The deadline for submission of the Model of 720 31st March each year. All the Assets and rights located abroad and valued above 50,000 euros must be declared. It is a purely informative presentation, but of an essential nature. The penalties for its non-filing or out-of-time submission are high.
Under the “anti-fraud” plan launched in 2013. The Spanish government imposed an obligation on Spanish tax residents to declare all their foreign assets through the 720 models. However, it also directly affects members of the international community living in Spain who have assets abroad.
The duty to report through model 720 is linked to tax residence. This means that, if you are considered a tax resident in Spain, you have the obligation to report foreign assets.
What is the Modelo 720?
It is a purely informative presentation. But its content is of particular interest for the Spanish tax authorities to thoroughly control taxpayers’ assets and their variations. In fact, its supervision is considered a priority in the control plan of the Spanish tax authorities.
Who is subject to the 720?
Any person, corporation or permanent establishment that qualifies as a Spanish tax resident in Spain. And is the owner, co-owner, representative, authorized person, beneficiary or has powers to disposition assets located outside Spain worth more than 50,000 euros (i.e. assets detailed below), must report the value of these assets.
When does a person become a Spanish tax resident?
A person will become a tax resident in Spain if either of the following two circumstances is met:
1) Stay in Spain more than 183
The person is physically present in Spain for more than 183 days in the specific calendar year. Sporadic absences are considered days spent in Spain to calculate this period unless tax residency in another country can be tested for more than 183 days. This evidence must be presented in the form of a certificate from the tax authorities of the other country confirming such tax residence.
2) Economic interest in Spain
The person has his or her centre of vital interests or economic interests in Spain, either directly or indirectly. There is a presumption that a person has their vital interest centre if their legal spouse or dependent minor children are tax residents in Spain.
1. Funds in accounts in financial institutions abroad: such funds may be maintained through the figure of the owner, co-owner, representative, authorised or beneficiary. The valuation of the funds should be the highest (i) of the balance as of December 31 or (ii) the average balances at the close of each quarter.
2. Securities and securities, rights, shares, insurance and income deposited, managed or obtained abroad. Life insurance policies and temporary or lifetime income generated by loans of money, rights or other assets to foreign entities are included, while pension plans and shareholdings are excluded.3. Real estate and rights in real estate located abroad.
It should be noted that once the limit of EUR 50,000 is exceeded for a group, all assets in that group must be declared regardless of whether each asset does not exceed the limit. In addition, the reporting obligation exists when the specific assets exceed EUR 50,000, regardless of how many holders/owners own a particular asset. Each holder/owner must declare the total balance/value (not the prorated one), indicating the percentage they own or own.
When should it be declared?
The reporting period is between 1 January and 31 March of each calendar year, with respect to assets held as of December 31 of the previous year. For example, the reporting period for assets held as of December 31, 2022 is January 1 through March 31, 2023.
How often should it be reported?
Model 720 should only be presented once if the person meets the conditions described in question 2 above. The person will only be required to present the 720 model again when, in relation to any of the three asset groups, there is an increase of 20,000 euros compared to what was stated in the last model 720 presented.
What does it happens if I do not submit it?
The fines for this tax were really high in the past few years. 5.000 € per data not included with a minimum of 10.000 €. This resulted in some cases with fines higher than the original value or the assets. Because of this unfair fine system, some taxpayers went to the European Commission and later to the European Courts to end up it. On 27th January 2022 the sentence was the systema was not legal and Tax Agency immediately revoked the fine system to a fairer one.
Submitting Model 720 out of deadline is now 150 €.
How should it be reported?
Model 720 must be completed online. The form is not standard formatted and requires navigation through various options and drop-down menus. The assistance of an experienced advisor is recommended.
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