Office Locations
Viewing posts categorised under: Modelo 720

2019: Modelo 720 – Reporting time for overseas assets

By Robin Beven - Topics: Modelo 720, spain
This article is published on: 15th March 2019

15.03.19

Time is running out for submitting your Modelo 720 declaration for 2019, the “Overseas Assets Declaration”.

The deadline this year is the 31st March and is fast approaching.

All those tax resident in Spain – those living in Spain for more than 183 days a year or where Spain is the main residence base – should be aware that as a result of legislation passed on 29th October 2012, residents in Spain who have any assets outside of Spain with a value of €50 000 (or alternative currency equivalent) or more, are required to submit this declaration form to the Spanish authorities.

This declaration can be made online, through the Tax Office`s web page www.agenciatributaria.es where the Modelo 720 form can be located (type in Modelo 720 into the search block on the top right-hand side of the page). It must be filed between January 1st and March 31st of the first year of residence, although I would strongly advocate speaking with your tax professional, accountant or Gestoria to avoid mistakes.

What to Declare?
There are three main groups of assets that must be declared if the total joint value of the group exceeds €50 000: Property – Bank accounts – Investments

To warrant a declaration the total value of assets should exceed the currency equivalent of €50 000 in each or any one of the categories. For example, if you have three bank accounts totalling more than €50 000 you are subject to making the Modelo 720 Overseas Assets Declaration.

It is worth noting that once the limit of €50 000 is surpassed for a group then all assets in all groups need to be declared, regardless whether each asset does not surpass the limit. Additionally, the obligation to report exists where the specific assets are over €50 000 regardless of how many owners hold particular assets. Each owner should declare the total balance or value, and not the prorata value, indicating the percentage owned.

A declaration must be submitted individually, regardless of the percentage of ownership, i.e. joint accounts. For example, if you have a joint bank account with a value exceeding €50 000, although your particular share is below the threshold, say, €25 000, each owner would still be required to submit an individual declaration based on the total value of the account.

Although this declaration of assets is solely informative and no tax is charged, failure to file, late filing or false information could result in fines.

For this reason, we recommend that everybody arranges to declare their assets, to avoid the imposition of such fines. Once you have made your first declaration it is not necessary to present any further declarations in subsequent years, unless any of your assets in any category increases by more than €20 000 above the initial value declared.

Modelo 720: Final Date for Submission is 31st March 2019

By Pauline Bowden - Topics: Modelo 720, spain
This article is published on: 19th February 2019

19.02.19

Within the framework of the “anti-fraud” plan launched in 2013, the Spanish government imposed the obligation for Spanish tax residents to declare all their foreign assets through the form Modelo 720. This reporting obligation was mainly directed at discovering assets of Spanish citizens with irregular assets located offshore. However, it also directly affects the members of the international community living in Spain that have assets abroad.

The duty to inform through the Modelo 720 is linked to tax residence, that is, if the person is considered a tax resident in Spain, you are subject to this obligation of reporting foreign assets.

Who is Subject to Model 720?
Any person, corporation or permanent establishment who qualifies as a tax resident in Spain and is the owner, titleholder, representative, authorised person, beneficiary, or has disposal powers of assets located outside of Spain worth more than €50,000 (see assets below), must report the value of these assets.

When is a Person a Spanish Tax Resident?
A person will become as a Spanish tax resident if any of the two following circumstances are met:

(i) The person is physically present in Spain for more than 183 days in a specific calendar year. Sporadic absences are considered as days spent in Spain for computing this period, unless tax residence in another country for more than 183 days can be proved. This proof must be in the form of a certificate from the other country’s tax authorities confirming such tax residence.
(ii) The person has his/her centre of vital interests or economic interests in Spain, either directly or indirectly. There is a presumption that a person has his/her centre of vital interests if his/her legal spouse or minor dependent children are tax residents in Spain.

