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Taxes For Members

Do I really need to declare foreign assets to Spanish taxman by March 31st 2023?

The Local Spain
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Do I really need to declare foreign assets to Spanish taxman by March 31st 2023?
Photo: AndreyPopov/Depositphotos"

The deadline is fast approaching for residents in Spain to file a Modelo 720 – a declaration to the Spanish taxman of assets held abroad. Find out the reasons you might need to file it.

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You may think it is none of the Spanish taxpayers business what assets you hold abroad, but the 720 asset declaration form was introduced in 2012 as a way to combat money laundering and fiscal fraud.

It applies equally to Spanish citizens and foreigners legally resident in Spain and is for information purposes only. In other words, you won’t be expected to pay tax on assets held abroad but can be fined if you don’t declare them.

March 31st deadline


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The form must be filed online between January 1st and March 31st relating to the assets held abroad in the last calendar year.

Once filed you do not need to repeat annually unless your circumstances change.

Who has to file a modelo 720?

If  you fall into one of the following three groups you will need to file a 720:

  • If you have accounts – bank savings and deposit accounts - held abroad where the sum of all the accounts together exceeds €50,000.
  • You have other assets and private pensions that are held abroad and exceed €50,000. This includes stocks and shares, bonds, life insurance, pension plans and annuities that are currently being paid. You are in this category if they have either a total value or a surrender value on the 31st December of the previous year of €50,000 or more.
  • You have a property with a purchase value of over €50,000. This includes owning private property or business premises.

If the assets are held in joint names, then each individual needs to submit a report and declare the total value and their share.

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Changes in circumstances

You are NOT required to complete the modelo 720 every year but you will need to complete it again if your assets have changed during the course of the last calendar year.

These are:

  • If you have purchased or sold property abroad
  • If your investments have matured
  • If you have cancelled previously declared assets
  • If you declared last year in one category but this year have reached more than €50,000 in a previously undeclared category
  • Your assets have increased by €20,000 in any given group previously declared

Exchange rate


 Photo: david_franklin/Depositphotos

 

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Remember to factor in the exchange rate as it was on December 31st.

The value of your assets will fluctuate according to the exchange rate, so you may find yourself tipping over the required €50K threshold because of a favourable exchange rate.

So, if you are on the way to approaching the threshold, remember to check what your assets are worth in Euros.

Recent changes 

Last year in 2022, several changes to do with the modelo 720 were brought into force. Following the recent EU ruling that Spain’s 'Modelo 720' foreign assets declaration form was “extremely repressive” and breached community rules, the Spanish government actually listened and last year voted in favour of more lenient fines and conditions.

Previously, income abroad that was not declared, or which was reported after the March 31st deadline, would be treated as an unjustified capital gain and the wrongdoer would receive a penalty of up to 150 percent of the value of the amount.

These fines could exceed the real value of the assets declared after the deadline, since they were set at an amount of €1,500 for each group of goods affected, or €5,000 for undeclared or incorrectly recorded data, with a minimum of €10,000 per group.

Last year Spanish Members of Parliament voted for the maximum fines to be reduced from 150 percent of the value of the undeclared assets to a maximum of 50 percent of the value.  

The fine for non-completion will also be in line with other tax fines and the duty to declare assets will expire after four tax years. 

Crucially, those who have been fined for breaching Spain’s foreign asset declaration laws can be reimbursed. The MO varies, depending on whether the plaintiff has already appealed or not before the deadline.

It remains unclear if the changes include a grace period for delayed and erroneous declarations as promised.

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Fines

Penalties for not filling the Modelo 720 correctly or making a mistake on it have now been reduced to a fine of €100 for each data set, with a maximum of €1,500 if the declaration is filed late, without prior request. 

Fines for not declaring - a maximum of 50 percent of the value of your assets. 

I haven’t filed but should have, so what do I do?


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If you are newly arrived in Spain – within the last year – and are filing your taxes for the first time then the 720 declaration should be straightforward. It may depend on what date you moved to Spain, however you should always be declaring the assets held on December 31st of the previous year. 

Same if you have only just crossed over into the €50,000 threshold.

But if you have been living here for longer than a year and realise that you should have filed a modelo 720 but didn’t, the legal advice is don’t put it off again.

Whilst fines have been reduced, if you're ‘discovered’ for not declaring your assets they're still steep, so for peace of mind if nothing else, it’s best to come clean.

It's worth knowing that there are no reports of fines being levied since the EU declared them illegal in February 2017. 

Speak to a tax specialist if you have any doubts about what to do.

More information:

All information about the "modelo 720" including the online form can be found (in Spanish) at the Tax Office website HERE.

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Join the conversation in our comments section below. Share your own views and experience and if you have a question or suggestion for our journalists then email us at [email protected].
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distinctlyflorida 2021/03/18 14:16
This article has certainly given us doubts as to what to do. We weren't tax residents of Spain in 2020 and aren't filing a tax form in Spain now, but expect to be tax residents of Spain in 2021. Do we submit the modelo 720 now for 2020 or wait until we file tax forms in 2022? The FAQs from the Agencia Tributaria don't directly address this basic question.

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