unknowns regarding the consequences it may have for individuals, companies and the public treasury. The CJEU understands that model 720 violates the principle of free movement of capital within the European Union, that the imprescriptibility of the infractions established by the norm is contrary to law and that it establishes a disproportionate sanctions regime for abusiveall of which may force the Administration to return a minimum of 230 million euros raised in different processes of outcropping of assets abroad.
Was the Government of Mariano Rajoy which in 2012 approved the standard, directly linked to tax amnesty -which in this case ran into the Constitutional Court-, with the purpose of establishing a scheduled regularization mechanism. The Ministry of Finance headed by Christopher Montoro he reserved the function of stick to one measure, and to the other, that of carrot. Model 720 began to be brandished as of 2013, but sanction procedures were barely processed as of 2019 due to the possibility that European magistrates would invalidate them. This gesture of prudence has been fully justified in view of the sentence. Now a waiting period has been opened before the possibility that those who were sanctioned can claim the return of what was paid to the Treasury.
Beyond the blow of European justice to a poorly argued sanctioning regime, which would not only affect possible fraudsters but also immigrants with properties in their country of origin and which requires a technical readjustment that the Government already had in its portfolio, the CJEU has stated that the free movement of capital in the EU. Certainly, there must be resources to avoid the concealment of assets for the purpose of tax evasion, and the application of the now questioned rule has allowed 88,000 million euros to surface. But in the Community regulatory framework, the flight of capital to countries with more than lax control and taxation outside the borders of the Union and the circulation and possession of capital and goods within the community economic spacewith information exchange procedures that they have nothing to do with the opacity of tax havens.
The European Union does have a pending issue in terms of tax harmonization, which more and more member countries are willing to address. When the United States proposed the standardization of corporate income tax for large companies in order to precisely combat avoidance practices and downward tax competition, the most influential voices in the European Union enthusiastically joined such an initiative. The way forward does not go through rules that can be understood as questioning the free movement of capital and goods within the EU, but through the rethinking, within the Twenty-seven, of tax models such as those of Ireland, the Netherlands and Luxembourg, clearly oriented to behave in practice as tax havens. In addition, of course, to the constant persecution of capital flight to third countries.