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TAX

Do I really need to declare foreign assets to Spanish taxman by March 31st 2022?

The deadline is fast approaching for residents in Spain to file a Modelo 720 – a declaration to the Spanish taxman of assets held abroad. There are big changes this year to the rules and fines, read on to find out what they are.

Do I really need to declare foreign assets to Spanish taxman by March 31st 2022?
Photo: AndreyPopov/Depositphotos

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


Photo: zerbour/Depositphotos

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 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


 Photo: david_franklin/Depositphotos

 

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.

What’s new for 2022? 

Following the recent EU ruling that Spain’s ‘Modelo 720’ foreign assets declaration form was “extremely repressive” and breached community rules, the Spanish government has actually listened and in February 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.

This 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.

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?


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. 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.

Member comments

  1. 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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For members

ENERGY

How to change the title holder of utility bills in Spain

When you move into a new property in Spain you will need to change the account or contract holder over, so that any future water, electricity or gas bills will be in your name. It's not as easy as you may think; here's how you go about it.

How to change the title holder of utility bills in Spain

Changing the name on your utility bills and the payment details should in theory be relatively straightforward, however you may come up against some common problems which can make the change pretty complicated.

Firstly, you will need to find out which energy companies have been contracted for your property.

You can do this by asking the previous owner themselves, contacting your landlord if you’re renting or asking your estate agent to find out for you.

When it comes to water, this should be provided by your local council or city, so you won’t need to contact the previous occupant for this one. 

How do I change the title over?

When you first move in, remember to note down the numbers on the gas, electricity and water meters, so you can give these to the utility companies and they can record how much you should owe, instead of having to pay for the previous occupant’s consumption as well.

Next, you will then need to contact the energy company supplying your property or water provider and ask for a cambio de titular a nombre del arrendatario o comprador (ask for a change of ownership in the name of the renter or buyer).

The process should be completely free for electricity and gas, but in some cities, you may need to pay a deposit for changing the title of the water bill, which you should get back when you vacate the property. The deposit can be anywhere between €50 and €100.

Contacting the energy company by phone may be the best way to make sure everything is done correctly, but some companies also have online forms where you can request a title change. When it comes to water, most cities will have water offices you can visit or specific e-mail addresses if you can’t contact them over the phone. 

There are a few pieces of information you’ll need to have on hand before you contact the company. These are:

  • The full name of the previous person who had the bills in their name
  • Your NIE / DNI
  • The address of the property
  • The date you moved in
  • The CUPS code (not needed for water)
  • Your padrón certificate (for water only)
  • A copy of the deeds of the property or rental contract
  • Your bank details

With all this information, they should be able to change the name over on the account relatively quickly, so that any future energy bills will go directly to you.

At this time, you can also change your tariff or amount of energy contracted to suit your individual needs.

How do I find the CUPS code?

The CUPS code or Código Unificado del Punto de Suministro (Universal Supply Point Code) is a number that identifies each individual property that receives electricity or gas. The number doesn’t change, so you could ask the previous occupant for this as it will be written on their energy bills.

Alternatively, if this isn’t possible you can contact your energy distributor – these are assigned by area and stay the same. By giving them your name, address and ID number such as NIE, they will be able to give you the CUPS code associated with your property.

What if I want to change to a new energy company?

If you’d prefer not to contract the energy company that the previous owner had, you can also choose to go with a new one. In this case, you will still need all of the same information and numbers as above, but you will contact the energy provider of your choice and the type of tariff you want to pay.

How long will it take to change the name over?

It can take between 1 and 20 days for the bills to be changed over into your name. The previous occupant will receive their final bill and then you will receive the new one from the date you moved in.

What are some of the problems I might come up against?

The most common problem is when the previous occupant is not up to date on paying their bills and has some outstanding debt. In this case, if you try to change the title over into your name, you will also be inheriting the pervious owner’s debt.

In this case, you will have to get the previous occupant to pay their outstanding bill before you can change it over into your name. If you have problems getting them to pay their bill, then you can show proof of the date you moved in by sending in a copy of your deeds or rental contract. This should in theory allow for the transfer of ownership without having to take on the debt, however it can be tricky process, often calling the energy company multiple times and waiting for verification of the proof.

What if the energy services have been cut off?

In the case that the property has been uninhabited for some time, the previous owners may have deactivated or cut off the utilities. If this is the case, then you will need to call the energy providers to activate them again. This will typically involve paying several fees to be able to get them up and running. The amount you pay will depend on the energy distributor and where the property is based in Spain. 

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