Author: Miriam Sánchez González
Do you have assets outside Spain?, the Model 720 arrives.
What is the Model 720? Don’t worry, you don’t have to pay taxes, but you are obliged to declare. It is about informing the Tax Agency of the goods and rights of your property located abroad. You will have (or not) to pay taxes on them, but in any case you are obliged to report the existence of these assets, real estate, bank accounts or shares in companies.
The Model 720, therefore, is a mere informative declaration about assets and rights located abroad if you are a tax resident in Spain, as long as the value of these assets and rights exceeds 50,000 euros.
What is the deadline for filing the Model 720?
Model 720 must be filed between January 1 and March 31 of the year following the year to which the information to be declared refers. In this sense, the information related to the fiscal year 2023 must be provided to the Tax Administration between January 1 and April 1, 2024, as March 31 is a Sunday.
Who is obliged to file Model 720?
Individuals and legal entities resident in Spanish territory, the permanent establishments in said territory of non-resident individuals or entities, among others, are obliged to file the tax form 720 when they are in any of the following situations:
The holder, representative, authorized, beneficiary, person or entity with powers of disposition or actual holder of accounts in financial entities located abroad.
Holders or beneficial owners, provided they are abroad, of securities or rights representing participation in any type of legal entity, securities representing the transfer to third parties of their own capital or securities contributed for their management or administration to any legal instrument.
Holders or real holders of shares and participations in the capital stock or equity fund of collective investment institutions located abroad.
Policyholders, as of December 31 of each year, of life or disability insurance when the insurance company is located abroad or when they are beneficiaries of temporary or life annuities as a consequence of the delivery of a capital in money, of rights of economic content or of movable or immovable property, to entities located abroad.
Holders or real owners of real estate and rights over real estate located abroad.
In short, with form 720, bank accounts, securities, rights, income, insurance and real estate or rights over real estate located abroad must be reported.
A single form for three reporting obligations
The assets and rights to be included in the model 720 are divided into 3 blocks of information:
Block 1: Properties and real estate abroad and rights over them.
Block 2: Bank accounts and deposits located abroad.
Block 3: Insurance, securities, titles, rights and income located outside Spanish territory.
If any of the blocks exceeds 50,000 euros, you must file form 720 reporting such assets or rights. Therefore, you are not obliged to file it if you do not have more than 50,000 euros in any of the blocks.
If you file for the first time, the obligation for the following years is only in case the balance of each block of information had been subject to an increase of more than 20,000 euros, taking as a reference the balance of that block of the last return filed.
What is the penalty if I do not file the Model 720?
The Court of Justice of the European Union has declared unconstitutional the penalties that involved a fine proportional to 150% of the tax calculated on the amounts corresponding to the value of goods or rights owned. In addition, fines could be accumulated in case of omitted, incomplete, inaccurate or false data or set of data: €5,000 for each non-reported or erroneous data or set of data, with a minimum of €10,000. If the return was filed after the deadline, there was a penalty of €100 for each piece of data or set of data, with a minimum of €1,500. This penalty regime was totally abusive and went against the free movement of goods and services.
In this sense, and after the CJEU ruling, the applicable penalty regime is the one provided for in the General Tax Law, specifically in articles 198 and 199, which regulate the tax offenses for not filing the self-assessment within the deadline or for filing them incorrectly.
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