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.
Thank you!
We already have the certificate to prove our non tax-resisdence in Spain.
1) Do we need to go somewhere to say we are not resident (we applied for residency years ago, but we were not aware that we only could be resident in one country at the time), or is the certificate to prove our non tax-residence enough?
2) You still mean we have to declare in both countries, both in Spain (210) and in Norway as we already do?
3) If the answer is yes, we only declare the last year and the years to come, we do not declare many years back, is that right?
Our properties are not rented, they are for family and friends purpose.
4) Is it easy to fill the forms, or do we need to have a gestor to fill them every year?
The time for filling form 030 for changing residence status is one month after status changed.
Now is better not to do anything.
As long as you already have tax residence certificate from Norway, you do not need to warry.
As resident in Norway you need to declare in Norway your wolrdwide income.
As well as in every country that you have income, you should declare in that country, but only income originated in that country.
This situation, is what may produce double taxation. And that is the reason why Agreements for avoiding double taxation are signed.
Taxes in Spain expires after 4 year since deadline for filling. So you Tax Authority can claim years 2008, 2009, 2010 and 2011. Deadline for 2012 is Dec 31st 2013. And that day will expire 2012.
You can fill yourself, is not difficult. Or you can ask any tax advisor or gestor. Or you can ask us, we bill 50€ for each form 210.
Hello Javier, some friends rcommended your site, and I have some questions.
We have been residents in Spain for some years, due to an error, we never gave up our residency in Norway, and we will not do so. We spend approx half year in Spain and half in Norway, and we wish to continue as residents of Norway due to medical needs there.
We asked a gestor about the Modelo 720, and he said we do not have to declare this Modelo because we do not wish to be resident. What do we do with our residencia now, do we have to do a “baja”, – and how is that done, and what will happen to our accounts etc?
The gestor says we have to present a Modelo 220 for our properties in Spain, but as far as I know, very few expaths do declare this model. We have had our house since 2001, and also two apartments since late 2009, what happens if we don’t declare Modelo 220? Is there a fine?
We do not work in Spain, but I have a registered company in Norway, and we declare for the company and for our three Spanish properties in Norway. For this I have got a statement from the Norwegian tax office.
Thank you,
Kakspa
If you don’t want to be considered resident in Spain, you should be able to prove that you are tax resident in Norway.
For precaution reasons I should advise to ask for this certificate in Norway, in reference to Double Taxation Agreement between Norway and Spain.
With this certificate you will be able to prove your non tax-residence in Spain.
As non-resident
1.- You don’t need to fill form 720.
2.- But you need to fill form 210, one for each real estate in Spain. For the ones non rented is filled once per year. For the rented ones is filled during the 20 days after the end of every term.
Until now, was easy to play this game, not declaring in Spain, and no one will question whether you don’t do it because you are not resident or because are resident but you don’t reach the limit for filling.
But now AEAT and Skatteetaten are exchanging tax information. So now, you should declare in the proper way.
Hola Javier,
When declaring a house, you write “the value of acquisition.”
Does this refer to the actual price intially paid when buying the house, or the value
of the house on the market today: For instance, a house bought many years ago for
€ 35000.– would now have a value of ca €150000,–
In your case you should declare for 35.000 euros.
Hi Javier,
Am I correct in assuming that if overseas assets amount to less than 50.000 euros there is no requirment to complete/file a 720?
Best wishes
Bob.
Yes, You right.
Hello Javier, I’ve been living and working in Spain since 2008. I have a flat in UK that I’ve never declared as it wasn’t let out. I know would like to sell it and transfer the money to Spain in order to buy a flat. What can I do to rectify this situation? Do I need to pay a fine? Thank you
It is simple. Present complementarias for the last four years, paying the tax difference.
There will be not fine, just interest for paying late at 5%.
Hello Javier,
I have a brokerage account in a bank in Canada that currently holds one stock and some cash. There is only one account number that references everything. My gestor has declared it on my 720 as a type ‘C’ subtype ’5′ other account. The total value of the stock and cash combined was declared. This stock has given dividends and I have declared them on my 2012 renta. Is there a potential problem if the hacienda does a cross check with my 720 and does not find a stock declared using ‘I’ code?
thank you,
Shane
I prefer C5 for liquidity and V1 for stock.
But dont see potential problem with it
Hi Javier, I asked this before but I guess you were too busy with the 720 deadline.
If this isn’t the right blog can you point me to one please?
Our group of friends has wildly different ideas on tax allowances for pensioners but can’t produce proof.
We get (approx) 5k personal allowance
2.4- 4k earned income allowance (the larger the pension the lower the allowance)
3.4k joint declaration allowance
First 1.5 k of divident income tax free
This is what our gestor has claimed for us on our tax return.
