Tax regulations and links to understand how to fill new Spanish tax form-720.
Form 720: Declaration of Assets Abroad. This form must be filled by all spanish residents owning assets abroad over 50.000 euros. This obligation must be fulfilled during first quarter of each year. Although this first year it is possible to fill until April 30th 2013.
- Link to official text of the regulation: http://www.boe.es/boe/dias/2012/11/24/pdfs/BOE-A-2012-14452.pdf
- Link to Ministry Order 72-HAP-2013 governing the presentation of form-720
- Link to government web-application for filling form 720: https://www.agenciatributaria.gob.es/AEAT.sede/tramitacion/GI34.shtml
- Instructions model 720. Design of model and fields
- Official exchange rates that should be used for assets nominated in non euro currencies: BOE-Bank of Spain resolution
In the model must be declared,
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accounts abroad in financial institutions,
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stocks, bonds, values, financial rights, and savings in insurance companies, deposited, managed or obtained abroad
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all types of Real Estate and rights over Real Estate abroad.
Each of the three blocks of goods, constitutes an obligation of different information to be provided, but the three reporting obligations are articulated through the same form. In this way three reporting obligations would be fulfilled by completing the form 720 informing all goods and rights with respect to the obligation to inform
It is excluded from this obligation to declare when the value thereof does not exceed 50,000 € for each type of assets. The presentation in successive years, after presenting form 720 for the first time will be mandatory when the value declared increases by more than 20.000 €.
The Declaration includes a record for each property situated abroad. For each record indicating its type and subtype:
‘C’:Accounts opened in banking or credit entities located abroad.
- Current account.
- Savings account.
- Term deposits.
- Credit accounts.
- Other accounts.
·”V”: Securities or rights located overseas representative of participation in any type of legal entity, values located overseas representative of the transfer of capital to third parties or provided for its management or administration to any legal instrument, including trusts and “trusts” or mass though lacking legal personality, capable of acting in the course of trade.
- Values or rights of participation in any type of legal entity. As shares and participations in companies.
- Representative values of the transfer of capital to third parties. Bonds …
- Values provided for its management or administration to any legal instrument, including trusts and “trusts” or mass heritage which, though lacking legal personality, capable of acting in the course of trade
· ‘I’: shares and participations in share capital or equity fund of collective investment institutions located abroad. In this case there is no subtype.
· “S”: life insurance (savings not risk) or disability and pension time or annuities, whose insurance companies are located overseas.
- Insurance life or disability, whose insurance company is located abroad.
- Temporary or life income generated as a result of the deposit of capital, abroad.
· “B”: ownership and real rights over properties located abroad.
- Ownership of the property.
- Actual use or enjoyment and bare ownership rights over real estate.
- Timeshares, timeshares shifts, part-time property or similar formulas on real estate.
- Other rights in rem over real estate. In this case you must describe it.
It must file a return if any of those paragraphs (1:C, 2:V, I, S, or 3: B) exceds the figure of 50,000 euros, and only those sections in which the figure is over 50,000 euros.
Information to provide
Information to supply include, open accounts in financial institutions, the balances of these accounts on December 31st, the average balance for the last quarter of the year and the date of opening. All holders, authorized… at 31 December shall declare the balance at 31 December and average balance. … Authorized holders who have ceased to be during the year, indicate only the balance of the day ceased to be holders, authorized…
In terms of the ownership of the account should be indicated if the declarant is:
- Holder
- Representative
- Authorized
- Beneficiary
- Usufructuary
- Taker
- With power of disposal
- Other forms of real property
In the case of Real Estate shall include the date and the value of acquisition, and the date of opening or cancellation of right over Real Estate and, in the case of values, rights, insurance and income deposited or managed abroad, the balance at 31 December of each year. And where appropriate the amount of transfer or sale.
The breach of this obligation has consequences on income tax and corporation tax.
Assets not declared, that cannot be proved its ownership arousing from declared income or assets, will be considered income to be taxed, and a 150% punishment over the value of them.
