If you reside in Spain and you own assets or rights abroad with a value exceeding 50.000€, you are required to file the Form 720, an informative declaration with the Tax Authorities.
Filing Form 720 does not in itself imply the payment of taxes on the assets you declare. This will depend on the origin of the assets. But omitting to present them, or doing so incorrectly, can result in fines of up to 50% of the undeclared value, if the Tax Agency considers it to be an unjustified capital gain.
Who must file the Model 720?
Form 720 must be filed by all individuals and legal entities resident for tax purposes in Spain. and own certain assets or rights located outside the country. A "tax resident" is any person who meets any of these conditions:
- Stay in Spanish territory for more than 183 days during the calendar year.
- To have in Spain the main core or base of its economic activities.
- Have a spouse and dependent minor children in Spain.
If you meet any of these requirements, and you also have assets abroad that exceed €50,000, then you are obliged to inform the Tax Authorities through the Form 720.
What assets must be declared?
Model 720 is structured as follows three independent blocks. You are obliged to declare each of them when the combined value of the corresponding assets exceeds €50,000 as of December 31 of the previous year. The blocks are as follows:
- Bank accounts and deposits open in entities located outside Spain, whether you are the holder, authorized or beneficiary.
- Securities, rights, insurance and annuities deposited, managed or obtained abroad, such as shares, investment funds, life insurance, pension plans, etc.
- Real estate and rights in rem on real estate located outside Spanish territory (apartments, houses, land, etc.).
It is important to note that dYou must declare all assets abroad that exceed €50,000, even if your share is less than that amount. For example: together with two siblings you have a property worth €60,000. Your share is worth €20,000, but you have to declare it. The same with bank accounts. If you and your partner have a joint account with €50,000 abroad, you both have to declare it in the Model 720.
What if I have already declared in previous years?
Once the first return has been filed, it is not necessary to file it again each year, unless there are variations in excess of €20,000 in the value of any of the blocks, or that the assets or rights previously reported have been transferred or cancelled. For example, if you have an account abroad with a balance of €52,000, and the following year it rises to €74,000, you will have to file a new return because there has been an increase above the aforementioned threshold.
How and when do I file Form 720?
The Form 720 is filed in the following form telematics through the Tax Agency's website. The deadline for filing is from January 1 through March 31 of each year, and always refers to data as of December 31 of the previous year.
In order to access the form and submit it, you will need one of the digital identification systems valid in Spain: digital certificate, electronic ID card or Cl@ve PIN system. You can also file the tax return through a file previously generated with a program authorized by the Tax Authorities, which is usual when it is managed through a tax advisor.
What happens if I don't submit it?
Although the sanctions previously applied were questioned and annulled by the Court of Justice of the European Union, the truth is that the Model 720 is still an obligation in force and the consequences of not complying with it can be relevant. Not declaring assets abroad can result in:
- Financial penalties for late or incomplete declarations.
- Consideration of undeclared assets as unjustified capital gains.
- Procedures for verification or inspection by the Tax Authorities.
Another problem of not filing the Model 720 when it is due, is that later inconveniences arise when you want to bring the assets to Spain. Classic example that we see in our office: a property is inherited abroad for a value of more than 50.000€. It is not declared. Years later, the property is sold to bring the money to Spain and buy a house. But the Spanish Tax Agency will look into the origin of the funds and it will come to light that the Model 720 had not been filed when it was due.
For all these reasons, it is advisable to comply with this obligation, even when you are not sure whether you are within the threshold or whether your assets are correctly valued.
Should I declare cryptocurrencies in the Form 720?
No. Cryptocurrencies are not included in the Form 720.even if they are in exchanges or wallets located outside Spain. In order to declare this type of assets, there is a specific model: the Model 721, which applies to those cases in which the value of the cryptocurrencies exceeds €50,000. You can read more about it in this post of our blog: How to declare cryptocurrencies abroad, if you live in Spain.
Form 720 is a tax control tool that seeks to prevent tax evasion by hiding assets abroad. Once the Model 720 has been filed, the Tax Agency will be aware of your assets. Therefore you will be able to declare in your annual income tax return the income they generate abroad. In this case, the income tax return is a liquidation where you must report all the income worldwide and is taxed only on the profits obtained.
The information provided by the Spanish government on its website is quite clear. But sometimes some clients have doubts as to when an asset is considered to have passed into their ownership. This usually happens with inheritances. Another question we are asked is How to determine the value of a property abroad?: For the price at the time of purchase or for the current tax value? We are also asked how to regularize when the deadline for filing the Model 720 has expired. These doubts must be analyzed on a case by case basis.
How can we help you?
At MBT Abogados we are specialists in international taxation and in the management of tax obligations of foreigners residing in Spain. We understand that tax procedures can be complex, especially when it comes to assets and rights located abroad, or little known rules such as Form 720.
We offer you personalized advice, clear and adapted to your situation, whether you are a recent resident, a displaced worker or a foreigner with dual nationality and assets spread over several countries. We take care of:
- Analyze your tax situation and your foreign assets.
- Confirm whether you are required to file Form 720 (and/or Form 721, in case of cryptocurrencies).
- Prepare and file the tax return in due time and form.
- Advise you in case of requirements or tax inspections.
We are a law firm specializing in services for foreigners in Spain. We offer 45- and 60-minute appointments, depending on the subject matter and complexity of the consultation. Our fees are €115 and €150 respectively. Consultations can be held at our office in Barcelona or via videoconference. You can book an appointment by email or Whatsapp.
———————————————-
Frequently Asked Questions (FAQs) / Model 720
- Do I have to declare my assets if I have already declared them in my home country?
Yes, Model 720 is not related to tax obligations you may have in your home country. If you are fiscally resident in Spain, you must inform Hacienda about the assets you own outside the country, regardless of their tax treatment elsewhere. - What exchange rate is applied to value foreign currency assets?
You must apply the official euro exchange rate corresponding to December 31 of the previous year, published in the Official State Gazette (BOE), with data from the Bank of Spain. - Will I be automatically penalized if I forget to declare?
Not necessarily, but the tax authorities may initiate a sanctioning procedure. Therefore, if you forgot to file the form, the best thing to do is to do it as soon as possible on a voluntary basis. - What happens if I sell a property abroad that was already declared?
You must file a new declaration indicating the cancellation of that property. In addition, if you have obtained a gain from the sale, you must include it in your Spanish income tax return.
