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Form 720: to file or not to file? What Spanish tax residents must declare



In our last article we talked about tax residents in Spain. Now we propose to look in detail at the issue of disclosure by tax residents of assets located abroad.

All Spanish tax residents, both legal entities and individuals, must provide information on foreign assets to the Tax Administration. This information is provided on Form 720, called "Declaration of Foreign Assets and Rights and Economic Transactions Abroad" (Modelo 720 - Declaración informativa sobre bienes y derechos situados en el extranjero). It declares any assets over 50,000 euros located outside of Spain as of December 31 of the reporting year.

The following information must be provided when filling out Form 720:

  • Taxpayer identification and tax residency information
  • Bank account information from foreign banks, including year-end balance and average balance for the year
  • Information about securities and rights held outside of Spain
  • Real estate outside of Spain
  • Information about other assets, such as business assets outside of Spain

The deadline for submitting the Form is from January 1 to March 31.

It is worth noting that Form 720 itself is informational in nature. However, previously, there were significant fines for not submitting, submitting incomplete or erroneous information.

  • Thus, a fine of €5,000 for each missing element was imposed for failure to submit, incomplete submission or incorrect completion of the declaration.
  • If the declaration was not submitted on time, the penalty ranged from €100 to €1,500 per element.
  • In addition, a fine of up to 150% of the underpaid tax could be imposed.

However, the Court of Justice of the European Union issued a decision on January 27, 2022, which annuls the penalties for incorrect or erroneous declaration of Form 720. According to the European Court of Justice, Spain violated the obligation of free movement of capital by imposing a fine of 150% of the tax calculated on amounts corresponding to the value of assets or rights located abroad, untimely compliance or non-compliance.

Финансовые элементы вид спереди с розовой копилкой

Can I get my fine back?

Yes, such an opportunity has appeared.

  • First, it is possible to declare all open challenges to the aforementioned fines invalid.
  • Secondly, return the fines that were paid earlier. This can be done on the basis of the ineligibility of these costs or through a special invalidation procedure in accordance with Article 217 of the Tax Law for those acts for which the statute of limitations has expired.

To file or not to file form 720?

The ECJ ruling prohibits Spain from levying the above penalties, but it does not prohibit requesting information about the assets located abroad of the new tax resident. Thus, the obligation to file Form 720 still exists.

However, fiscal policy is subject to constant change and it is difficult to stay up-to-date while doing other business. That is why we regularly monitor up-to-date information on taxation issues, respond quickly to legislative changes and offer fresh solutions for our clients. Laduchi Consult specialists have many years of experience in financial consulting in general, and in taxation in particular, and are always ready to provide comprehensive support, no matter how difficult the situation is.

Orden HAP/72/2013, de 30 de enero, por la que se aprueba el modelo 720, declaración informativa sobre bienes y derechos situados en el extranjero, a que se refiere la disposición adicional decimoctava de la Ley 58/2003, de 17 de diciembre, General Tributaria y se determinan el lugar, forma, plazo y el procedimiento para su presentación.

Please note that all materials contained on this site have been prepared for informational purposes only. This data does not constitute or replace professional financial, legal or tax advice. The information is general in nature and does not take into account your personal circumstances. Always seek professional advice from officially licensed professionals: financial advisors, accountants and lawyers.

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