The European Justice knocks down another Montoro reform that limited claims against the State

New judicial setback against decisions of former Minister of Finance Cristóbal Montoro. The Court of Justice of the European Union, in a ruling issued this Tuesday, has condemned Spain for two regulations approved in 2015 by the Ministry that, in practice, have limited the ability to claim compensation from the State after breaches of Community law . This is a reform carried out by the Executive of Mariano Rajoy to try to avoid waves of claims such as those that were experienced at the time due to the previous conviction against the so-called 'health cent'.

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In fact, the rule was made a few months after the CJEU itself condemned Spain in 2014 for Law 24/2001, which included the so-called 'health cent', a tribute that was created —also with Montoro in Treasury—and that was rejected by the community justice system. The ruling opened the door to a multi-million dollar bill that the State had to assume to compensate for the amounts unduly collected. With the 2015 law, according to the CJEU, "obstacles" were put in place so that taxpayers could claim the State for failing to comply with community regulations.

The European Commission considered that this reform breached European treaties, which oblige a State to compensate taxpayers in the event of breaching Community law. It opened a procedure to Spain to demand a rectification of the laws, 39/2015 and 40/2015, which was "unsuccessful", as the sentence indicates. After that, he decided to take the case to the Court of Justice of the European Union.

In its ruling this Tuesday, the Court considers that Spain "has failed to comply with its obligations under the principle of effectiveness by adopting and maintaining the contested provisions in force, to the extent that they subject compensation for the damage caused to individuals by the Spanish legislator as a result of the infringement of Union law”.

“The Court of Justice recalls that subjecting the reparation, by a Member State, of the damage that it has caused to an individual by infringing Union Law to the requirement of a prior declaration, by the Court of Justice, of a breach of the Law of the Union attributable to said Member State is contrary to the principle of effectiveness of this Law”, states the sentence.

Specifically, the CJEU calls into question some aspects of these two laws in which limits are placed on who can claim and how much. Among other criteria, it points out that limiting the damages that can be claimed by the taxpayer to only five years prior to a judgment against Spain "makes it difficult for injured individuals to obtain adequate compensation for their damage." “Reparation of damages caused to individuals due to breaches of Union Law must be appropriate to the damage suffered,” they underline.

The sentence of this Tuesday is the second blow to decisions that Montoro took at the head of the Ministry of Finance by the Community Justice. In February of this same year, the CJEU overturned the sanctioning regime of the system for declaring assets abroad, known as 'model 720'. This sentence gave rise to those who were sanctioned for not declaring their assets outside of Spain in a timely manner to claim these fines from the state.

This matter has already reached the Supreme Court, which has in its hands ten years of sanctions on nearly 5,000 taxpayers. The contentious-administrative chamber has entered for a few weeks to analyze resources of people fined by the Treasury for hiding or not correctly declaring their assets abroad. In addition, lower echelons of the claims system, such as the Administrative Economic Court, have also returned to the Tax Agency cases of taxpayers who were sanctioned at the time for hiding their assets abroad.