Penalty for not filling, filling incomplete, filing with non accurate data, will be punished with 100 euros per data with a minimum of 10.000 euros.
Cooperation with other States
On the other hand, Royal Decree approved today partially to Spanish law transposes the Community directive on administrative cooperation in the field of taxation. Thus, reinforcing cooperation in the exchange of information between countries needed for the liquidation of taxes.
Among other issues, is attributed to the tax agency competition to formulate requests for mutual assistance to other States or international organizations. This provides legal security to be achieved greater agility in the process of mutual assistance.
And already a few years ago the tax agency began to provide tax information for citizens of the EU to their respective countries through the model 299 which is filled by Spanish financial institutions, collected and processed by Tax Authority, and information send to respective countries.
The Government aims to deepen in the coming months in this type of agreements for the exchange of information, both to improve the collection of taxes, and to enhance the fight against tax fraud.
Example of filling in data for a current account
Frequently asked questions:
Important note: the obligation to submit a declaration in the case of co-ownership of a good, relies on the value of the asset, not in the value of the percentage owned.
the following questions and answers are taken from the AEAT website:http://www.agenciatributaria.es/AEAT.internet/Inicio_es_ES/La_Agencia_Tributaria/Campanas/Declaraciones_informativas_2012/_INFORMACION/Ayuda/Preguntas_frecuentes__Modelo_720/Obligacion_de_declarar/Obligacion_de_declarar.shtml
1.-Must be filed a Form 720 when ownership of a bank account abroad is shared and whose balance at 31 December exceed the €50.000, but whose ownership corresponds to several people?
- There is a reporting obligation on the bank account when this limit is exceeded (if none of the other exceptions to the obligation to declare apply) regardless of the number of the account holders. Must be informed total balances, indicating the percentage of participation.
2.-Must be filed a Form 720 when sharing ownership of Real Estate located abroad whose acquisition value exceeds the €50,000, at 31 December but whose ownership corresponds to several people?
- Yes, there is a reporting obligation on the property when this limit is exceeded (if none of the other exceptions to the obligation to declare apply) regardless of the number of owners. Must be informed total acquisition value, indicating the percentage of participation.
3.-If a person ceases to be authorized in an account of a financial institution located abroad on June 2012 must file form 720? in that case, which has to be balance and the date to be reported?
- There is obligation to declare if the balance that existed in the account on the date of the revocation of the authorization, if happened by the end of year would had determined obligation to declare by 31 December.
- The content of the Declaration in connection with this account in the event that there is obligation to declare it must inform about:
- Business name or full name of the Bank or credit as well as his home.
- The complete identification of the account.
- The date of the revocation of the authorization.
- The account balance at the date in which I leave be authorized.
4. Do I need to declare pension schemes contracted abroad?
- There is no obligation of information about pensions plans (for contributions to them or capital into them) as long as is not fulfilled the requirement that is covered by the scheme and capital is withdrawn.
5-When an individual moved abroad once started the exercise and must file the tax on the income of natural persons by this exercise. Are you required to file also the information model with respect to the property and rights abroad?
- Yes, provided in accordance with the regulation of these three obligations of information is obliged to fill form 720
6.- If a person is the “owner” of an account abroad whose balance at 31/12 is € 40,000 and is also “authorized” in other current account whose balance at 31/12 is €30,000, there is obligation to declare?
Yes, provided that no if no cause of exoneration.
7. Form Field “Tax Number in the country of fiscal residence”. There are no instructions what should be put in this box?
The instructions on how to fill concrete boxes are in the link that is up on the design of the model 720 records:
- It will indicate the tax identification number of the entities declared in the previous field, assigned in the country or territory of residence tax.
- This field will be blank when the “type of asset” take the value “B”.
Example: in the case of an account in the Bank Espirito Santo of Portugal, will be the VAT Number of this entity in Portugal.
8. Do I need to declare asset which have been sold during the financial year, and before 31 December has been reinvested in other assets?
