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

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 it.

March 31st deadline

The form must be filed online between January 1 and March 31 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 a 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.

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

 

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 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.

HUGE penalities

Spain’s tax office threatens huge fines for not filling out the forms properly, filing late or missing off information, whether deliberate or not and the European Commission issued a February 2017 arguing the fines penalties are in conflict with EU rules because they are considered disproportionate and discriminating against foreigners.

But Spain has yet to respond to the complaint and the fines are still in place.

The fines are: 

For non-presentation/ false information there is a fine of €5,000 for every piece of information that is either missed off or incorrect with a minimum fine being €10,000.

For late presentation/ form wrongly presented, such as not being presented electronically, there is a fine of €100 for each piece of misinformation with a minimum fine of €1,500.

The threat of huge fines have provoked a barrage of complaints and these have been taken all the way to the EU.

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

Photo: AlexShadyUK/Depositphotos

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.

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.

The fines for being ‘discovered’ for not declaring your assets rather than submitting them late could turn out to be substantially heftier 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 but Spain has officially yet to respond to the EU complaint. . 

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:

And a summary in English HERE