The Spanish Constitutional Court has declared last 8th of June, the tax evasion amnesty for undeclared assets or those hidden in tax havens adopted in 2012 by the Spanish Government, as against the highest Law, the Spanish Constitution; it has been declared unconstitutional.
According to that procedure of regularisation tax payers could declare till the 31 of December 2012 all non declared income for tax periods until year 2010 at flat tax rate of 10% through model tax return 750 in exchange for forgiveness of any tax liability including interest and penalties.
The position of the Spanish Government was that a tax amnesty as one of voluntary compliance strategies would increase tax base and tax revenue. However, the Constitutional Court has declared that the approval of such procedure was done incorrectly (as it did not pass the parliamentary obligatory discussion) and, most important, it infringed one the most important principles of taxation included in the Spanish Constitution which is the “principle of proportionate contribution”. This principle means, that the tax system must be proportionate and balanced so that every tax payer might pay taxes according to his net wealth and income as expressed in art. 31 of our Magna Carta (Constitution Española)
However this good news has had no practical effects at all as the same Court establishes absolutely no fiscal consequences for those who benefit from the tax amnesty under another sacred constitutional “principle of legal certainty”. And so although the amnesty is declared illegal, the process entirely void and nil, it will not mean an opportunity for the Tax Authorities to review or open tax inspections for the tax debt and periods declared under the tax amnesty.
So , if you presented your tax model 750 for the tax amnesty regularisation – like many of other Spanish politicians, well known businessmen, artists and celebrities – you are a lucky guy and you can be sure that even through an illegal process your former tax sins are definitely forgiven.
By Carlos Espinosa
Solicitor & Tax Adviser
+34 627 41 32 01