(12th February 2020)
If you live in Spain, you probably have already heard of the „Modelo 720“ and asked yourself, what this is about and if you also have to file it.
The form 720 („Modelo 720“) is an annual tax return in Spain regarding assets held abroad.
The form 720 must be submitted to the Tax Office until the end of march of the following year. This year, the declaration regarding 2019 has to be made until the 31st of March of 2020.
- If you have all your assets in Spain, relax, because then you do not have to file this tax return.
- Also if you are not a resident (taking as a base the rules about fiscal residency from the Spanish income tax laws), you also don´t have to worry, you don´t have to submit this form.
- If you have been sent to Spain for work and are using the Special Income tax system for seconded personnel (“Régimen especial para trabajadores desplazados a territorio español =„Ley Beckham“), you also do not have to submit this tax return.
But if you own assets abroad and are a resident (Spanish Income Tax Law) in Spain, you should take some time and have a closer look at this tax return.
Whether you have to prepare the tax return in this case or not, depends on the composition and the value of the existing foreign assets.
When reporting your assets abroad through form 720, three categories of assets are considered separately: bank accounts, bonds & insurances and real estate.
Roughly speaking, once you have a total of more than € 50,000 in assets in one category, you must individually break down all assets that compose this category.
However, if you stay below the value limit within a category, you do not have to comment on this category.
If you remain below the value limit in all categories, you do not have to submit the Form 720.
Very important to take into account, is that not only the owner of the property is obliged to declare. Representatives, agents, beneficiaries, authorized persons, or beneficial owners ("titular real") also have to file the “Modelo 720” in certain cases. It is then not about the conditions on the 31st December of the year in question, but on the day when for example the authorization ended.
For all 3 asset categories, different information is requested:
- respective account balance on 31st December and
- average account balance of the last quarter.
- State on the 31st December about number, type and value of the shareholdings / shares,
- State of contributions made on the 31st December,
- For life insurance or disability insurance: surrender value at 31st December ("Valor de rescate"),
- As beneficiary of temporary pensions or annuities: the capital value as of 31st December ("Valor de capitalización").
- Identification of the property (register entry, address),
- Date of purchase and purchase price,
- in the case of multi-person ownership or split use over the year: date of purchase and value as of 31st December,
- usufruct / liens etc .: date of purchase and value on 31st December.
- You have the right to dispose of an account in Germany, which on 31st December has a balance of more than EUR 50,000.
- You have shares in Switzerland whose value exceeds 50,000 EUR on the 31st December.
- You are a co-owner of an apartment in France that is worth 100,000 euros and has 5 owners (all residents in Spain). Each of the five people has to submit a tax return indicating that they only own 20% of the apartment.
No, there is nothing to pay, it's just an informative declaration.
But of course, the Spanish Tax Office uses the data to check whether the income derived from existing assets abroad is correctly declared and taxed in Spain (income tax, donations tax).
That means, if the Tax Office sees that I have savings accounts abroad, but do not report any income from interest, it might come to the idea to make a tax audit.
Furthermore, one must not forget that there is a wealth tax in Spain (Impuesto del Patrimonio). You may have to pay taxes on your assets, but this obligation does not come from the Form 720, but from the corresponding Spanish tax laws (income and wealth tax, donations tax, etc.).
No. Once the tax return has been submitted, it is not necessary to prepare it again every year.
You only have to do it again if:
• there is an increase in the respective category of more than 20,000 euros compared to the last year you filed a declaration, or
• you close a bank account during the year, the power of disposition ends, you sell a property, ... etc.
You have to compile the information on the individual asset categories and determine the value per category. If this results in an obligation to declare, you can either file form 720 all by yourself or ask a tax consultant to do so for you.
On the website of the Tax Office you can fill out the form and submit it yourself. You only need an electronic signature or a similar electronic identification.
On the website of the Tax Office you will also find information material and questions and answers on the topic. However, the Form 720 itself is only available in Spanish.
Of course you can also contact a tax consultant to first clarify whether you have to submit the “Modelo 720” at all and afterwards to ensure the correct preparation and filing of the tax return.
I would especially recommend this if you are unfamiliar with the subject of taxes and the corresponding Spanish terms, as the Spanish Tax Office can impose extremely high fines for incorrect or even not filed tax returns (even if this is questionable under European law).
This article is intended to give an overview of the Spanish tax return on foreign assets (Modelo 720).
It cannot and shall not replace an individual case analysis and personal advice from a tax consultant.
If you have assets abroad, or the power of disposition above them, or if you are the beneficiary of an insurance, etc., you should definitely check whether you have to submit this tax return or not.
If you are not sure about your obligation to file this tax return, or you just want to be on the safe side when completing the Form 720, you should seek help from a tax consultant who is familiar with the subject.
Are you wondering who to turn to?
It´s simple: to me!
Explain me your situation, then I'll check if you have to submit the Modelo 720 or not. If so, I ask you for all the information needed, clarify your questions, prepare the tax return for you and submit it to the Tax Office.
It is that easy.
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Rechts- und Steuerberatung für Ausländer und Expats in Spanien (Einkommen, Immobilien, Beckham-Regelung).
Legal and tax advice for foreigners and Expats in Spain (income, real estate, Beckham Law).
Asesoramiento legal y fiscal para extranjeros en España (renta, inmuebles, Ley Beckham).