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720 Form: Am I obliged to inform about all pension plans outside Spain?

From January 1st to March 31st of each year you must fulfil if accomplish certain requirements, Form 720 about the Information return on assets and rights held abroad.

We have published several articles in our blog treating different aspects about this Form, but in today’s article, we want to talk about the obligation to inform of the different types of pension plans that exist in several countries such as the IRA (Individual Retirement Account) or the 401 (K) from the United States, the British ISA (Individual Savings Account) or QROPS (Qualifying Recognised Overseas Pension Scheme), the NISA (Nippon Individual Savings Account) from Japan, the Australian Superannuation or the RRSP (Registered Retirement Savings Plan) from Canada, among others.

You can expand your information in this article that we published in our blog about the 720 Form.

Inclusion of pension schemes in Form 720

Pension plans, a name that often refers to other types of foreign products, have generated some confusion and debate about their inclusion or not in Form 720.

The definition in the field of Spanish Law of pension plans is that it concerns the rights of individuals, in whose favour they are constituted to receive income or capital for retirement, survival, widowhood orphanage or disability. Therefore, and in accordance with this definition, such rights are not included in any of the categories of goods and rights located abroad referred to in articles 42bis, 42ter and 54bis of the General Regulations of the actions and procedures of management and tax inspection and development of the common rules of tax application procedures, which are the three categories of information of Form 720 discussed above.

However, at an international level, the term pension plan is used for other types of financial products with very similar characteristics, but which, in certain cases, have characteristics that do not comply with the definition under Spanish law of a pension plan, mainly because they can be rescued in different cases from these foreseen in it, therefore, we must monitor and analyze each financial product in question.

In summary, in order to qualify a foreign financial product as a pension plan, for the purposes of its non-inclusion in Form 720, the requirement that the contingency must be exclusively for retirement, survival, widowhood, orphanage or disability must be met, the contributions can’t be available without any of these circumstances occurring. It is worth mentioning that at the time when the pension plan is rescued due to the occurrence of any of the aforementioned circumstances, the existing rights in the same will have to be declared, as well as the rent or capital recued, and if this is intended, for example, to deposit in foreign accounts or acquisition of foreign securities, they will also be taken into account at the time of the Form 720 fulfilment.

If you are a tax resident in Spanish territory and have accounts, securities, rights, insurance or real estate abroad, and you are not clear if you must present the Informative Declaration on assets and rights located abroad, do not hesitate to contact us, we will analyze your case in detail and professionally.

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