Under Spanish Law, residents are required to disclose foreign assets to the tax authorities every year.
Declaration requirements
There are three disclosure categories: bank accounts, investments, and immovable property. Assets in any one category in excess of €50,000 (£35,653, $53,427) must be declared.
The requirements first came into force in 2013. However, the taxpayer, a pensioner residing in Granada, failed to disclose his €340,000 in stocks and cash in Switzerland until 2014.
In May 2015, he was ordered to pay more than €442,000 in interest, fines, and other costs.
According to El Economista, this included a fine of €253,950 for failing to declare his assets on time, €169,300 to regularise his undeclared assets, and €16,060 in interest.
A serious violation
The failure of the taxpayer to declare his offshore assets was viewed by the Spanish tax authority as a serious violation, for which a penalty of 150% of the tax due was levied.
This case marked the first occasion that the 150% penalty was imposed.
Under the foreign assets declaration scheme, known locally as Modelo 720, the Spanish ministry of finance advised that more than €126.3bn in assets have been declared, mostly located in Switzerland and Luxembourg.
European protest
According to El Pais, several Spanish law firms have protested to the government about the disproportionate level of the capital gains penalty.
The European Commission is understood to have already written to the Spanish Government questioning the policy, as it may contravene European law.