What to Declare?
There are three main groups of assets that must be declared if the total joint value of the group exceeds €50,000:

  • Funds in accounts in financial institutions abroad, e.g. banks: such funds can be held through the figure of the owner, co-owner, representative, authorised person or beneficiary. The valuation of the funds should be the highest of (i) the balance at December 31 or (ii) the average balance at the closing of each quarter
  • Securities, rights, insurance and income deposited, managed or earned abroad. Life insurance policies and temporary or lifetime income generated from lending money, rights or other assets to foreign entities are included, whilst pension plans and stock options are excluded
  • Real estate and rights over real estate located abroad

It is worth noting that once the limit of €50,000 is surpassed for a group; all assets in all groups need to be declared, regardless if each asset does not pass the limit. Additionally, the obligation to report exists where the specific asset(s) are over €50,000 regardless of how many holders/owners hold a particular asset(s). Each holder/owner should declare the total balance/value (not the pro –rata value), indicating the percentage held/owned.

When to Declare?
The reporting period is between January 1 and March 31 of each calendar year, with respect to assets held as at 31 December of the previous year. For example, the reporting period for assets held as at December, 2018 is until March 31, 2019.

Frequency to Report?
Form 720 only has to be filed once if the person meets the conditions described in question 2 above. The person will only be obliged to file Model 720 again when, in relation to any of the three groups of assets, there is an increase of €20,000 compared with what was declared in the last Modelo 720 filed.

How to Report?
The form is to be completed on-line. The form is not a standard format and requires navigation through various options and drop down menus. Assistance from an experienced adviser is recommended.

Penalties
The consequences for failing to file Modelo 720 in time, or not filing it at all, are very severe. The specific penalties are as follows:

(i) Penalties for late reporting: The penalty for voluntary late submission is 100 euros per item declared and a minimum fine of €1,500 for each group of assets.

(ii) Penalties for failure to report: The penalty for failing to file Modelo 720 is €5,000 per infraction with a minimum fine of €10,000 for each group of assets.

Additionally, the undeclared assets will be treated as unrealised capital gains and will be consequently included in the general base of the income tax return (Impuesto de la Renta de Persona Físicas) for the earliest year of such tax not prescribed. Finally, interests and an additional penalty of 150% paid income will also be levied.

The regulation establishes that if declaring late, the formal penalty is much lower (€100 per data, with a minimum of €1,500 per group of goods) than by not declaring or declaring incorrectly (€5,000 per data, with a minimum of €10,000), but the other two possible sanctions or consequences are the same, both for not declaring and for declaring late: the Administration can attribute as unjustified patrimonial gain the value of the goods abroad in the IRPF of the last year not prescribed (2012), and additionally apply a sanction of 150% on the resulting IRPF quota, unless it can be clearly demonstrated that the goods abroad correspond to income declared or obtained when one was not resident in Spain.

It is worth noting that the penalties will apply even if the statute of limitations for other tax filings and obligations relating to those assets (and incomes) has expired, as the statute of limitations does not apply to Modelo 720.

However, if the tax payer can prove that the funds came from income earned whilst he/she was not a Spanish tax resident, or that the funds came from taxed income, the income tax and income tax penalties will not be levied. In case of a tax inspection, it is thus extremely important to present a detailed and backed-up response and justification to prove the assets were obtained before becoming a Spanish tax resident, or that they have been subject to taxation by a foreign tax authority.

The European Commission’s response to Model 720
In November 2015, the European Commission (EC) started an infringement procedure against Spain confirming that there are two aspects of the Modelo 720 that may violate EU legislation: (i) the disproportionate sanction regime, and (ii) the imputation as unjustified capital gains of assets not declared on time without the possibility of claiming the expiration of the statute of limitations. The EU Commission requested Spain to amend such regimes. However, up to this date, the Spanish tax authorities have not modified any aspect of Modelo 720 as per the EC’s recommendations and have continued to strictly apply Modelo 720 and its penalties.

Given the obligations under Modelo 720, its severe penalties and the increasing automatic exchange of information treaties between states, we strongly recommend that clients seek advice to analyse whether they are subject to Modelo 720 and if so, to make the appropriate filings.

