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.
Hello,
If the holding value on an account is zero during all the whole reporting year, is it still required to report it in the 720 form?
Is the a minimum value under which accounts do not need to be reported?
Thanks in advance
Dwight
If you never reported, joint balance of all accounts should be over 50.000 euros, under that limit you do not need to report any.
If you already reported you will need to report again if by the end of any year, joint total balance increased by more than 20.000 over amount declared previously.
Thanks for the reply, I had thought the figure would be higher, is your assessment of it not being higher tan 6750 euros because i had the bond for 20 years? I just thought the Hacienda would apply 27% capital gains tax on the 100,000 euros gain?
Yes. Your insance is prior to new regulation from 20th January 2006, so you still benefit from old regulation that allows you to have exempt 75% of insurance profit and only pay taxes for the rest 100.000 x (1 – 75%) x 27% = 6.750. And sayd, not more, because if that insurance contract was signed before 31st Dic 1994, you will have extra reductions.
I had an investment bond with a UK life company for 20 years. The last 12 years however i have been living in Spain and declared it on the Modelo 720 this year. However i have now surrendered the bond and the Life company tell me i have a 100,000 euro Gain over the 20 year period. What are my tax liabilties in Spain? Thanks
Tax for that, will no be over 6.750 euros.
Como no tengo mas de 700,000 euros en activos puedo considerar que esta declaración no tiene implicación fiscal?
Brenda, al no tener más de 700.000 euros en activos entre España y el extranjero, no tienes obligación de presentar declaración de patrimonio.
Pero si tus activos generan rentas (dividendos, intereses, ganancias), estas debes declararlas en la declaración de renta.
Hi Javier,
This is a very helpful source of information. Many thanks.
A question please.
I understand as a Spanish resident I do not declare UK Pensions on my 720 (I am not drawing from these). Do I declare these Pensions on my Wealth Tax (Borrador) declaration?
Yes, pensions payd by the UK Estate, are not declared. Neither on wealth tax.
This not apply for private pensions
Hi JAvier,
Thank you for being the first to highlight the difference between UK State and private pensions. I have a pension plan through my UK employer who is not the State. So this needs declaring.
Assuming the 720, Euro 50,000 threshold, has been reached. Are the only items on the Wealth Tax declaration but not on the 720 declaration, assets held in Spain?
Many thanks
Andy
As long as you are contributing, there is not need to declare.
Only when you become beneficiary of pensión plan (collecting money from it) you will need to declare it in form 720. And income: in individual income tax form.
Assets held in Spain are not declared in form 720
Good morning Javier,
A question please. I am resident in Spain and have a private loan of Euro 200.000 to a non listed UK company. The company pays me a fixed interest rate and there is a fixed date for the capital repayment back to me.
Should this “asset” of Euro 200.000 be declared on the 720 or Wealth tax? What category may it fall under?
Many thanks in advance
Andy
In form 720 only loans, instrumented as tradable assets (bonds…), must be declared.
Private loans are never declared.
However, in Wealth tax it should be declared.
Additionally, if you are linked to the company, as administrator, stakeholder, or relative of any of those, the operation should be proved that was valued at market interest rate.
Also if you are partner of that company, subcapitalization anti-abuse rule applies. This will mean that part of those interests can be taxed, not at the savings rate, but at general rate.
Thanks Javier,
Apparently I am ‘fiscally registered’ in Spain but I have conflicting advice on whether I need to submit a tax form! The Hacienda and my assessor say “No”.
What portion of the profit would be taxed bearing in mind I have only been resident for 3 years?
The UK Tax Office say I will not be subject to Capital Gains Tax in the UK.
Would I be better leaving Spain at the end of this year(and renouncing my Spanish residency) and remaining out of Spain for more than 183 days next year when I sell it or do I tell the Hacienda I am non-resident and pay the back-dated non-resident tax on my house in Spain which is about 200 euros a year.
To live more tan 183 days in a country is one of the reasons that will make you tax resident in that conuntry. But not the only one.
You should analize propperly, your tax residence issue and check your choices for changing it.
Tax rate in the house´s profit, is what I told you in the first answer.
Hello Javier,
I became resident in Spain in 2011 but receive my Government pension in UK where it is taxed. I also receive rental income from my house in the UK which is also taxed .
I earn and keep no money I Spain but own a house there.
