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If you are a resident in Spain, you will have to declare your foreign assets before March 31 if the value of these assets exceeds a minimum threshold. The Modelo 720 is solely a form to disclose your holdings outside of Spain, no taxes have to be paid with its filing.
Not declaring when obligated to do so is considered fraud by the Spanish tax authorities and hefty fines can be imposed. There is no statute of limitations, meaning that these fines will remain applicable in the future.
Even though this declaration does not lead to the payment of taxes, the tax authorities may use the information for further inspections. If any inaccuracies in previous tax returns are corrected under your own initiative, potential fines may be reduced.
Am I Required to Disclose Foreign Assets?
A declaration needs to be submitted if you own or control assets greater than €50,000 outside of Spain as of December 31 (or if the average value in the last quarter exceeded €50,000) in one or more of the following categories:
- Bank accounts and deposits, including crypto currencies.
- Property and property rights on real estate.
- Pension funds and other financial rights.
- Shares, stocks, bonds, values.
- Insurances.
There is no need to submit the declaration, if:
- The total value of your assets abroad exceeds €50,000, but the value of your assets does not exceed €50,000 in any one of the aforementioned categories. So, for example, the total value of all of your assets may be €100,000, but if you have real estate holdings valued at €40,000, stocks valued at €35,000 and €25,000 in a bank account, then because your holdings do not exceed €50,000 in any one of the categories, you are not required to file the Modelo 720.
- Your holdings in any of the above categories do not change in value in excess of €20,000 as compared to the last declaration you filed.
- The (“Beckham”) expat scheme is applicable, and you are considered non-resident for tax purposes.
A declaration must be submitted in the following cases:
- If you have submitted a Modelo 720 form in previous years and the value in one of the categories has increased by more than €20,000 in comparison to the last declaration.
- If you have a joint bank account and your share is less than €50,000 but the total amount in the account is more. For example: if your share in a joint bank account is 50%, and the account has a total balance of €60,000, both parties need to present a declaration disclosing both the total balance and noting the percentage of their share, even though each individual’s share totals less than €50,000.
- If you enjoy usufruct rights on real estate holdings, or if you own properties abroad in any other way.
- If you are a beneficiary, representative or signatory for assets. For example: you are a signatory on a foreign bank account in your parents name with a balance of €60,000.
- If you have properties of which the purchase price exceeds €50,000 (also if the purchase price or mortgage value is less than €50,000).
- If you sold your property abroad last year, closed your bank account, your power of attorney has been cancelled, etc.
- If you have shares in a holding company with assets abroad, these assets will need to be declared as well.
The overall purpose of this declaration is for the Spanish government to get visibility to capital held outside of Spain, whether it is registered in your own name or registered to others, and which might not be declared in Spain. The above are singular examples and are therefore limited; if you have any doubts we advise you to contact us.
What Information Must I Provide?
For all types of bank accounts, deposit accounts, etc., you need:
- Bank details: name, address and tax number.
- Account number, IBAN, BIC.
- Date you opened your account or obtained authorization over or access to the account.
- Balance as of December 31 and average balance in the last quarter.
- Bank accounts with negative balance also need to be declared.
For property ownership, usufruct rights, time-sharing, shared property, etc., you need:
- Type of property: urban or rural.
- Address of asset(s): country, city, street, number.
- Acquisition date: day, month, year.
- Acquisition price, including taxes.
For shares, bonds, investment funds, etc., you need:
- Name and address of the company, person, entity, etc. to which the rights relate.
- Value as of December 31, divided per right, share, etc.
How Do I File My Declaration?
The information that you are required to provide per asset is extensive, so check to make sure you have all the necessary information and give yourself plenty of time to gather any missing items. The requested information typically needs to be provided in February in order to prepare and file the declaration before the deadline on March 31, so be sure to contact us plenty of time in advance if you need assistance.
It is also important that you have a contact address in Spain. The Spanish tax authorities often check the validity of the data in the tax declaration and failure to provide a timely reply may lead to an unilateral interpretation of facts accompanied by fines and sanctions. We can offer you the possibility to use our address and contact details if needed.
BCN Business Services is an English-speaking consultancy firm providing complete services to foreign entrepreneurs in Spain. Areas of expertise include immigration, registration, company formation, accounting, taxes, personnel administration, real estate, insurance and related legal issues. You can learn more at bcnbs.com and follow on LinkedIn.
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