Récapitulatif sur le MODELO 720

By Cedric Privat - Topics: Barcelona, Modelo 720, spain
This article is published on: 25th January 2019

25.01.19

Qu’est-ce que le Modèle 720 ?
En 2013, le gouvernement espagnol décide de s’attaquer à la fraude fiscale. Il met alors en place un certain nombre de mesures.

Visant en priorité les nationaux espagnols, cette réforme affecte également les étrangers vivant et/ou travaillant en Espagne disposant d’un patrimoine en dehors de la péninsule Ibérique.

Le Modèle 720 est une déclaration informative mais obligatoire sur les biens et avoirs à l’étranger.

L’objectif de cette démarche est de disposer d’informations sur:
– les comptes bancaires situés à l’étranger
– les titres, droits, assurances-vie et placements gérés ou acquis à l’étranger
– les biens immobiliers et les droits sur les biens immobiliers à l’étranger
Ce formulaire dûment rempli doit être présenté entre le 1er janvier et le 31 mars, uniquement par internet (via le site “Agencia Tributaria – Modelo 720 Declaración Informativa. Declaratión sobre bienes y derechos situados en el extranjero”).

Qui doit présenter le Modèle 720 ?
Toute personne physique ou morale résidant sur le territoire espagnol (plus de 183 jours par an), et uniquement si la somme de ses actifs est supérieure à la somme totale de 50 000€ dans une ou plusieurs des trois catégories.

Les années suivantes, il n’est demandé de représenter le Modelo 720 qu’en cas d’augmentation de plus de 20 000€ par rapport au capital initialement déclaré.

Quels sont les risques en cas de non-présentation?
Même si cette déclaration n’a pour but que d’informer, le gouvernement espagnol menace d’appliquer de lourdes sanctions en cas de non respect de cette mesure.
– 5 000€ pour toute information incomplète, erronée ou fausse, avec un minimum de 10 000€ d’amende par déclaration.
– 100€ par information, avec un minimum de 1500€, si la déclaration a été déposée au delà de la date limite.
– Si l’Hacienda se rend compte de l’absence de déclaration, les sanctions annoncées sont extrêmes (par exemple, 150 % de la valeur du bien, plus-values sur tout patrimoine non justifié)

De nombreuses plaintes ont été déposées afin de contester ces sanctions excessives et injustes, la commission européenne serait également en contact avec les autorités espagnoles sur ce sujet.

Néanmoins, il vous est fortement conseillé d’effectuer cette déclaration afin d’éviter tout problème avec Hacienda.

Plusieurs conseillers fiscaux francophones à Barcelone, dont je me propose de vous fournir les coordonnées, peuvent vous apporter leur aide pour remplir ce formulaire.

Je reste à votre entière disposition pour vous fournir tous renseignements complémentaires.

Are you moving to Spain?

By The Spectrum IFA Group Spain - Topics: Beckham Law, Modelo 720, spain
This article is published on: 11th July 2018

11.07.18

If you are considering a move to Spain, or have recently arrived, there are a few basic steps to follow which will help with managing and improving your finances. The list below is intended for general guidance only, but refers to some of the key points consider as part of your early financial planning.

First, an update on Brexit

Whilst departure terms between the UK and EU are yet to be finalised, the status of British expatriates living in Europe has largely been agreed, in principle at least. From state pension escalation, to health care cover and rights on residency and employment, first phase negotiations concluded (eventually) with consensus on protection of citizens’ rights.
Of course, agreement still needs to be formalised and as the EU/UK progress agreement highlights, ‘nothing is agreed until everything is agreed’. But for now, at least, it is looking like existing expatriates’ rights are likely to be recognised beyond April 2019.

Buying a property

From the initial and legally binding ‘pago de arras’, the legal process of buying a property is markedly different from UK conveyancing.