I know there are all sorts of other things (like tax relief on buying your house – now stopped) But in general terms are there any other allowances on Pension income.?
You stated most common allowances.
Handicaped will have up to 7000
Capital gain for over 65 is exempt for permanent residence
Pension plans reduce your taxable pension income
…
When you say ‘pension plans reduce your taxable income’ do you mean annuities? Our income is from state pensions and I have an occupational pension but it isn’t an annuity – my understanding is that it is treated as ‘earned income’.
All this income in Spain is treated as “wages income”. And contributions to pension plans (you can contribute even if you are already retired) deduct from wages income.
Stocks and Shares Isa held in Fidelity Funds Network Account would surely go in Section ‘I’. If held in non income bearing stock and not being sold surely the difference between the year end valuations would not be taxable only any gain made when stock sold?
Stocks and shares Isa held in same Fidelity Funds Network paying dividends are obviously declared in Spain.
I have declared all dividends on these since becoming tax resident
Capital gains on your invesment funds, will be declared in Spain when you sell them.
Thanks for your reply – I am now somewhat confused – I did in fact reply to this sometime ago – but on coming back in – to check for a reply – I cannot see my comment on here – think I may have checked or unchecked the buttons incorrectly. Anyway I am also confused as your reply to me seems to contradict what you said to JMB about ISA declaration at the end of April. My position is that my husband and I have been tax resident since we came here permanently in January 2007. we both had Maxi Stocks and Share ISAs which we knew would not be tax free in Spain and that we could not invest in any more ISAs whilst tax resident in Spain – the funds within each of our Maxi Isas were both income producing and non income producing so we always declared the Dividend Income on our annual Renta Declaration – done by an assessoria and as you now confirm expected the others would attract Capital Gains Tax when sold and surely not be taxed until that time. Although it is not possible to add to our Isas whilst non UK resident it is allowed to switch the investments within an ISA account.
This we have done My husband now has all his in non income producing and has therefore not had any dividend income since his declaration for 2008. His Account is with Fidelity Fund Network. I have a Fidelity Fund also and just one of the holdings is producing Dividend Income and the rest are not.
I also have Maxi Isas in a Cofunds Account which had Dividend Income (all declared) but this has also been switched to all non Income and again no dividend income since 2008. We also hold Sterling OffShore Savings accounts with Lloyds TSB Gibraltar and Lloyds TSB Isle of Man (opened since we arrived in Spain with Halifax International which has now become LLoyds TSB) we have always declared all the interest earned on these accounts. we have a UK current account which used to earn a very small amount of interest – again we always declared that interest – but the bank stopped paying interest on current accounts a few years ago!. Because of the foregoing our Gestor says it is not necessary to submit 720 because we can prove we have declared everything. However since our Offshore accounts (Although mostly joint) are over €50000. my Maxi Isas are over €50000 as are my husband’s maybe we should. My big worry is this question of the need to have declared the difference in the value of the Isas between one year and the next as income – but your reply seems to say Not necessary?
A lot of people in our area have only just heard about the 720 declaration and sorting this out is a nightmare – I only found out when I went to my tax man to make the declarations for renta in the middle of May!!
There is a thin line, that will mean to be taxed or not.
If you sell investment funds, money appears in your account and with that money you buy another fund: you will be taxed.
But if somehow you ask your financial institution to switch from one fund to another without being a money movement in your bank account, capital gain is not taxed until the final sell of funds, with money appearing in your bank account.
This rule does not apply for funds in tax paradises.
But interest in bank accounts in tax paradises has not this problem.
The difference in value of your ISA year to year must be declared only if they are invested in funds in tax paradises.
If you have other questions you can also call me to my mobile.
Hola Javier
Well I didn’t manage to get our deckarations done to-day as Gestor was called away urgently so will be doing it next week. Further to phone call forgot to ask you exactly what other information will be needed under the “I” for my ISA Investment Funds besides ISIN numbers name of Fund and value at 31st December. Do we have to give acquisition date? . Surely we do not have to give acquisition prices since the idea is to establish value of assets at 31 December and thereafter only if an increase of €20,000. or more is made in any following year.
Once again your help would be much appreciated.
Acquisition Price for funds and shares is not needed.
I have just been reading your comments regarding ISAs to JMB at the end of April – and am awaiting a response from you to my query on 29th May.