No. When the loss of the status of owner or real owner referred to in the last paragraph of article 42 ter.1 have his origin in the transmission of values and rights, and the amount obtained had been entirely used in the acquisition of other securities or rights which must be declared, You only must declare balances at 31 December.
9. What exchange rate is used to value goods in foreign currency?
- The European Central Bank official exchange rate will be used at December 31, for the balance at 31 December and for converting into euros fourth quarter average balance. BOE-Bank of Spain resolution
- In the case of cancellations of accounts, the official rate on the date of cancellation will be used.
- In the case of real estate, the value of acquisition, as well as in the rest of goods and rights subject to Declaration, must conform to the exchange rate prevailing on the date of December 31 for the year corresponding to the declared information.
My wife and I officially became fiscally resident with the Agencia Tributaria on 18 February 2014.
Can you clarify when we need to submit our first Modelo 720; do we need to do an initial submission now, or at the beginning of 2015 before doing our first IRPF return?
Thanks
Almost. Tax residence in Spain is either the hole year, either not any day. So, your tax residence started on the 1st January 2014.
So you need to fill form for tax year 2014. This must be done within first term 2015.
Until next year you do not need to fill any form, but the one for saying that you started as tax resident, and the one for activating your NIE issued by police in the tax database. Both are done with form 030.
Hello Javier,
I will be moving to Spain this summer and am the beneficiary of a trust that owns 3 operating companies in Canada. When in Spain, I will set up a Holding Company in either Spain or Denmark that will in-turn own a consulting company in Ireland. This company will bill consulting fees to the 3 companies in Canada and also later this year, other clients in Africa and Ireland. I assume that the Irish company can accumulate corporate profits without having to pay any Spanish corporate taxes as long as no dividends are being received. I am also assuming that if this corporate structure is owned by me directly, I would have to declare the balance sheet value (i.e. the after tax cash value remaining) on the form 720? Also, if any dividends were paid out to me, would the tax rate be in the 21 – 27% range and if the company is in Ireland and would I need to pay social security payments on this income in Spain if I received no salary?
Thanks!
Trust do not exists in Spanish law. Most similar vehicle is “fiducia”. Trust is taxed as any vehicle that not pays corporate tax.
If trust bills Canadian companies, this income will be taxed in beneficiary tax income.
Any company within the trust can accumulate without you or the trusts paying taxes.
In form 720 you declare trust value by the end of year.
Dividends paid to you o the trust will be taxed at 21-27%, government is reviewing income tax, may be soon will be cheaper (2015 there are elections).
When you are in charge of a Spanish resident company, you need to pay social security.
You can also pay, because you want. This will give you right to medical care. It is not expensive, less than 3.000 per year, and with this payment your wife also be granted with medical care.
Hi Javier,
I have moved to Spain from England ,25 December 2012! And I wasn’t aware
That I had to fill 720 form, I own a house in England worth €300.000 ,will I have to pay panalty (€10.000),I haven’t fill the form 720…thank you
What means ‘I have moved’?
Consular registration in Spain?
Official communication to Spanish Tax that you become SPANISH tax resident?
I went to ayuntamiento and got myself certificado de
Empadroamento….registration date was 17th December 2012
,so for the year 2012 I haven’t fill the form 720 my question
Is do I have to pay penalty ? Everything is too complicated
Here,as I am still paying my all my taxes in England ,I am even thinking of de registering and be non resident in Spain again..
Ask a Tax Residence Certificate to HMRC.
Empadronamiento is a civil procedure not a tax one.
Hola Javier:
Quería hacerle una consulta que hasta ahora ni siquiera nuestra asesora ha podido respondernos. Mi marido es ciudadano británico, residente en España y ha cotizado como autónomo durante 15 años. En su país trabajó como profesor para la autoridad local en Fife (Escocia), y al cumplir los 60 años comenzó a recibir una pensión de la Teachers Public Agency. Más tarde, al cumplir los 65, comenzó a recibir otra pensión compartida que se gestionó desde el INSS : por parte de su país la pensión correspondiente a los años que trabajó allí (una pensión estatal, no privada) y por parte de la SS española según los que trabajó aquí. En la actualidad somos cotitulares de un préstamo hipotecario, por lo que, según nuestra asesora, nos conviene hacer la declaración de la renta conjuntamente, pero sólo hemos declarado la parte de la pensión que recibe en España. Mi pregunta es: al haber trabajado para el estado , ¿están exentas las dos pensiones de su país de ser declaradas?
