What Is The Modelo 720?
Form 720 or “Modelo 720” is the Informative Form on Goods and Assets Abroad. Informative form means that you do not have to pay in anything when filing in, although it will have effects on your Personal Income Tax Return and on your Wealth Tax Return, as you will have to include on them the assets you declare in form 720.
Who is obligated to submit 720 form?
Only taxpayers who are Spanish Tax Residents may have the obligation to file in this 720 Form. As you know, Spanish Tax Residents are those that spend in Spain physically over 183 days during the natural year (from January 1st, to December 31st), including work travels or holidays abroad. In case your spouse and dependent children are Spanish Tax Residents, Spanish Tax Authorities would presume that you are a Spanish Tax Resident too, unless you can prove otherwise.
When do I need to declare these assets and rights?
Form 720 is submitted from 1 January to 31 March of the following financial year to which the information in that model refers to.
Do I need a form 720?
There is the obligation to declare the referred assets when the whole value for all the assets included under one of the following paragraphs is over 50.000 Euros.
1. Accounts and deposits in banking institutions abroad.
2. Securities representing the holding in equity for any kind of entities abroad.
3. Real Estate abroad and/or rights on them.
If such is the case, a 720 Form must be filed including only the assets and goods included under the corresponding group. If two groups are over 50.000 Euros, the 720 Form will have to include all the assets and goods included under the two groups I already filed a 720 form in the past. Do I have to file it again? Not necessarily. You only need to file the 720 Form again in case the value of one of the three groups of assets has increased 20.000 Euros regarding the last time you filed it.
What happens if I don’t file the Modelo 720 form?
If you miss the deadline however, the fines are costly and there are severe penalties for failing to correctly report all your overseas assets with the form 720. Although the declaration of overseas assets is merely informative and not a Tax collection, there are very high penalties, for late submission, giving false information or an incomplete submitted declarations.
The penalties go from 100€ per detail with a minimum of 1.500€ for late submission to 5.000€ per detail with a minimum of 10.000€ for not submitting or submitting with incorrect details. However, it should be pointed out that on 2019, the European Union has considered Spain to be breaking EU law with these sanctions. While these penalties still apply at the moment in 2022, the European Commission is currently in the process of bringing legal proceedings against the Spanish Hacienda Tax authorities against the illegality of such fines.
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