It is important to engage a knowledgeable lawyer, ideally English speaking if you do not speak Spanish. Your lawyer will liaise with and arrange your meeting with a notary, which is legal a requirement in Spain for the property buying process. Resident and Non-resident tax obligations vary and require reviewing on an individual basis.

Mortgages

Seek guidance on the wide range of borrowing options available, from the national banks to smaller regional lenders. An independent mortgage specialist will identify the most competitive and flexible mortgages available and ensure suitability for your specific borrowing requirements, as well as introducing you to trustworthy and reliable legal and professional services, a must in Spain when purchasing or selling property. It is important to note that banks do not make mortgage offers without the property being secured. (See below for our independent mortgage brokers, Spectrum International Mortgages Spain)

Bank accounts

Familiarise yourself with the various current and savings accounts available, from the cuenta corriente (current account) to tax efficient ‘Cuentas de Ahorro’, or savings accounts. It is important also to note that bank managers tend to move branches frequently, so finding a bank you like is more important in the longer term than a friendly bank manager or ‘Director’.

Tax Residency

Please note you cannot choose where to be tax resident. The law dictates when this will happen and you do not necessarily have to complete any forms to be treated as tax resident. If you meet one of these following conditions you will be a tax resident:

● If you are in Spain for more than 183 days in any calendar year
● If your “centre of interests” are considered to be in Spain eg. If your main income is in Spain, your main home is in Spain or if your spouse and children live in Spain.
● Residency commences from the first day that you declare Spain to be your permanent home.

Tax declarations

When you move to Spain, the Spanish tax authority becomes your controlling tax authority, even if you pay tax elsewhere. The tax year is the calendar year. Worldwide income needs to be declared annually (between April and end of June) and the relevant form is called “La Renta”. (Income taxes and capital gains tax are called IRPF). UK source income from dividends and property rental, whilst taxable in the UK, should also be included in your Spanish tax return. The double tax treaty between Spain and the UK should ensure an accurate tax assessment, but it is important to check that liabilities have been calculated correctly.
Note too that tax-free investments in the UK, such as ISAs and premium bonds, do not hold the same favourable status in Spain. For permanent and long-term Spanish residents, there are tax efficient alternatives available (see Investment section below). Without exception, make full disclosure of income and assets, recognising that there is automatic exchange of tax and financial information between the two countries, under global Common Reporting Standards adopted by the EU in 2017.
The Modelo 720 or M720 is a requirement for all Spanish residents, including foreigners, to complete. It is an informative overseas asset declaration for assets of over 50,000 euros including property, banks accounts, offshore investments, shares and other assets. This declaration needs to be completed by March 31st following the first full fiscal year of residency. As this declaration can only be completed electronically we highly recommend the involvement of a qualified ‘gestor’ or tax accountant, as hefty penalties could be imposed for providing erroneous information.
Wealth tax obligations change on a regular basis and vary between autonomous regions, so obtaining the latest local rates applicable is important.

Beckham Law

For employed individuals earning over 60,000 euros pa and having not been resident in Spain for the past 10 years before becoming tax resident, the possibility exists of being paid as a non-resident for tax purposes and up to five full tax years. The rate of income tax is 24% plus you avoid the need to declare M720. It is available to company owners as long as they (and their immediate family) do not own more than 25% of the shares. The ability to join this scheme needs to be assessed on a case by case basis.

Inheritance tax

This is a subject that causes some confusion on moving to Spain. In Spain, it is the beneficiaries that are assessed for Inheritance tax. In the UK it is the estate of the person who has died that is assessed for Inheritance tax. This means that different planning is required in Spain although it is possible to plan for both the UK and for Spain in some circumstances.
Like wealth tax, inheritance tax varies from autonomous community to autonomous community. Advice in the community where you are living is therefore very important.

Healthcare

Spain’s comprehensive and efficient healthcare system is considered to be at least on a par with the UK and better in many areas. It is generally accessible to expatriates but the extent of cover available to you, and how to secure access to it, depends on individual circumstances. Eligibility for a Tarjeta de Salud or holding suitable private health insurance, or a combination of the two, are essential to avoid unexpected and expensive bills for medical treatment. This especially applies to dental treatment which is typically very costly in Spain.