Muchas gracias
The part of your husband pension as UK public servant, is exempt of taxes in Spain, and only UK can collect taxes for this part of the pensión.
So, in Spanish income tax, this part should not be declared. In Spain you should declare only, the Spanish part of the pension.
And, of course, if you have not income, it will be better to fill IRPF jointly, for getting jointly allowance and full allowance for payment on your permanent residence.
Hello Javier, what a very useful site!
You don’t seem to comment much on valuing securities; if I hold equities at the year end, how do I calculate the average value? Can I take the value at 1-Oct and the value at 31-Dec and work from there?
Surely I do not need to work with the daily prices for the assets – that would be a lot of work!
Many thanks,
Trey
You declare value at December 31st.
If you need to convert to euro, you use official tax rates from European Central Bank, you can check them here http://www.boe.es/boe/dias/2014/01/03/pdfs/BOE-A-2014-112.pdf
So only average value for bank accounts then. Much easier to do!
Many thanks for the answer, have a great 2014.
Trey
For average balance of bank accounts use folloging formula
(30 Sept + 31 Oct + 30 Nov + 31 Dic)/4
same to you.
Hello Javier
Could you clarify if is necessary to report assets for 2013, if they are still within the €20,000 + or – reporting regulations i.e what you submitted in 2012 , but you have opened new saving accounts because the previous insurance / investment accounts matured.
Good question. But I have not yet an answer. In September I sent a formal question to Tax Authories. I am expecting answer, but they have 6 months for answering. Not latter than in Febrary I will have it.
Give me a call in 1 month.
I think, if it were a bank account defenetily you will need to represent form 720, because of cancellation of old one, as one of main data, IBAN, changed.
But for insurance policy, you only need to declare insurance company and amount; in this case I think there is not need for re-filling.
Hello Javier,
My question is similiar to the above,
Can you please tell me if I closed previously declared bank accounts and moved those assets into other declared bank accounts and a new bank account, with no increase over 20K in this category, do I need to do the declaration again this year?
Effectively I have moved around assets in the bank account category. But I did close 3 accounts and opened 2 new ones.
Also do I have to declare all accounts in this catagory again or only the closed and new accounts?
regards,
Shane Kelly
Yes. You need to declare only the cancelled accounts.
Would Inheritance tax for spanish resident beneficiaries also include money in a life insurance bond? If the beneficiaries are in the Valencia región would a spanish regulated life insurance bond be more advantageous for inheritance tax purposes than just leaving a large amount of money in a bank?
In Valencia, as well as in Spanish law, there is a 9.200 euros allowance for every beneficiary from live insurance.
So, it is a good idea to have 9.200 euros in live insurance, or tree times if you have 3 beneficiaries in Spain.
Hi Javier
You have said to Margaret
“When you speak about inheritance tax, do you think about you an your husband? Or about other relative?
In the first case, if you have common assets regime, this tax can be fully avoided.”
Is this common assets regime for Spanish or UK fiscal residents? If it is for Spanish tax residents does this mean there is a way if I die for my wife to avoid Spanish inheritance tax on our house in Spain which is just in my name?
Thanks
Under common assets regimen, any asset bought on your name, if you can not prove that money used to pay it was exclusively yours, is presumed to be joint.
For joint assets, for inheritance purposes, 50% is already of your spouse, and only your 50% will pay inheritance tax.
Inheritance tax is a progressive tax, has a personal allowance tax exempt, and there is another allowance of nearly 200.000€ for your permanent residence, plus 50% from common assets division, in many cases will mean not paying inheritance taxes at all.
