Author:
Miriam Sánchez.
Form 720: Are you obliged to declare your assets abroad?
Many tax residents in Spain are unaware that they have the obligation to inform the Treasury about their assets and rights abroad through Form 720. Failure to comply with this regulation can lead to unnecessary penalties and tax problems. In this article, we explain who must file it, what assets are included and why it is essential to be up to date with this obligation.
What is Model 720 and who is obliged to file it?
Form 720 is an informative declaration that must be filed by individuals and legal entities with tax residence in Spain when they own assets or rights abroad with a value of more than 50,000 euros.
The main categories of assets to be declared are:
- Bank accounts in foreign entities.
- Stocks, securities, life insurance and other financial rights abroad.
- Real estate and rights over real estate outside Spain.
If you own any of these assets and exceed the threshold of €50,000 for each category, you are required to file Form 720.
The problem of lack of knowledge: many taxpayers find out too late
One of the biggest problems with Form 720 is that many people are unaware of its existence until they receive a notification from the Tax Authorities. This can be due to several reasons:
🔹 They believe that it only affects large fortunes and not small savers with offshore accounts.
🔹 They are not aware of the reporting limits and are unaware that the €50,000 threshold applies to each asset block.
🔹Confusion as to whether foreign assets are taxable or simply reportable.
The result is that, in many cases, the taxpayer learns of this obligation when he has already incurred in a tax violation, which may result in penalties.
What happens if I do not file Form 720?
The Court of Justice of the European Union (CJEU) declared abusive the penalties that Spain applied for not filing or incorrectly filing the Model 720. Before this ruling, the fines could reach up to 150% of the value of the undeclared asset.
However, this does not mean that non-compliance has ceased to be punishable. Currently, the general penalties of the General Tax Law apply, which can range from 100 euros per undeclared item of information to higher penalties if the Treasury considers that there has been concealment of assets.
How to comply with Model 720 and avoid problems
✔Inform yourself in time: If you have accounts, real estate or investments abroad, check if they exceed the threshold of 50,000 euros.
✔ File on time: The return must be filed between January 1 and March 31 of the year following the fiscal year being reported.
✔ Seek professional advice: An international tax expert can help you file Form 720 correctly and avoid unnecessary penalties.
Cigarrán Abogados helps you with the 720 Tax Form
If you have doubts about whether you should file the Form 720 or how to do it correctly, in Cigarrán Abogados we can help you. We have experience in international taxation and we can advise you to avoid mistakes and penalties.
📞 Avoid problems with the tax authorities.
¿Do you need help? At Cigarrán Abogados we can help you (+34) 91.355.85.15
