¿What is the Modelo 720?
¿Who should use the form?
The obligation to file Form 720 lies on Spanish residents and legal persons who, at any time during the year own;
Foreign Bank Accounts: Money in banking institutions abroad.
International Investments: Securities representing equity in foreign entities.
Property abroad, including any rights associated with them.
Spanish residents are individuals to spend over 183 days in Spain, which makes one a Fiscal Resident
Remember it is not for any money or assets held in Spain, overseas only
This includes individuals, beneficiaries, representatives, and companies with rights of disposal or full ownership.
Even if some or all of the foreign holdings were sold before the end of the year, they must be reported.
For foreign assets acquired as gifts or inheritance, the cost amount is considered as the fair market value at the time of receipt.
The M720 is an informative submission and no Tax will be due on this form, it is to let the Spanish Government know what you have outside of Spain, as this can be subject to Taxes due if assets are sold and money has earned interest for example.
Due Date for Filing:
The tax form needs to be submitted before 31st March of every year.
If you miss the submission period, you’ll incur a penalty.
Single Category Over 50,000 Euros: You must file Form 720 for that category.
Multiple Categories Over 50,000 Euros Each: You must file Form 720 including all assets from every category.
Form 720 must be submitted electronically at the Spanish Tax Agency.
You’ll need an identification with a digital signature (electronic ID or an electronic certificate) for submission.
Seeking professional assistance ensures smoother compliance.
What assets and information need to be included in form 720 in Spain?
Foreign Bank Accounts:
Bank’s name and address.
Full account details (including type, identification, and opening/closing dates).
Balances on December 31st and average for the last quarter.
Note: You must declare even if you’re just an authorized user.
Securities and Investments Abroad:
Shares, insurance policies, and annuities (both temporary and lifetime) managed or obtained abroad.
Securities for trusts or collective investment institutions abroad.
For each category:
Business name and address of the entity.
Details on December 31st (number, class, value of shares; redemption or capitalization value for insurance and annuities).
ISIN of shares or investments.
Property identification details.
Location (country, city, street, and number).
Acquisition date and value.
Percentage of ownership.
Special rules apply for usufruct, bare ownership, and multiple ownership situations.
If I already filed it before, do I need to do it again? You are only required to refile if the value of any of the three asset groups has increased by 20,000 Euros or more since your last filing. you haven’t sold an asset or closed an account and you haven’t obtained any new assets.
If you’re covered by the Special Expatriate Tax Regime (often referred to as the Beckham Law), you’re off the hook for filing Form 720. But, keep in mind, this doesn’t extend to your spouse. The Beckham Law benefits the individual taxpayer, so they may still need to file it.
Remember, the need to file Form 720 kicks in when you own assets or rights abroad. This includes cases where you’re a legal representative or the ultimate beneficiary of assets held in trust companies.
The new penalties for filing incompletely or inaccurately are now much lower. There’s a fixed pecuniary fine of €20 for each omission or error (it used to be €5,000!) and a minimum penalty of €300 (once €10,000!). There’s also a maximum penalty of €20,000 – previously it was uncapped. These penalties will be reduced by 50% if you file after the deadline but before receiving notification of non-compliance.
To give you an idea of just how brutal the Modelo 720 tax rules used to be: if you failed to declare an asset like a foreign bank account, you’d be looking at an eyewatering penalty of €25,000. The penalty now looks more like €300-€600. A lot more reasonable – still, you’ll want to avoid falling foul of the Modelo 720.