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.
Javier,
My wife and I have a joint account in a British bank which amounts to just under 40.000€. We also have a few shares worth about 3.500€, and we have no property in UK. So far so good, but I have a Stocks and Shares ISA currently worth about 18.000€. My question is – does this ISA count as type I or type C? If I understand correctly the ISA counting as type C would mean I would have to fill in the declaration. Thanks in anticipation.
The answer is with who you have your ISA, with a bank or with an insurance company.
If is a bank, the ISA will be supported by a bank account, so bank accounts will exceed 50.000
If is an insurance company, insurance adds with stocks, bonds… so there will be no need of filling form 720.
What does the following actually mean?
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.
Stephen
When you are putting money into pension plan, generaly are not declared.
But when you are retired, and already collecting money from the pension plan, for income tax you need to declare this income. And for form 720, if money into fund was transfered to an insurance company, you need to declare money into insurance company.
Javier,
Once again thankyou, after all the questions you have answered all that remains for me to ask is one final question.
Do I definitely not submit the form 720 as I am UK resident under the double taxation treaty tie breaker rules and I have the UK tax certificate.
Even though I am in Spain more than 183 days and there is no mention of my situation in the AEAT questions and answers or seminars.
Only the standard statement ‘if you are in Spain more than 183 days you are resident’
Bill
Bill, article 9.1.a, of the Individual Income Tax (Ley 35/2006) says that you are tax resident if you spend more than 183 days in Spain, unless you prove your tax residence in other country.
Javier,
Many thanks I do actaully have the UK certificate, recently obtained under the UK’s 91 days and over yearly prescence in the UK. It was just of concern as I have heard the Spanish Tax office are checking electricity readings which would show a period in Spain of over 183 days and I wondered if I would have to go into great detail regarding the double taxation treaty even though I have the certificate, do they really go into the depths of the treaty do you know or as you say the certificate maybe with an explanation will be enough, sorry to ask you again on this.
It’s just these high penalties are scaring everone and especially me, i have even thought of submiting the form just to be on the safe side.
Yes, but this readings are a PRESUMPTION on residence.
And presumption admits to probe the opposite. And the accepted probe is this certificate of fiscal residence
Hi javier,
This isn’t really about the 720 but this has got me looking critically at everything. We have a few shares. They were issued by companies who went public while we had an interest in them (e.g. an insurance policy) so they cost us nothing, we aquired them before we lived in Spain. We get about 100€ each year in cash dividends and 100€ in new share dividends (SCRIP). I notice one company ( a Spanish one) treats these differently for tax purposes. So my questions are
1. Are dividends treated differently if they are cash or shares?
2. When we come to sell them how will capital gains be calculated?
SCRIP dividends are not taxed, stocks received are treated as they were acquired in the same date as the stocks that originated them, therefore acquisition value of old stock is shared proportionally among all stocks (old + new) in other to determine acquisition value after SCRIP.
In your case as they were acquired by 0 euros, new ones are also considered to be acquired for 0 euros.
In other words, you will be taxed when you sell them.
So, fiscal treatment is almost equal to the one in UK
Javier,
Your website is excellent, here is another question, if I do not submit a 720 from as I beleive I am non resident for Spanish tax under the double taxation treaty tie breaker rules but at a later date Spain disputes my status and decides I am resident and the UK agrees because the permanent home definition can be missinterperated. Then it presumably would be a late return so is that 1500euros fine plus late interest etc. Or can all the assets be at risk as the form has not been filled on so they could charge 150% on all the assets thereby causing bankrupcy.
Basically what is the maximum fine for a late submission and how long can it be late for…months, years?
You can prove your non-resident status in Spain proving your resident status in UK.
Ask HMRC for a certificate of fiscal resdience. And if required in Spain show it, and you will have no problems in Spain.