Currency exchange

Relying on your bank for foreign exchange transfers is generally an expensive option. Numerous currency transfer specialists provide not only competitive terms and secure, swift transactions, but a range of other benefits including on-line facilities for regular payments, forward contracts and rate tracking alerts.

Pensions

Pensions are a technically complex subject where reliable advice is essential. From understanding UK state pension entitlement, to reviewing all existing personal and/or occupational schemes, there is scope to increase the value, flexibility and security of your retirement finances. British expatriates living in Europe currently enjoy pension freedoms and transfer opportunities that are unavailable elsewhere. However, in relation to both Brexit and ongoing UK pension reform, it is unlikely this flexibility will remain beyond the short term.
Even if Brexit transitional arrangements encourage a smoother economic separation, further changes to pension regulations are already on the UK domestic agenda. Consult an authorised, qualified and experienced specialist to arrange a comprehensive review of your existing pension arrangements. Be wary of any recommendation to transfer a UK pension without receiving a detailed report which explains clearly why a transfer is in your best interests.

Wills and estate planning

Spanish forced heir-ship rules restricts the extent to which you can freely transfer wealth during your lifetime. It also, unless you have planned properly, governs how your estate is distributed upon death – most notably, prescribed heir-ship laws override individual choice when it comes to nominating beneficiaries. However, if you are a British expatriate living in Spain, EU legislation allows you to specify that your estate be administered according to the laws of your country of nationality, rather than your country of residence. Doing so provides valuable flexibility and control over the eventual distribution of your estate. Note this relates to probate law and is unconnected to inheritance tax law.
It is important to establish and maintain a valid will or testamento which fully reflects your intentions. A notary will prepare your will in the appropriate format.

Investments and savings

Recognising that UK assets are taxable in Spain, and that tax free in the UK doesn’t translate to the same in Spain, consider switching to Spanish approved tax efficient investments. Care is needed with possible tax consequences on the disposal of UK assets, so always seek professional advice before restructuring. Seguro de vida are widely regarded as the most tax efficient solution available in GBP and EUR (and other currencies), in English language and with investment flexibility to match individual objectives and risk profiles. Technically a life insurance policy, but in practice an investment vehicle and this is the most tax efficient means of investment in Spain –
Low cost, straightforward, beneficiary nomination, IHT exemptions/reliefs, capital access, income option, portability (UK return),

IFA

Even for the financially experienced it is worth seeking professional advice, if only to ensure that all available investment and tax planning opportunities are being fully utilised. Only deal with an independent, appropriately authorised firm and ideally someone living and working locally who has been recommended by other expatriates in the area.
The regulatory status of an independent broker can be checked on-line at; www.dgsfp.mineco.es/regpublicos/pui/pui.aspx, and at any initial discussion with an individual you should be informed about the advisory process, from fact finding and presenting suitable recommendations to responsibility for investment management and ongoing client servicing.

2018 Modelo 720 Reporting Time!

By Chris Burke - Topics: Barcelona, Modelo 720, spain
This article is published on: 10th March 2018

10.03.18

Just a reminder that time is running out for submitting your Modelo 720 declaration for 2018. The deadline this year is the 31st March and is fast approaching.

All those tax resident in Spain (those living in Spain for more than 183 days a year or where Spain is the main base for your business) should be aware that as a result of legislation passed on 29th October 2012, residents in Spain who have any assets outside of Spain with a value of €50.000 (or alternative currency equivalent) or more, are required to submit this declaration form to the Spanish authorities.

This declaration can be made online, through the Tax Office`s web page www.agenciatributaria.es where the Modelo 720 formcan be located (type in Modelo 720 into the search block on the top right hand side of the page). It must be filed between January 1st and March 31st of the first year of residence to avoid being investigated or fined by the Spanish authorities. I would personally recommend speaking with your accountant / Gestoria to avoid mistakes.