I knew from the start that my Isa income would be taxable in Spain and with regard to Maxi Isas declared the Dividends on my annual tax declaration as did my husband – but not all the holdings in the Isa produce income most of them are capital growth. Since although we cannot add to Isas whilst non residents the assets held within them can still be switched and All my husband’s are now capital growth only. and I have only one holding which pays dividends. Our Gestor says that since we have always declared all of our savings income when it was paid – (this incidentally includes offshore accounts with Lloyds TSB International Gibraltar and Isle of Man we can prove the disclosure so we do not have to fill in 720 . However since you say that we should have declared the annual difference of value of the Isa as taxable saving we will not have paid the correct tax – so should presumably get on and ask him to make the declaration – both mine and my husbands exceeeds €50000.
I do not agree with yogur gestor, you should fill form 720.
ISA is a UK tax vehicle, in Spain you do not declare ISA itshelf you declare its assets.
For investment funda in fiscal paradises there is a special regulation. Latent gains are declares yearly and when finally you sell taxes paid previous years are deducted
Hi Javier
Many thanks for your reply to my rambling messages!! I think I may have confused you slightly by trying to explain everything. I assume by fiscal paradise you mean what I would call tax havens ie my offshore accounts? In fact these are all straight forward savings accounts and I am sure they will go in the bank account section – we only started using offshore when we came to Spain and have always declared the interest on them every year. Our ISAs are all held with UK FundsNetwork and Cofunds in the UK and are all Investment Funds so can I assume that I do in fact treat them as section “I” assets as you stated in an earlier reply to me. Obviously since we have not been able to invest in ISAs since we left UK they are held in UK and not in offshore tax haven. I will certainly get my gestor to complete forms 720 for us – are we going to get fined for late disclosure? If so – presumably we will have nothing left?!!!!
\thanks for your ongoing advice
In Spain is considered fiscal Paradise, any offshore country that has not signed at least 12 agreements with other counties with clause for exchanging tax information.
For filling late you will have a fine of 1.500 euros.
As long as vehicle is an Investment fund, code will be “I”.
Changes of value in Investment funds are not taxed until you sell them.
But dividends are taxed in the tax year you received them. In Spain, dividends from stocks or shares are tax exempt until 1.500 euro. This exemption does not apply to dividends from investment funds.
After living in Portugal for five years, we moved to Spain in November 2012 and are now Spanish residents. We assume that we will become fiscally resident in Spain in July 2013 under the 183 day rule and therefore submit tax returns plus form 720 in 2014 for the year ended 31st December 2013. We still own a house in Portugal which was our main residence and which we are trying to sell but if it is not sold in 2013 it will have to be declared in the 720 form along with other money which is still in Portugal. We bought the house for 105,000 euros and hope to sell it for about 150,000 euros after the deduction of agent’s commission etc. We also spent about 40,000 euros on the house but until it sells do not know if the Portuguese tax authorities will agree for this amount to be taken into account when capital gains tax is assessed. If they do not agree to 40,000 euros of expenditure, we will be liable for capital gains tax in Portugal on the 45,000 euros profit which of course we will pay. Our question is will we also be liable for any capital gains tax in Spain on the 45,000 euros profit when it is shown in any future form 720 declaration after any future sale?
Hoping you can help in this matter and if you need any other information please let us know.
In Spain, as resident, you can deduct from capital gains, investment done in the property, as long as you have invoices… that will prove such investment. And acquisition Price will be inflation adjusted for determining capital gain.
Do you know what is the situation with the declaration 720 in Gizpukoa? I have read that they have not yet passed into law and so have not yet filled out the declaration becuase of this.
Declaration is mandatory. But, form and dates for declaring are not yet aproved.
Good afternoon,
I only heard about the new law today(may21st) and am panicking a bit! We live in Tenerife and don’t work. I am retired, we live on my pension. We have a property in UK but do not recieve an income from it. The only money we have banked is to pay off the mortgage in a few years. We did not sell the house because it had lost so much value in the crisis. We were hoping things might improve!
What should we do? We can’t afford to pay any tax, let alone fines plus we’ve missed the deadline anyway.
Sue. Are you tax resident in Spain?
If not you dont need to feel this form.
What is the “Valor Catastral” in the UK and where can I find it. I am doing the forms in Navarra so I still have a bit of time.
Also I have an offset mortgage account, and the bank account linked to it has more than 50.000 euros, but of course if there to offset the mortgage, do I need to declare it?.
Thanks.
Paula
In form 720, value to declare is acquisition value, for this form you don’t need valor catastral at all.
Offset mortgage account, must be declared in form 720. The offset mortgage account is linked to your mortgage loan.
But the big advantage of offset mortgage account is tax benefit. This design, linking to loan, Works in every country. The reason is that instead of obtaining interest, you pay less interest on the loan.