Javier,
Sorry if I was unclear. What I meant was that both Spain and the UK recognise us as Tax resident in Spain. Our pensions have a no tax classification in the UK and we pay Spanish income tax.
In that case, you should apply for a Spanish tax residence certificate from AEAT.
In general pensions are taxed at residence country, unless you have a pension as public servant and citizenship of the country that pays pension, because in that case rule of tax residence switches to tax due at country which pays the pension.
Hello,
I have a Trust fund in Luxemburg, and the money is stated as a loan and on death the loan is NON repayable, my spouse will inherit my half, would the spanish tax authorities take that trust into consideration and make a tax claim on that half of the trust and expect her to pay the tax from other sources.
Assets are already on her name. On your death she will inherit the loan. Which is quite difficult to trace.
Depending on which Comunidad autonoma she is resident, tax could be 0% up to 34%.
We are expat pensioners , we live here in Spain but as all our money is in England and the interest is taxed at sores that is where all our tax is paid. I know this makes us non tax resident , but do we fill in the 720 or pay the wealth tax on our property here.
We have three joint accounts with more than 50.000 euros plus a flat in England. which we know we will have to declare. We also have our own separate accounts with less than 50.000euros in them
, do these have to be declared as well. We keep getting different information which is very confusing for us
We have been told we will have to pay the wealth tax for the last four years and could get a hefty fine our Valor Catastral went up three years ago from 59.000euros to 215.000. this could end up being a very large amount to pay. We got our residencier five years ago and was told by the tax office in England we did not need to file a Spanish Tax Return as we do not have enough money in the bank here to earn any interest, we make nothing.
If we become non resident does that mean we will not be allowed in the country for more than 183 days.
If you are non resident in Spain you do not need to fill form 720.
Civil residence is not the same as tax residence. As citizens of any EU country you can live any time you want in Spain.
For tax residence seems to be a conflict of residence, you are tax resident in England for main economic centre, and in Spain for number of days. When conflict of residence, DTA UK-Spain states tiebreakers rules for residence: main economic centre has priority. So you are tax resident in UK, even if you live hole year in Spain.
If so, and for making stronger your tax residence in UK, apply for a tax residence certificate according to DTA between UK-Spain to HMRC.
HMRC office in England, cannot inform about Spanish tax liabilities.
About form 720. If total balance of all account ads up more than 50.000, you should declare all, even the ones with less than 50.000
Dear Javier
Does this mean that I can own a house in Spain and live there all year but keep nearly all my money in England (but not own any house in England) and still be treated as UK tax resident? What decides where my main economic centre is? Or does owning a house in Spain and none in England mean that my main economic centre will be Spain?
Location of your main economical and personal centre, will be where You have more personal and economical links.
Personal: family, friends, colleagues, partners,
Economical: wealth, Income, future or present pension…
This tiebreaker rule applies before the one about number of days. So, is possible that living hole year in Spain you keep being tax resident in UK. And for making stronger this position apply for a tax residence certificate to HMRC, this will work well with Spanish tax authorities. But don’t forget collect every document that may prove that UK is your vital center.
Javier,
This really surprised me. We own a house in Spain, our pensions are paid in England. Our income and small capital is in England and Gibraltar with enough transferred to our Spanish bank account for living expenses. We have family in the UK but not close. We are Spanish Fiscal residents, I thought we had to be, is that OK? Both Spain and the UK seem to have accepted it. We were advised it was preferable for Inheritance Tax purposes to establish fiscal residence here. (we live in Andalucia)
Margaret, you can not be tax resident of both countries at the same time. But this trick has worked well, as long as there was not an effective exchange of tax information, but soon will not work.
When you speak about inheritance tax, do you think about you an your husband? Or about other relative?
In the first case, if you have common assets regime, this tax can be fully avoided.
If you want you can call me to my mobile 670720457
How can I check my model 720 is filed with the Hacienda/government?
Going to your Tax Office or with a digital certificate in internet http://www.aeat.es checking your presented forms.