Reporting obligations on assets and rights located abroad: Form 720
The Law 7/2012, of 29 October, amending the tax and budget policy and adequacy of financial regulation for the intensification of actions in preventing and combating fraud, introduced new reporting obligations on assets and rights located abroad, by incorporating it in the Tax Code under an additional provision eighteen.
- Assets whose ownership must be reported
- Obligation to report on accounts in financial institutions located abroad,
- Obligation of information on values, rights, insurance and income deposited, managed or obtained abroad,
- Obligation of information on real estate and rights on real estate located abroad,
- Deadline and presentation:
It will take place from January 1st to March 31th of the year following to which the information is related. For instance, Form 720 of 2015 has to be filed before March 31th, 2016.
The presentation must be done necessarily by electronic way (via digital certificate).
- Parties obliged to file:
This form must be filed by all persons, natural and legal resident in Spanish territory, permanent establishments in the territory of non-resident persons or entities and entities referred to in Article 35.4 of the General Tax Act, who own, have power of disposal or are authorized of any of the assets mentioned above.
As exceptions to the general rule are included, among others:
- In connection with the obligation to report accounts in financial institutions, there is no obligation to report any account if the amount at December 31th and the average balance of the last quarter of them does not exceed collectively the 50.000 Euro. Furthermore, the filling of the statement in subsequent years is only mandatory when it increases more than 20.000 Euro in respect of the amounts of the latest statement. It is important to consider that the amount of 50,000 Euro is for the total amount in the accounts, not per owner.
- The same limit and the obligation to file the return in subsequent years, mentioned in the previous paragraph applies to all the assets of this category: values, rights, and deposit insurance, managed or income earned abroad.
- The same limit and the obligation to file the return in subsequent years, it is appropriate for all goods in the following categories: real estate and real property rights.
- Those assets hold by legal persons and other entities resident in Spanish territory and permanent establishments of non-resident in Spain, that are recorded in their accounts individually and sufficiently identified.
- Those assets hold by individuals resident in Spanish territory to develop an economic activity and keeping accounts in accordance with the provisions of the Commercial Code, recorded in their accounts individually and sufficiently identified. This exception does not apply to securities, rights, insurance and rents.
- Failure to inform, sanctions regime:
Commission of a very serious tax offense: In the case of not filling the form, there is applied a system of penalties which provides for a fine of 5.000 Euro for each item or set of data, based on each account or equity item omitted or provided for incomplete, inaccurate or false, with a minimum of 10.000 Euro. This penalty is reduced to 100 Euro per data or dataset, with a minimum of 1.500 Euro, in the case of late submission without prior notification, or in the case that it has been submitted by means other than electronic, computer and data transmission, when obligations to do so by such means.
Additionally, the breach of the obligation of information has consequences in Income tax and in the Corporate Tax (CT), because the undeclared assets will be taxed under the income tax or the corporate tax as a result of undeclared assets are considered as capital gain or income unreported, and additionally with the penalty consisting of a proportional fine of 150% of the amount of the total tax liability resulting from the assignment in income tax or CT.
Exposed and undeclared income is charged to the last tax period among non-expired, and the novelty of special importance to emphasize that these undeclared income "will not expire", that is, they will always be attributable to last year not prescribed (whatever that its origin may be demonstrated in a period as expired).
In the event that the property was acquired through declared income or generated when taxpayer was not resident in Spain the penalty will not be applied.