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 Javier,
I have read all of your replies to various questions concerning the 720 form.
Concerning the fiscal information (NIF field) on the 720 form. For example, Canadain Banks do not have a NIF number. Is this field mandatory?
What information should I enter if my bank in Canada does not have a NIF?
Not, that field is not mandatory.
http://www.agenciatributaria.es/AEAT.internet/Inicio_es_ES/La_Agencia_Tributaria/Campanas/Declaraciones_informativas_2012/_INFORMACION/Ayuda/Preguntas_frecuentes__Modelo_720/Cuestiones_sobre_la_cumplimentacion_del_modelo/_Que_campos_son_especificamente_obligatorios_en_el_caso_de_que_se_declaren_cuentas___articulo_42_bis___C_.shtml
Hi Javier, thanks for all the help your blog is giving. So many of us are worried about this – not worried that we have to declare but worried about getting it wrong!
I think I am now clear for this year. We have no property outside Spain, our income is from State and occupational pensions. We have only a small amount (<5k) in shares and bonds, but we do have one joint bank account which individually is over 50k and other, smaller, accounts. Though most of these are held jointly, so we do not have more than 50k total each, our understanding is that we must complete a 720 for all bank accounts , but not the other two sections.
Is this correct?
My thoughts are now turning to next year, as we are in the process of restructuring our money.
I understand we only declare again if 'something' increases by 20k or more – but what, exactly, is that 'something'. Is it the overall sum, the sum in one bank account? If it is the sum in one bank account is that only an account that was already over 50k?
For example, we have one joint account with 55k in it, another with 10k in it, if we moved 30k from the first to the second would we have to complete 720 next year? Also, is the 20k counted at any time in the year or only in the last quarter or at year end?
Finally, if we put money into bonds, which we are thinking of doing, will we have to declare that section next year if we have more than 50k in bonds, or if the amount we have in bonds goes up by more that 20k in the year? e.g. what if we put 30k into bonds now?
best regards
Margaret
As you have a joint bank account over 50.000 you need to feel all bank accounts.
And other sections with information you provided, you don’t need to fill.
Pensions in general are not declared. Check this for pensions: http://jullastres.es/wordpress/?p=764
Next year you will need to declare if:
Real Estate owned abroad exceeds 50.000
Bonds stock funds… exceeds 50.000
Bank accounts if INCRESES BY 20.000 over previously declared total balance, because you already declared this section.
Thank you very very very much!!
Hi Javier
Great Blog.
I am right in thinking that UK Premium bonds from the UK government owned National Savings and Investments would be declared under section 2I as would a fixed term investment bond with returns linked to the UK FTSE 100 contracted through a UK bank (as broker) but ultimately invested with a UK insurance company?
Also that, as my wife’s and my overseas bank accounts and bond investments are in joint names (50% ownership), even though no one investment or bank account holds 50,000€ and our individual ownership of each asset group totals less than 50,000€, we still need to declare all our overseas accounts and investments (including accounts that only hold 1€ to “keep them open”) because the total of each asset group held jointly exceeds 50,000€.
For example, say we have three overseas joint accounts of which we both own 50%, one account with 24,000€ in it; one with 30,000€ in it; and the other with 2€ in it – we need to make a declaration even though no one account has 50,000€ in it, the total of individual ownership is less than 50,000€, but because the total of the joint accounts exceeds 50,000€. We each have to declare the three individual accounts totalling 54,002€ with 50% ownership – or am I wrong?
Steve,
Bonds: if you have a contract with insurance company, probably it will be treated for form 720 as insurance (like a unit-linked). But if the Registry References of the bonds are under your name (not on the name of the insurance company) should be declared as bonds (cesiones de capitales a terceros).
If the group assets exceeds in value 50.000, you need to declare all assets in the group, including even assets for 1 euro.
In your example, total amount in accounts exceeds 50.000, so you need to declare de 3 accounts. Your part in the accounts adds 27.000,50 euros, but obligation is for the value of the assets where you participate, which is 54.001, so you and your spouse need to fill form 720
Hi Javier,
I have a house with acquisition value over €50,000.
I rent it out for a monthly rent of less than €500 per month.
I am paying a mortgage on the house and I wonder if the amount I still have to pay on the mortgage impacts what I have to declare at all.
Can you tell me what I have to declare? Is it just for the value of the house that it was on the day I bought it or something else as well?
I’m unsure the amount I have to declare as well. If the house cost €100,000 for example, can you tell me what I would have to declare in my situation?
Thanks a lot
For form 720, mortgage is not included. Value to declare is acquisiton Price.
For individual income tax, interests deducts from rental income, as well as other expenses for the property.
Hi Javier,
So, with regard to overseas property/real estate.
All overseas property/real estate must be declared on the 720, even when a overseas property/real estate was aquired when not a Spanish taxpayer.
…even when the overseas property/real estate was aquired with “tax paid” monies in that overseas country ?
