ONE of the trade publications I read on a regular basis is International Adviser magazine. As the title suggests, it covers many areas of concern for UK investors who have moved overseas.
Earlier this month, the magazine reported on a case that has been brought to the European Courts of Justice (ECJ)and which will be of interest to expats resident in Spain. It involves a Spanish taxpayer who is appealing to the ECJ over an ‘excessive’ penalty for disclosing overseas assets late.
As you are probably aware, since 2013 it has been a requirement for all Spanish tax residents to declare their assets outside Spain if they exceed €50,000 in each defined asset class.
In this case, the individual failed to disclose €340,000 held in stocks and cash in Switzerland and, in May this year, he was ordered to pay over €442,000 in interest, fines and other costs!
The taxpayer’s failure to declare his overseas assets was viewed as a serious violation by the Spanish authorities, and the maximum penalty of 150% of the tax due was levied, plus other costs.
Whilst this may be an extreme case – and there are several Spanish law firms who contest that the level of penalty is disproportionate – the European Commission has also written to the Spanish Government to question the policy, as it may contravene European law. It is worthy of note and a reminder that filing accurately, and on time, has to be the best policy. The cost of not doing so could be extreme, as you can see.
Even though this case is being appealed, when the ruling may be overturned or modified, the individual concerned will not recover costs, to say nothing of the stress this must have caused him.
If you have always filed your M720 as required – and kept it updated if the value of your non-Spanish assets has changed markedly since the previous year – then you have nothing to fear. If you need to make changes, this will next be relevant to the year ending on 31st December 2015 and should be filed by 31st March 2016.
If you have not made previous declarations and, perhaps, should have, then you need to take some urgent advice from an expert on how to proceed. I don’t think it is sensible to wait and hope that the legislation will be withdrawn in response to the European Commission enquiries.
As we know, many more countries are signing up to the voluntary sharing of financial data and, with advances in technology, this becomes ever easier for them to achieve
Whilst there may well be penalties and tax to pay as a consequence of ‘putting your hands up’, getting matters straightened out should help you sleep at night.