Modelo 720 is the form which has to be completed by Spanish residents to declare overseas assets to the Spanish Tax Authorities.
This requirement has been in existence since 2012 and affects anyone resident in Spain who owns, or is beneficiary to, overseas assets above a certain value.
The Modelo 720 was introduced to clamp down on tax fraud being committed by Spanish residents who have acquired, or intend to acquire, assets and or hide wealth outside of Spain in order to evade paying tax. You can read more about this in our article – Overseas Assets Declaration.
What has to be reported?
There are primarily three reporting categories, cash in bank accounts, investments and real estate. The reporting requirement only applies to assets in a particular category, if the group total value of the assets in that category amounts to €50,000 or more.
The obligation to complete the Modelo 720 to report assets, applies to the owner of the assets, authorised signatories, a settlor who can benefit from a trust they settled, and those with authority to dispose of the asset. This includes assets held by a company, a trust or fiduciary.
You need to report even if your personal share of assets is less than €50,000. With joint assets, each owner needs to declare the full value (not pro-rated) and indicate their percentage share of the asset.
In most cases, assets are valued using the wealth tax rules as of 31st December each year. For assets held within financial institutions (e.g. bank accounts), you also need to declare the average balance over the last three months of the year.
You need to report the value of the assets in Euros, so any investments held in Sterling, US Dollars, Swiss Francs etc, need to be converted. The rate to be used is that at 31st December of the relevant year.
When do I need to Modelo 720?
The deadline for submitting the Modelo 720 is 31st March to declare assets owned at the end of the previous year. So if you have not yet made your declaration and need to, you’ll complete a Modelo 720 this March, to declare the assets owned as at 31st December just passed. If you have already submitted Form 720 in the last two years, you only need to report again if either, the value of an existing asset grew by more than €20,000, you sold an asset/closed an account, or you acquired a new asset.
Exchange rate movements have to be considered. For example, a strengthening of the Pound against the Euro could mean that whilst the value (in Pounds) of your overseas asset may not have changed, or possibly even decreased, the Euro value may have increased. This either moving the asset value above the €50,000 threshold, or resulting in a value increase €20,000.
How do I complete the Modelo 720?
If you have a digital certificate, the Modelo 720 can be done online, if not a manual for can be completed and submitted in person at Hacienda. Lawyers and accountants in Spain often complete the Modelo 720 for their clients. We recommend that expats consult a suitably qualified professional who is versed in both financial and tax matters, in both Spain and their home country, before completing the Modelo 720.
If you have questions about Modelo 720, click here to enquire. Alternatively come in and see us or call on (+34) 951 77 55 44 and ask to speak to one of our Money Matters advisers.