“I have always said that the best thing about the Model 720 has been having the opportunity to meet people like Esaú Alarcón.” In these terms, the lawyer Alejandro del Campo spoke before questions from this newspaper this week. “Neither Alejandro del Campo nor I are heroes. Only unrepentant who fight for the common good,” replied Esau Alarcón. “I want to remember Isabel Espejo, may she rest in peace, Sanz Gadea and Paco de la Torre who, despite their official status, defended my same thesis against the Model 720,” he added.
Social networks were filled this week with messages of affection for these two lawyers. Esaú Alarcón and Alejandro del Campo are the two undisputed protagonists of this fiscal and legal story, which has ended like this: with the Court of Justice of the European Union (CJEU) knocking down the controversial Declaration of Assets Abroad, . The ruling, historic, amends the conclusions of the Advocate General, and considers that Spanish tax regulations impose “disproportionate” restrictions on the free movement of capital. The European Justice thus knocks down the entire Model 720, both the fund of the mechanism and its high fines. This is the story of an unprecedented judicial journey in Spain.
Model 720 required citizens to report their assets abroad and the regulations establish high fines, which can reach 150%, for submitting it after the deadline to the Tax Agency. It was one of the measures promoted by the former Minister of Finance, Cristóbal Montoro.
The prosecutors then considered that such an occurrence was an outrage to the taxpayer. In the middle of the European battle against tax avoidance -rather, a sort of fiscal fishing expeditions-, most professionals gave up on this matter as lost. In tax matters, from Brussels the only policy on the matter was “control, control and control” of taxpayers’ accounts to ensure that not a single euro escaped the Treasury. Until a Mallorcan lawyer appeared on the scene.
Alejandro del Campo, known for his extensive portfolio of international clients, was not resigned to the fact that the Treasury considered anyone who had accounts or assets in other countries to be a kind of white-collar criminal. He took a plane, went to Brussels and denounced Montoro’s Model 720 before the European Commission.
Nobody gave a penny for the matter. The surprise came in 2015, when the Commission launched an infringement procedure against Spain. He warned the Government that its regulations were at the limit of what was acceptable.
The government hid it
The Executive tried to cover up this opinion of the European Commission. However, the lawyer Esaú Alarcón, a partner at Gibernau Asesores, managed to bring to light the harsh Opinion of the European Commission against Spain on this matter, which the Government guarded with great zeal. He demanded it as evidence in a procedure before the National Court. This issue is now very important as it will allow taxpayers to recover their penalty money. As there is an infringement of European Law sufficiently characterized because it comes from an infringement procedure of the European Commission -Brussels gave the Ministry of Finance the possibility to change the Model 720 and it did not-, the Treasury will have to return the sanctions even if they are firm and are not contested, through the patrimonial responsibility of the State.
“The content of the publication of the appeal offered by the Official Journal of the European Union is very relevant because it makes very clear the reasons why the European Commission initiates legal proceedings against Spain,” explains Alarcón. Among these reasons were the Spanish government’s promises of reform to Brussels, which ultimately did not materialize.
The information spread like wildfire among the prosecutors. That Mallorcan lawyer had extracted a few lines of good sense from the Brussels bureaucrats and another Barcelona lawyer had demonstrated it. Nobody gave credit.
And the impossible happened afterwards. From words, they went to deeds. Given the inaction of the Government, the Commission took Spain before the Court of Justice of the EU for Model 720. The conclusions presented in July by the General Advocate were, until today, the last episode in this story, although they hardly clarified anything.
The hope was that this European instruction would be the end of these shots from the Treasury. The end of absolutely disproportionate sanctions. The end of the IRPF requirements without respecting prescriptions earned in relation to assets abroad not declared on time. However, the prosecutors have had to wait until the final ruling of the CJUE. In a very small percentage of cases, what happened in this one happens: that the Court amends the conclusions of the Advocate General.
The sentence is the end of a legal journey of two years of dedication
Once these sanctions are annulled, a million-dollar process of claims from the affected taxpayers will be opened. Will Spain then invent a legislative or jurisprudential device that prevents taxpayers from recovering what is theirs? The sentence is so forceful that it has made it very difficult.
Many succumbed during these years to the Model 720. Not all those affected have sued until a final judgment. They chose to pay the disproportionate sanctions and personal income tax payments without contesting. Faced with the threat of a 150% penalty, they voluntarily regularized their situation by paying personal income tax on prescribed assets. Those affected will be able to recover their money after the sentence.
Alejandro del Campo and Esaú Alarcón are still very aware, from their offices, of the consequences that this international legal adventure will bring for their clients and for all Spanish taxpayers. They are convinced that this European ruling will eventually allow those affected to request and obtain fair compensation. For now, victory is already yours. As faithful enthusiasts, they started this adventure because they didn’t know it was impossible.
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