What is the tax form 720? Who is required to submit it? When is the deadline?
The Spanish tax form; Model 720, is the Reporting of Overseas Assets and rights, by tax residents in Spain.
The origin of the “720 Model” lies on the “Law 7/2012, of October 29”, and is an action to prevent and fight against fraud. This declaration allows the Spanish tax authorities to be aware and to control that appropriate taxes are paid.
When you have assets abroad amounting to quantities over 50.000 Euros, you will be required to submit the form 720 if you:
- Are an individual or legal entity residing in Spanish territory.
- Are an establishment owned by a non-resident person or entity in said territory
- Are an entity referred to in article 35.4 of the General Tax Law (lying inheritances, communities of property, etc.).
This means that foreigners living in Spain for more than 183 days a year, (or those whose main business interest is in Spain), and therefore registered as tax residents, should bear in mind that if they have any assets outside of Spain valued at 50.000 Euros or more, they are required to submit this tax form to the Spanish Authorities.
The deadline for submission is from January 1 to March 31 of the year following the one to which the information to be supplied refers to. In other words, you have until 31 March 2020 to submit your form 720 for the year 2019.
Given the fact that this 720 Model comes as an obligation from previous years, once you submit the first statement, in successive years you will only need to report where there has been an increase or decrease by more than 20.000 Euros compared to the last statement you submitted.
The assets outside of Spain that are subject to this declaration form fall into 3 categories:
- Bank accounts located outside Spain
- Shares, insurances, bonds or dividends obtained or managed outside Spain
- Real Estate assets or rights on Real Estate assets located outside Spain
It is compulsory to submit this form when the total value of assets outside of Spain is 50.000 Euros or more in each or any one of the above categories.
Example: if you have 2 properties valued at 30.000 Euros each, although the value individually would be below the threshold, the total value of both would be 60.000 Euros, thus exceeding the specified limit in that category. These assets are therefore subject to the 720 tax declaration.
However, if you have a property valued at 30.000 Euros and say, shares valued at 30.000 Euros, as they are in separate categories and each total value does not exceed the 50.000 Euros, then you would not be required to make a declaration.
A declaration must be submitted individually by each owner, regardless of how many owners there are, or the percentage of participation held by each owner.
For example, if you own half of a property valued at 50.000 Euros, although your 25.000 Euros share is below the threshold, both owners are still required to submit an individual declaration based on the total value of the property. Although this declaration of assets and rights 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 residents in Spain fulfil their obligation to declare their assets outside of Spain in order to avoid the imposition of fines from a minimum of 10.000 Euros to a maximum of 150% of the value of those undeclared assets located outside of Spain.