Reporting Assets Outside Spain. Form 720

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.

In the model must be declared,

  1. accounts abroad in financial institutions,
  2. stocks, bonds, values, financial rights, and savings in insurance companies, deposited, managed or obtained abroad
  3. 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.

  1. Current account.
  2. Savings account.
  3. Term deposits.
  4. Credit accounts.
  5. 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.

  1. Values or rights of participation in any type of legal entity. As shares and participations in companies.
  2. Representative values of the transfer of capital to third parties. Bonds …
  3. 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.

  1. Insurance life or disability, whose insurance company is located abroad.
  2. Temporary or life income generated as a result of the deposit of capital, abroad.

· “B”: ownership and real rights over properties located abroad.

  1. Ownership of the property.
  2. Actual use or enjoyment and bare ownership rights over real estate.
  3. Timeshares, timeshares shifts, part-time property or similar formulas on real estate.
  4. 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:

  1. Holder
  2. Representative
  3. Authorized
  4. Beneficiary
  5. Usufructuary
  6. Taker
  7. With power of disposal
  8. 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.
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462 respuestas a Reporting Assets Outside Spain. Form 720

  1. Monica dijo:

    Hi Javier,

    Thanks very much for all the information on the site, it is very helpfull. I wonder if you could help with the following scenario involving shares (aciones):

    31Dec12, Have 200 Shares of BP (previously declared in last years modelo 720)
    01Feb13, SELL 50 Shares of BP
    01Mar13, SELL 60 Shares of BP

    Should I declare:
    1) 90 shares using key ‘M’, 110 shares using key ‘C’ with combined sale amount
    OR
    2) 90 shares using key ‘M’ , 50 shares using key ‘C’, and another separate entry of 60 shares using key ‘C’
    ??

    I’ll probably go with (2) as more detailed, but maybe I don’t need to and (1) is sufficient?

    I have groupped share buys together (eg buy 20, buy 30, buy 20 = one entry of 70 ‘A’) as the price used on the 720 form is on the same day (31Dec13), and I dont need to specify the purchase date.

    All very confusing to know how to do this correctly. Any suggestions greatly appreciated.

    Thanks,
    Monica.

  2. karen dijo:

    hi,

    I declared on the 720, a house in the UK last year which myself and my brother inherited from our mother. We put the vaule of the property at 220,000 pounds. The house has now been sold for 190,000 pounds and the money split 50/50. This money is now held in UK banks. Do we need to fill out the 720 again? We have been heard we do and we need to declare how much we paid for the property and how much we sold it for If so what value do we put on how much we paid for the property?

  3. Oliver dijo:

    Thank you for this informative post.

    I am curious about this paragraph:

    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 €.

    Last year I submitted the 720 form declaring a property in the UK that was worth 240,000 EUR. Today, the property is worth more or less the same (perhaps slightly less due to exchange rate movement).

    Do I need to submit another 720 form this year or not? I have no other assets to declare besides the property which was already declared.

    Many thanks!

  4. elizabeth dijo:

    i have uk passport. i work in spain and pay taxes in spain. my elderly parents in uk have just gifted their house to my sister and myself in equal parts in october 2013. my parents have use of the house (uso fructo).the total value of the house is 250,000 euros.
    do i have to declare on modelo 720 my 50% share of the house in the UK?
    thank-you. elizabeth

  5. christine and irving duncan dijo:

    Can you explain what the Article 4 is and how do I get onto it to be able to read it.
    As double residence do I have to pay the wealth tax on my property and also would we be liable for Spanish Inheritance Tax.
    Thank you for your help so far

    • DTA, will tell you, where are you resident. Wealth tax is not the same as Inheritance Tax.

      this is the article 4 (the one from UK-Spain DTA):

      Article 4 Fiscal Domicile
      (1) For the purposes of this Convention, the term “resident of a Contracting State” means, subject to the provisions of paragraphs (2) and (3) of this Article, any person who, under the law of that State, is liable to taxation therein by reason of his domicile, residence, place of management or any other criterion of a similar nature; the term does not include any individual who is liable to tax in that Contracting State only if he derives income from sources therein. The terms “resident of the United Kingdom” and “resident of Spain” shall be construed accordingly.
      (2) Where by reason of the provisions of paragraph (1) of this Article an individual is a resident of both Contracting States, then his status shall be determined in accordance with the following rules:
      (a) He shall be deemed to be a resident of the Contracting State in which he has a permanent home available to him. If he has a permanent home available to him in both Contracting States, he shall be deemed to be a resident of the Contracting State with which his personal and economic relations are closer (centre of vital interests);
      (b) If the Contracting State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either Contracting State, he shall be deemed to be a resident of the Contracting State in which he has an habitual abode;
      (c) If he has an habitual abode in both Contracting States or in neither of them, he shall be deemed to be a resident of the Contracting State of which he is a national;
      (d) If he is a national of both Contracting States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.
      (3) Where by reason of the provisions of paragraph (1) of this Article a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident of the Contracting State in which its place of effective management is situated.

  6. ben unwin dijo:

    Dear Javier,

    A couple of questions regarding the 720 declaration of bank accounts. Firstly, is it necessary to declare all bank accounts if the cumulative amount is >E50K? Does this include empty accounts and credit card accounts, and if so how to report debts?

