JANUARY 2017 – Since 1 January 2013, the Spanish tax residents are obliged to file an annual informative tax declaration called ‘Modelo 720’ (M720), to declare the ownership of non Spanish assets that exceed 50.000 € in value, category by category. The categories and the information to be provided are as follows:

  1. Properties outside Spain You will need to declare the date of purchase, the full address, the type of property, the percentage of ownership and the purchase price (not the market value), ignoring the percentage of ownership.
  2. All types of bank accounts outside Spain You will need to declare the bank name, the full address, the type of bank account, the full bank account details (including IBAN), the date the bank account was opened, the percentage of ownership, the bank balance at 31 December and the average bank balance during the fourth quarter (ignoring the percentage of ownership).
  3. All types of investments assets (investment bonds, shares, insurance products and other related financial assets) You will need to declare the name and type of investment, the date of purchase, the type and percentage of ownership and the value at 31 December ignoring the percentage of ownership. (This information may vary depending on the type of asset, for example you will need to provide the ISIN number for share in the Stock Market).

The filing of this annual declaration is between 1 and 31 March each year.

If the M720 was filed either in the previous years, you will not need to file again, unless the value of your non Spanish assets, category by category, has increased by 20.000 € in respect of the latest M720 submitted, or unless you have sold any of the assets declared in any of the previous M720 filed. You need to be very careful because the increase in values may happen by the simple currency exchange rates applicable between two different years.

You need to take the M720 rules very seriously and check, year by year, if you have the obligation to submit this declaration. This is because the tax fines in the event of a tax inspection, and even by voluntary late filing, are horrendous.

As an example, if you did not declare your non Spanish assets in your M720 and you were inspected by the tax office, the minimum fine would be 10.000 € per category of assets. But even worse, a tax inspector would have the right to presume that you acquired this asset using undeclared income (unless you demonstrate that the asset was purchased in a year you were not tax resident in Spain or that you used declared income for this purchase), and subsequently the whole value of the asset would be regarded as undeclared income obtained in the oldest non prescribed year (four years ago). Bearing in mind the tax rates up to 56% and the fines up to 150 %, sometimes the tax assessment can exceed the value of the asset.

Even if you voluntarily submit the M720, the minimum fine would be 1.500 € per category of assets, with the same inconveniences as above.

But this is not all! You will need to declare not only the direct ownership of your non Spanish assets, but also those that you own indirectly, whether as a shareholder or beneficial/real owner of company structures.

Due to the ‘esoteric’ rules and implications behind this legislation, you may need to seek proper tax advice to guide you in the filing of this declaration, and more importantly, in the case that you need to bring these tax filings up to date, due to the implications involved in this decision, and please do not hesitate to contact us for any questions or advice you may need.
Modelo 720 for the year 2016

Since 1 January 2013, Spanish tax resident individuals are obliged to submit an annual tax return called Modelo 720 (M720), to declare the ownership of non Spanish assets (bank accounts, properties, shares and bonds, and all different types of investments). The categories are as follows:

Category 1.- Properties owned out of Spain.

Category 2.- Bank accounts opened out of Spain.

Category 3.- Other type of investments out of Spain (shares, bonds and all different types of investments).

The M720 is required where the total value (ignoring the percentage of ownership) of the non Spanish assets, category by category, exceed 50.000 €. The tax fines for not declaring these assets through a tax inspection would be of a minimum of 10.000€ per assets category, whereas voluntary filing would be subject to a fine of 1.500 € per assets category.

The deadline to submit the M720 for the tax year 2016 is on 31 March 2017. Please find above a detailed summary of the M720 rules for your records, which also includes the information and documents we need to receive from you to enable us prepare your declaration.

Please also do not forget the following:

If you declared a M720 in a previous year, but the value of the assets, category by category, has not increased by 20.000 €, there is no need to declare the assets owned under that category this year.

Regardless of the above, it is mandatory to declare the sale of any non Spanish assets previously declared in a M720 declaration.

In the case that you owned non Spanish assets that had to be declared in the M720 declaration in previous years, and these declarations were not submitted when due, please urgently let me know and I will advise you further.

For more information about the Modelo 720 contact us – just click here