1. I only rent a place here in Spain whilst I work and pay income tax on my earnings.
2. My “sole property” is my “overseas property/real estate” does not have a rental profit/income.
3. The property is in “negative equity”.
Therefore, should I inform my mortgage company that I have declared my property on the Spanish 720….as Spanish tax authorities could apply a “future property taxes” or penalties to me, which would mean I may I would not be able to meet mortgage payments resulting in a loss of my house ?
(in the small print of my mortgage I have to declare interests by others in the property title).
Yes, overseas property must be informed in form 720.
For your individual income tax you can state that your permanent house is the house abroad, so you will not pay taxes on it.
Mortgage company, knows that in any country you are resident you will be taxed for capital gains in your house when you sell it, I think you don’t need to inform them.
Hi Javier,
Can you help me out?
I moved to Spain in October 2011. I have a house with acquisition value of £110.000 but my mortgage is still over £90.000.
I am renting it out for £380 per month.
Can you tell me what I have to declare? I’m not sure what to do. Does the fact that I have a mortgage matter?
Do I have to declare any amount due to the acquisition value of the house?
Do I have to declare anything for the total amount of rent? I already declare the rent to the UK, so I’m getting worried about getting taxed twice.
Would really appreciate your help with this.
Thank you so much!
Markus
Markus:
You need to fill form 720, for the house. Mortgage is not declared in this form. Acquisition value, is the value to declare in this form.
Rental income, must be declared un your IRPF( individual income tax). For avoiding double taxation you are allowed to deduct UK tax, from the amount to pay in taxes in Spain.
Javier,
Is this general or just on rental? I thought we had to pay the tax in Spain and claim it back from the UK? I’ve filled out double taxation forms for my main income so don’t pay tax in the UK but for some things (small amounts of bank interest for example) I just pay tax in both countries as its not worth the trouble for a few pounds.
In UK you can claim back withholding that exceeds 15% on interest and dividends.
In Spain, when you pay individual income tax, from the amount to pay you will deduct what you paid in UK, as deducting for international double taxation. In this way you avoid being double taxed.
Javier. Further to my earlier query, can you advise what the calculator is for submitting pension information on Modelo 720. ie-: from GBP to Euros etc.
Derek
The oficial Exchange rate for EUR/GBP, from European Central Bank on Dicember 31st 2012, that was 0.8161
Javier. You are advising people that occupational pensions paid in the UK including final salary schemes are not needed to be declared on Modelo 720 even if they are declared to the spanish tax authorities. This according to the latest information given to me is not correct. Can you confirm which is the procedure.
Derek
You dont need to inform about pensión scheme, in form 720
But you need to declare your income from it, in your individual income tax.
Hi,
I am trying to find Form 720 to complete online. Can you please send me limnk.
Many Thanks
Eric Berg
https://www.agenciatributaria.gob.es/AEAT.sede/tramitacion/GI34.shtml
Hi Javier,
Reference to my last email (which i rambled a bit)
My question is:
We have bank acounts in the uk that are more than the €50k so we will need to be declared them. But what happens then, as all of them were reinvestments from expired investments. ¿Are we going to need to have proof for all prevous transactions and indeed proof of where the money origially came from? (which in our case was from inheritance while residence in the uk from some 10 years ago)
In form 720, you will declare accounts open on December 31th 2012. And the accounts closed during 2012. No document will be attached to form 720; but you should save this documents, in case you were required.
Fantastic blog by the way. Great work.
Re Modelo 720
You replied to “geoffrey dyson” (marzo 10, 2013 en 5:52 pm) indicating that he would have to ….
A. Declare his 150.000 property on the 720 and
B. pay a “presumed” income tax also (Value X 50% X 1.1% converted to Euros ).
However, is it not true (with regard to the 720 and “penalties”) that…..
A house worth €150,000 is not declared in year 2012 return. If this is found out in year 2014 the total to be paid including interest and penalties in 2014 would be €95,931.20.
This will only be avoided if the taxpayer can prove that those rights or assets were acquired:
- With declared income, which would include income regularized by “special tax return” regulated in the first additional provision of Royal Decree-Law 12/2012, also known as “tax amnesty”.
- With income earned in tax years in which the tax payer was not a taxpayer in Spain of the Personal Income Tax respectively.
Taking the last paragraph, if “geoffrey dyson” had bought his property whilst he was in the U.K. and was a U.K. taxpayer and the monies he used were therefore declared and “tax paid” in the U.K., he WOULD NOT need to declare his property on the 720 ?
And that (with regard “presumed income tax”) if his mortgage (assuming there is one) was not covered by his rental received, he would not be liable for income tax at all ?
There are two issues:
1.- Form 720. If you don’t declare real estate, penalty will be 10.000 euros.
You must declare all your assets abroad if you were Spanish resident year 2012.
2.- Income Tax. Because real estate was not declared in form 720, Tax Authority is allowed to presume than 100% of the real estate value is a capital gain; unless you can probe that money used to buy property arises from a declared income.
Mortgage: that part of the acquisition Price paid with mortgage, of course will never be presumed to be from a non-declared income.