I declared my house on the Form 720 in the UK which I bought 30 years ago. I am now thinking of selling it. My assessor tells me I do not have to submit a tax form to the Hacienda and the Hacienda have also told me this every year since I took Residency.
If I decide to sell my UK house next year would it be liable to Spanish Capital Gains Tax if I am still a resident of Spain
If you are tax resident in a country, you pay taxes in that country for your worldwide income and capital gain.
And in the country where you are NON tax resident, you pay taxes only for income and gains obtained in that country.
I think gain in your house in UK, could be exempt in UK. But in Spain will be taxed.
Good news is that gain in your house:
1.- acquisition value will be inflation corrected by approx 30%
2.- gain will be taxed approx at 6% o 7% tax rate. Because you bought your house before 1986
Thanks for all the advice. You have given a link for the official exchange rates of many currencies. The Colombian peso is not included on the list. Is there somewhere I can find the official rate?
As there is not oficial Exchange rate you can take market rate on 31st dicember of the year to declare.
Thankyou for the response. Yes, the Modelo 720 was done as assets are over €50,000.
So, if the pension income is not used and this makes the bank balance grow by more than €20,000 per year i have to do a Modelo 720 every year even though the origin of income is from a pension?
In that case, you will need to fill form 720 every year.
But only for the accounts, as is the part where you have an increase over 20.000
Declaration for insurance, stocks… does not to be declared as this part decreses.
Regarding private pension income that is already taxed in the UK. If this income is more than €20,000 per year and is not being spent therefore making my capital grow by more than €20,000 , would i have to still do a Modelo 720?
As you talk about 20.000 euros, I asume that you already declared 720 with that pension.
Income will go to a bank account, that you do not need to declare again, if increase in balance do not exceed what was declared.
First I want to thank you for a very informative site. Sencondly I would like to ask for your advice. I have worked and lived in Spain durimg the period 2006-2011 as tax non resident (expat contract/ special tax regime) and also in 2012 jan-july as tax resident. In august 2012 I moved to Japan. I will now probably return to Spain in jan 2014. I was initially worngly informed by my tax gestor that I would continue as a tax non resident also in 2012. He then informed me the I would be considered as a tax resident in 2012. I realise now that I should have filed a model 720 but as I am to late I would like to ask for advice on the best way to proceed.
Thank you in advance
Dwight
After the arrival year, and the 5 following year, you become fully tax resident in Spain. That happened in 2012.
So, for 2012, you need to check if you are resident or not. In Spain you cannot be resident part of the year: either you are considered resident the full year, either you are not resident the whole year, even if you lived part of the year in Spain.
From your information you lived in Spain more than half of the year, so seems that you are resident the hole 2012, unless you prove the opposite.
To prove your non residence in 2012, you will need to prove your tax residence in other country. In your case: in Japan.
So if you get a certificate of tax residence in Japan for 2012, you will not be considered resident in Spain, under what is stated in article 4 of the double taxation agreement between Japan and Spain.
Otherwise you should fill form 720, and Renta for 2012.
How to get tax residence certificate in Japan:There are no ready-made forms. In order apply for a certificate of residence; you should submit to the tax authorities documents:
- a copy of the registration card
- a copy of the Japanese tax return
Thanks again for your very good answers.
If we finally decide to declare the 210 forms for 2012, what is the worse case scenario if we do not declare the four years before 2012? Will we be fined, or do they just ask us to declare back four years if they find out?
And, if we don’t declare at all, and they find out, what can happen? A fine?
I wish to know all about it before filling the documents!
If you want to know amount to pay every year:
1.- find within your bank documents “Recibo IBI”, in that bill will show “Valor Catastral”.
2.- Multiply “Valor Catastral” by 0,27225%; that will be tax to pay.
This amounts paid in Spain can be deducted from income tax to pay in Norway.
Worst scenario will be: Spain considering you as resident, so you will be forced to pay taxes for your worldwide income in Spain. For now you are “protected”, but as occurs in Norway, Tax Authorities may verify requirements to check your real residence.
Worst Scenario as nonresident in Spain: will be taxes for not expired years. Cost of this risk you can estimate by adding taxes for every year, there will be also interests for paying late (at 5%). Penalty will be 50% of taxes not paid. Penalty will not apply if you pay this taxes before you are required.
If you do not pay those are latent risks until a tax of each year expires.