    1. Property
    1. Bank accounts (cash)
    1. Investments

To warrant a declaration the total value of assets should exceed €50.000 in each or any one of the categories; e.g. if you have 3 bank accounts and totalling up all the balances it exceeds the €50.000 limit you are subject to making the Modelo 720 declaration. However, if you have a bank account at €30.000 and, say, investments valued at €30.000 then there would be no reporting requirement as they are in separate categories and each individual total value does not exceed the €50.000.

A declaration must be submitted individually, regardless of the percentage of ownership (in joint accounts). For example, if you have a joint bank account with a value exceeding €50.000, although your particular (say €25.000) share is below the threshold, each owner would still be required to submit an individual declaration based on the total value of the account.

Although this declaration of assets abroad is solely informative and no tax is charged, failure to file, late filing or false information could result in serious consequences.

For this reason, we recommend that everybody arranges to declare their assets, to avoid the imposition of fines from a minimum of €10.000 to a maximum of 150% of the value of those undeclared assets located outside Spain. Once you have made your first declaration it is not necessary to present any further declarations in subsequent years, unless any of your assets in any category increases by more than €20.000 above the initial value declared.

Modelo 720 Reporting

By Chris Webb - Topics: Madrid, Modelo 720, spain
This article is published on: 1st February 2018

01.02.18

Modelo 720 – WHAT’S IT ALL ABOUT?
In 2013, the Spanish Government launched an “anti-fraud” plan to prevent tax evasion. Although aimed at discovering assets bought by Spanish nationals with irregular money, it also affects members of the international community living in Spain that hold assets abroad.

It is important that you don’t ‘bury your heads in the sand’ regarding this requirement, hoping that you won’t get caught………because eventually you will.

The Modelo 720 reporting requirement is based on tax residency; if you are deemed to be a tax resident in Spain, then this requirement affects you. In general, you will be deemed tax resident if you are in living/working in Spain for more than 183 days a year, and remember that the onus is on you, the individual, to be able to prove otherwise to the authorities, should they decide to investigate. The reality is that in most cases, it would be very difficult to demonstrate this to the Spanish Tax Authorities and so most people would be deemed Spanish tax resident by them.

WHO HAS TO REPORT?
Any person, permanent establishment or company who is tax resident in Spain and is the owner, titleholder, representative, authorised person, beneficiary, or has disposal powers of assets located outside of Spain worth more than €50 000 (see assets below), must report the value of these assets. Any assets held in other currencies must have that value converted to Euros to gauge whether it exceeds the Euro limit imposed.

WHEN DO YOU REPORT?
Between 1 January and 31 March of each tax year, you must submit details of assets from the previous year. If you have previously reported your external assets on the Modelo 720, then there is no need to resubmit a report every year unless the value of any of the asset classes has increased by €20 000 or more.

WHICH ASSETS MUST BE REPORTED?
There are three main asset classes that need to be reported if the total value of each class is over the €50 000 limit:

  1. Bank/Building Society accounts located outside of Spain – It is important to note that if you hold several bank accounts and THE TOTAL amount held exceeds the €50 000 limit, then ALL the accounts need to be reported, regardless of whether each one is under the limit.
  2. Investments / Life or disability insurance policies – If you are the owner or policyholder of an investment or insurance policy then these will need to be declared if they exceed €50 000. Again, there is a requirement if you have multiple investments or policies, that if the total value exceeds the limit then they will all need reporting.If you are holding Life Insurance Bonds, then the surrender value of the policy is deemed as the value. If you hold “pure life” policies that only pay out a benefit in the event of death and have no physical surrender value these do not have to be reported.Interestingly if you are holding what we describe as Spanish compliant Life Insurance Bonds, then the onus of reporting on the Modelo falls to the institution themselves. They have their own version of the Modelo to comply with meaning they do not necessarily have to go on your individual report.
  3. Property – Owners or part owners of an overseas property where the value exceeds the limit must report these properties.


