What is Form 720?

The "Modelo 720" (in Spanish) form is used to provide the Spanish Tax Office with information on assets located abroad that exceed 50,000 euros on 31 December of the previous year. It is intended to provide information on the following assets:

  • Foreign bank accounts
  • Securities
  • Shares
  • Investments
  • Company shares
  • Insurance and
  • Pension rights
  • Real estate located abroad or rights over it.

Who must submit the Form 720?

An all-natural and legal person resident in Spain who have foreign assets with a value of over 50,000 euros must submit Form 720.

The deadline for the valuation is 31 December of the previous year.

Persons who are merely entitled, authorised or policyholders are also obliged to complete this form. If the sum of the values in any of the three groups mentioned is less than 50,000 euros, no declaration is required.

How and when must the declaration be made?

The declaration of foreign assets must be made using Form 720. The presentation of this form can only be submitted electronically; it is not possible to submit it in paper form to the Spanish Tax Office. The information corresponding to the year 2019 must be submitted at the latest on 31 March 2020.

Goods whose ownership must be reported:

  • Obligation to report on accounts in financial institutions located abroad.
  • Obligation to provide information on securities, rights, insurance and income deposited, managed or obtained abroad.
  • Obligation to provide information on real estate and rights to real estate located abroad.
  • Information on participation shares in the share capital or equity fund of collective investment undertakings situated abroad.

*In order to know exactly the information that has to submit in relation with the points commented previously, you can consult the pdf that we attach with this article, where there is more information about this form.

Exceptions to the general rule include.

It's obligatory for all individuals and legal entities resident in Spanish territory, permanent establishments in the territory of non-resident individuals or entities and the entities referred to in article 35.4 of the General Tax Law, which own, have the power to dispose of or are authorised to dispose of any of the aforementioned assets, must present this declaration.

Exceptions:

In relation to the obligation to report accounts at financial institutions

There is no obligation to report any account when the balances at 31 December and the average balances of the last quarter of these do not exceed, jointly, 50, 000 Euros. Furthermore, the presentation of the declaration in successive years will only be obligatory when there is an increase of more than 20,000 Euros with respect to the amounts that determined the presence of the last declaration. It is important to note that the 50,000 Euros are per total account, not per holder.

Securities, rights, insurance and income deposited, managed or obtained abroad.

The same limit, as well as the obligation to present the declaration in successive years, commented on in the previous paragraph, applies to all assets in this category.

Real estate and rights to real estate.

The same limit, as well as the obligation to file the return in successive years, applies to all the assets in this category

Those assets owned by legal entities and other entities resident in Spanish territory, as well as permanent establishments in Spain of nonresidents, registered in their accounts on an individual basis and sufficiently identified.

Those assets owned by individuals resident in Spanish territory who carry out an economic activity and keep their accounts in accordance with the provisions of the Commercial Code, registered in their accounts on an individual basis and sufficiently identified.

This exception does not apply to securities, rights, insurance and income.

What are the consequences of not submitting the Form 720?

Commission for very serious tax offences

In the case of failure to comply with the obligation to report, a penalty regime is provided for which establishes a fine of 5,000 Euros for each piece of information or set of data, referring to each account or asset element, omitted or provided incompletely, inaccurately or falsely, with a minimum of 10,000 Euros.

This penalty is reduced to 100 Euros for each data or set of data, with a minimum of 1,500 Euros, in the case of the late submission without prior notice, or in the case of submission by means other than electronic, computerised and telematic, when there is an obligation to do so by such means.

Failure to comply with the information obligation

It has consequences for personal income tax in the IS, which, broadly speaking, could result in higher tax liability for personal income tax or the IS as a result of considering the unreported assets as capital gains or unreported income, with the corresponding penalty consisting of a proportional fine of 150% of the amount of the total tax liability resulting from the assignment to personal income tax or the IS.

Discovered and undeclared income

It will be attributed to the last tax period from among those not subject to the statute of limitations, and as a particularly relevant novelty, it should be noted that this undeclared income "will not be subject to the statute of limitations", i.e. it will always be attributable to the last period not subject to the statute of limitations (regardless of whether its origin can be proven in a period that has already expired).

Assets acquired through declared income or generated when the person was not considered a taxpayer for personal income tax purposes

The treatment of undeclared income and the corresponding penalty will not be applied.

In the event that the property was acquired through declared income or generated when the taxpayer was not resident in Spain the penalty will not be applied.

Conclusion:

You already knew, if you have goods or rights abroad and they comply with the requirements previously mentioned, you have to file a form 720 if you do not want to incur in serious tax infraction.

We hope that our article has solved the basic questions about this obligation, we are at your service in order to advise you, as well as for the preparation and filing of the form.

Our tax advisors will take care of everything that is necessary to present Form 720 for you in a timely manner to avoid any problems with the Spanish tax office.

Form 720
Reporting obligations on assets and rights located abroad: Form 720
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