Law 7/2012, of 29 October, on the modification of tax and budgetary regulations and the adaptation of financial regulations to intensify actions in the prevention and fight against fraud, introduced a new obligation to provide information on assets and rights located abroad, incorporating the eighteenth additional provision into the General Tax Law.
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.
Deadline and form of presentation:
It must be made between 1 January and 31 March of the year following that to which the information to be provided refers. Therefore, the information corresponding to the year 2019 must be submitted at the latest on 31 March 2020.
The presentation must necessarily be made by telematic means (via digital certificate).
All individuals and legal entities resident in Spanish territory, permanent establishments in said 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 to the general rule include:
- 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 presentation of the last declaration. It is important to note that the 50,000 Euros are per total account, not per holder.
- 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: securities, rights, insurance and income deposited, managed or obtained abroad.
- The same limit, as well as the obligation to file the return in successive years, applies to all the assets in the following category: real estate and rights to real estate.
- 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.
Failure to comply with the obligation to inform, penalty regime:
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 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.
In addition, failure to comply with the information obligation has consequences for personal income tax in the IS, which, broadly speaking, could result in a 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 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).
In the case of 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.
Our tax advisors will take care of everything what is necessary to present model 720 for you in a timely manner to avoid any problems with the spanish tax office.