Here you have a link to apply for it at HMRC:
http://jullastres.es/wordpress/?p=800
My husband and I are residents. We have bank accounts in the UK. I have one solely in my name value about 40,000 euros and my husband has one in his name solely value about 30,000 euros. Neither of these comes up to the 50,000. So do we need to declare them. They are not in joint names. We have had them for some years.
Thank you for your help. Jane Corbett
In that case, no one needs to fill form 720, as they are not in joint names.
Hi Javier. I own a holiday apartment in Spain, but I’m resident in the UK. Can you please confirm that Form 720 does not apply to me. Thanks.
Form 720 applies to Spanish residents.
As you are non-resident in Spain, you don’t need to fill this form.
Hi,
I moved to Spain in 2010 and have never declare any property as was not aware of that. Tax company I used has never asked this question. However I own property outside Spain and purchase value was higher than 50k€. Shall I expect any penalties if I declare it now? am I going to pay any additional taxes? I do not rent it.
Thanks
Regards
Max
Hello Max,
You need to fill form 720 for the property.
In your individual income tax you should declare a presumed income for real estate because you can use it (is not rented).
The amount to declare is calculated as a 1,1% of half of the acquisition value. And this amount will be taxed at your marginal rate.
You can present “complementarias” for the years you didn’t include this income, and if so there will no be penalties.
As you can see the amount to pay is not high.
Great, thank you for your response.
So I need to add 1.1% to my income in Spain and get this taxed.
What does it mean to present “complementaries”? Shall I use another form or just add more income to 2012 declaration?
What if I pay taxes (local taxes – not income tax) in the country where the flat is located?
Thanks
Regards
Max
Complementaria is the Word we use when you fill again the same form that was filled before correcting mistakes or omissions, and as result of this corrections arises a bigger amount of tax to pay
Ok, thanks it makes sense. However what to do if I do not have this form? Shall I ask them http://www.agenciatributaria.gob.es for meeting and fill that in?
one more thing, what if I paid taxes already outside of Spain (mendatory taxes in the country where flat is located)?
thanks
Regards
Max
If you dont need to fill, thats all.
taxes paid in the country of source, will be taxed again in country of residence. But agreement por avoiding double taxacion, states procedure for avoiding this double taxation. Procedure is carried by residence cauntry, that will:
Hi!
If I was getting less than 25000 gross per year, do I still need to fill in the 720 form as spanish resident?
Thanks a lot for your help
Monika
Form 720 is about wealth by the end of year, but is not related to income.
If balance in accounts by the end of year exceeds 50.000, or value of financial assets exceeds 50.000, or acquisition value of real estate exceeds 50.000, you will need to fill form 720
Hola Javier
We have been residents for about 9 years and have a life insurance policy of approx 120,000 Euros based on current exchange rate with the UK. So I have to declare this.
But we also have bank accounts in joint or individual names of which none are over
50,000 Euros. If you add the value of the various banks accounts together these come to more than 50,000 Euros but in a mixture of joint and individual names, do these have to be declared.
Also I thought it was obligatory for residents to declare all assets in any other country no matter what the value is. Am I right in this and if so, should we not declare all bank accounts.
Also thanks for the very informative website.
Thanks Ian
In addition to above Javier, we have been told that we didn’t need to declare our UK assets in previous years by our Gestor here (I think this is not correct) and also we didn’t do any tax return for the first couple of years when resident, how do we best correct this.
Form 720, is a new form, so 2012 is the first year to declare.
Government cannot claim taxes older than 4 years, so, forget about 9 and 8 years ago. And you cannot pay even if you want.
Insurance is declared by value at 31st December 2012.
Accounts: add up your accounts (individual + 100% balance on joint) if exceeds 50.000 you need to declare all of them.
Do the same for your spouse to check if she needs to declare them.
With financial assets you have another limit of 50.000, add all them up, for checking if you need to declare them.
Thanks Javier,
But is it as easy as declaring a house at it’s aquisition value? Nothing else to take into consideration?
Thank youuu!!
Markus
Yes, its only an informative form, but you will also fill address and acquisition date.