The Spanish tax authorities require Spanish tax residents to file a modelo 720 declaring non-Spanish assets with severe financial penalties for non-compliance and/or disclosure.
The purpose of the declaration is purely informative.
Assets to be declared
Assets to be declared are divided into 3 distinct categories and where disclosure is required then each asset within that category must be fully identified and its value declared:-
Category 1 – Bank accounts
- Current, deposit, savings, building society, post office accounts etc
Category 2 – Investments
- Shares, unit trusts, pension funds, annuities, endowment, life policies with cash in value etc
Category 3 – Real estate
- Property, land, houses, usufructs, timeshare etc
Disclosure is based on assets held as at 31 December with bank accounts valued at the higher of the year end balance or the average balance for the last three months of the year.
Where the combined value of assets in any single category exceeds EUR50,000 then all assets within that category must be declared regardless of balance/value. Where the combined value of assets in any single category is less than EUR50,000 then assets in that category need not be declared.
Assets should be declared:-
- If you are the owner
- A settlor of a trust, a beneficiary of a trust, an authorised signatory, or you have the authority to dispose of the asset
- With jointly held assets, it is necessary to declare the full value indicating percentage of ownership
- For non-disclosure the fine is EUR5,000 per item with a minimum fine of EUR10,000 for each group of assets
- For voluntary late submission the fine is EUR100 per item with a minimum EUR1,500 for each group of assets
- Undeclared assets are treated as a capital gain and taxed accordingly
- An additional penalty of 150% of the unpaid tax is also levied
The tax must return must be completed online and filed on/before 31 March in respect of the previous fiscal year to 31 December (i.e. the return for the fiscal year ended 31 December 2017 should be filed on/before 31 March 2018).
For those having previously filed a modelo 720, then it is only necessary to file again if:
- The value of an existing asset grew by more than UER20,000
- An asset was sold or account closed
- A new asset was acquired
European Commission investigating the legality of modelo 720
The European Commisison is investigating the legality of the modelo 720 and in particular the disproportionate penalties imposed for non-submission or incorrect submission, and whether having no statute of limitations on submission breaches EU law.