    Also the address of the bank, is this the headquarters of the bank or the local branch that I am registered with?

    Which sub-catogary do ISAs come under?

    Finally some savings accounts do not have IBANS only account numbers, how can we report them?

    Many thanks for your invaluable help

    • Includes empty accounts.
      Credit card accounts are not declared as long as you cannot use them. I mean you do not declare them if they are just an instrumental vehicle for the bank regarding your credit card, and they ONLY reflect your use of the credit card.

      Address is headquarters

      IRA, most of the cases are C1.

      Any account in Europe for sure has IBAN. Ofshore or out of Europe may be has not IBAN, set code O, and type your account number.

  7. christine and irving duncan dijo:

    Thank you for your reply, could you please clarify what article 4 is and how do I get onto it. Does having double residence mean I have to pay the wealth tax on my property like a non-resident has to . Also if anything happened to one of us would the other partner have to pay inheritance tax.
    Christine

  8. christine and irving duncan dijo:

    Even though we pay our taxes in England we do live here most of the time and have our residencia, If we were non-residents we would have to leave the country for six months at a time, although England pays for our health care over here as residents.
    So what are we according to the 720 (resident or non-resident).
    We have all the proof we need to prove we pay our tax in England. Please help
    Christine Duncan

    • In case of conflict, because of a double residence, what applies is the double taxation agreement between UK and Spain, instead of their national laws. Check article 4.

      And get your tax residence certificate from HMRC. With this you will have no problem, living in Spain, and being tax resident in UK.

  9. Tony dijo:

    Hi Javier,

    We have been living in Spain since 2007 and have owned a property here since that year. Our only incomes are our UK state pensions, a Civil Service Pension and my wife’s small private company pension. All these pensions are taxed in UK. Although we both have Residencia, we are not tax residents.
    My wife’s father (who lived in the UK) died and she inherited the proceeds of his UK estate in January 2013 which was in excess of £50,000. From the proceeds plus a small loan, we bought a property for £95,000 which is now rented.
    We have been told that this UK property must be declared on form 720 but would like to know if we are liable to Spanish taxes on this inheritance as we do not have any taxable income in Spain.

    • If you are not tax residents in Spain, you do not need to fill form 720, neither to pay inheritance tax in Spain.

      Most important is to collect the prove of your not residency in Spain: a certificate of tax residence issued by HMRC

  10. christine and irving duncan dijo:

    we are tax resident in England we do not earn anything in Spain, we are both pensioners we do own our own property here. do we need to fill in the 720 form. we have all the proof we need to show we do pay our tax in England,the only thing we pay here is the ibi
    on the property, we do have our nie as we live here most of the time

    • As not residents you need to pay IBI and form 210, for your real estate in Spain, once per year, amount will be 0,27% of cadaster value.

      Complete, your proof of not residence asking HMRC to issue a certificate of tax residence in UK.

    • michael dijo:

      Hi,
      Like you i found our selvees in the same position.
      I think what the reply missed out for you is that if you spend more than 183 days a year out of the uk you are considered resident in your place of abode.

      Example if you live in Spain most of the year you have to add up your days out of the UK, to prove you are a resident. So if in Spain for 184 days you are considered under the tax laws to be a tax resident of Spain and are due to pay tax in Spain .
      We went onto Spanish tax last year both ocupational pensions none workers. uk pension now paid gross.
      It was not that bad to do with the help of a proffesional tax adviser. Amount paid about the same, but peace of mind is worth a lot.
      It was also usefull to get onto Spanish medical service, and if either of you became ill and needed a regular percription the amount you pay is dictated by your fiscal number, and your ability to pay.
      Any one else has to pay full amount ?

  11. George Stephan dijo:

    My wife and I are residents of Spain of British Nationality. We have a current joint account with a UK bank. Our joint UK pension is paid in that account. That account stood at 31 December at less than 70,000 GBP. We declare our income to Agencia tributaria in Spain each yearand pay tax.
    As joint account holders is 70,000 GBP divided by 2 which is less than 50,000 Pounds. We have no other assets in the UK or elsewhere.
    Please help

    • 50.000 limit, for form 720 is calculated adding total value of assets.
      But is NOT calculated adding your part in each asset.

      Both needs to present form 720.
      Do not worry for filling late, may be a fine of 1.500 could be issued. But for all the ones I filled late, until now nobody has yet received a fine, and same of them were fill 10 months ago.

  12. Toni Atkinson dijo:

    Hi Javier,

    Can you advise if I am a resident of Spain (with a non-lucrative resident visa – meaning I am not allowed to work here, but can live here with a registered NIE), am I required to file a 720? I have no assets here and transfer money from Australia monthly to pay my living expenses. I am registered as an Australian resident for tax purposes.

    Thank you,
    Toni

    • As tax resident in Australia, you are non tax resident in Spain.
      But as you are living most of the year in Spain, for avoiding Spain to presume that you are tax resident in Spain, will be useful to collect your prove of residence in Australia: certificate of tax residence in Australia.
      Only tax residents in Spain are required to fill form 720

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