WHAT IF YOU DON’T REPORT IN TIME / CORRECTLY?

The Spanish Tax Authority has implemented a series of penalties for those who do not comply with this regulation. These penalties can be imposed for late filing, incomplete/inaccurate filing and even for presenting the information to them in a way not deemed acceptable; basically, it must be done online. These are considered very serious offenses and the penalties in these cases are fixed, generally to an amount of €5 000 per item or “set of data” on the same asset, with a minimum of €10 000. The amount is reduced to €100 (with a minimum of €1 500) if the information is filed late without prior notification from the government. Speaking to some accountants and Gestors, they believe and have seen fines to be around €150 if you file late without any notification, but the law states differently so in reality the exact fine is questionable.

WHAT IF YOU DON’T REPORT AT ALL?
Should the Spanish Tax Authorities discover that you have assets with a cumulative value over €50 000 in any of the above asset classes and deem that you have wilfully not disclosed this information, penalties are imposed. In some cases the fines issued are as high as 150% of the value of the undeclared assets!!!! It is also important to note that there is no statute of limitations when it comes to the Modelo 720 so there is no limit to how far back they can go…………

There have been numerous complaints about the unfairness of the Modelo 720 and the fines being imposed. The European commission has been in discussion with the Spanish Tax Authority to reduce the fines. The latest I have heard is that the 150% penalty of undisclosed assets would not stand and would be reduced to the lower fine levels, providing the assets were reported voluntarily, which just means it falls from the undisclosed category to the late reporting category and doesn’t help those caught not declaring. The Tax Authority is pushing for people to report their assets voluntarily, maybe there will be softer sanctions in the future but for now, this is how it stands.

If you want to discuss how to report the Modelo 720 please feel free to get in touch. I work closely with a qualified accountant in Madrid who can file on your behalf if there is a requirement to do so.

Modelo 720 Reporting Time!

By Chris Burke - Topics: Modelo 720, Residency, spain, Tax, tax tips, Tips
This article is published on: 23rd March 2017

23.03.17

Just a reminder that time is running out for submitting your Modelo 720 declaration.

All those tax residents in Spain, (those living in Spain for more than 183 days a year or where Spain is the main base for your business), should be aware that as a result of legislation passed on 29th October 2012 residents in Spain who have any assets outside of Spain with a value of €50.000 or more, are required to submit this declaration form to the Spanish authorities. (that’s €50.000 or alternative currency equivalent).

This declaration can be made online, through the Tax Office`s web page www.agenciatributaria.es where the Modelo 720 (Tax in Spain) can be located and completed. It must be filed between January 1, and March 31, of the first year of residence, to avoid being investigated or fined by the Spanish authorities. I would personally recommend speaking with your accountant / Gestoria to avoid mistakes.

The assets outside of Spain that are subject to this declaration form fall into 3 asset categories:
1. Property
2. Bank accounts (cash)
3. Investments

To warrant a declaration the total value of assets should exceed € 50.000 in each or any one of the categories; e.g. if you have 3 bank accounts and totalling up all the balances it exceeds the €50.000 limit you are subject to making the Modelo 720 declaration. However, if you have a bank account at €30.000 and say, investments valued at €30.000 then there would be no reporting requirement as they are in separate categories and each individual total value does not exceed the €50.000.

A declaration must be submitted individually, regardless of the percentage of ownership (in joint accounts). For example, if you have a joint bank account with a value exceeding €50.000, although your particular (say €25,000) share is below the threshold, each owner would still be required to submit an individual declaration based on the total value of the account.

Although this declaration of assets abroad is solely informative and no tax is charged, failure to file, late filing or false information could result in serious consequences.

For this reason, we recommend that everybody arranges to declare their assets, to avoid the imposition of fines from a minimum of €10,000 to a maximum of 150% of the value of those undeclared assets located outside Spain. Once you have made your first declaration it is not necessary to present any further declarations in subsequent years, unless any of your assets in any category increases by more than €20.000 above the initial value declared.