What You Need To Know About Declaring Your Foreign Assets To The Spanish Taxman

If you are a Spanish resident then it’s time to sit up and pay attention. Because the deadline is fast approaching for Spanish residents to complete their file a Modelo 720 form. This is a declaration that Spanish residents make to the Spanish taxman outlining any assets they hold overseas.

Not every Spanish resident needs to complete it but many do. The 720 asset declaration form was introduced in 2012 as a way to combat money laundering and fiscal fraud. This means that if you hold any assets abroad then the Spanish government needs to know about it.

This applies to both Spanish citizens and foreigners who are living legally in Spain. The good news is that completing this declaration won’t cost you a penny. It is for information purposes only, and you won’t be asked to pay tax on any assets that you hold in another country (so those with homes in their home country can breath a sigh of relief) but you can be fined if you don’t declare those assets.

Here’s what you need to know:

When Is The Deadline To Declare Foreign Assets?

The deadline to complete the Modelo 720 form and declare your foreign assets in Spain is March 31st. This will relate to any assets you held in the last calendar year. You don’t have to complete this form every year, you only need to repeat and resubmit this if your circumstances and the assets you hold changes.

Who Has To Complete A Modelo 720 Form?

Not sure whether any of this applies to you? To help you decide, you will need to complete a Modelo 720 form if you fall into one of the following groups:

• You have bank, savings, or deposit accounts overseas who the sum of all the accounts is greater than  €50,000.
• You have a private pension or other assets with banks or financial institutions overseas that are greater than €50,000. This includes stocks and shares, bonds, life insurance, pension plans and annuities that are currently being paid.
• You have a property abroad with a purchase value of over €50,000. This could be a private property or a business premises.
• If the assets are held in joint names, then each individual needs to submit a report and declare the total value and their share.

When Your Circumstances Change

You don’t have to complete a Modelo 720 every year. But you do need to complete the form every year that your circumstances change. So if you hit 65 and a new pension matures or you invested in property in your home country this year then these are examples of changed circumstances you would have to declare. You will also have to complete the declaration if the assets you hold decrease. For example if you sell a property.

It’s worth bearing in mind that the current exchange rate could impact whether you need to declare the assets you hold or not, particularly if they hover around or just below the 50,000 value. You should use the exchange rate value as it was on 31st December 2023 when making your calculations. Remember to check what your assets are worth in euros before you complete the form.

Changes To The Modelo 720 Process

The Modelo 720 process was changed in 2022 as a result of an EU ruling which determined thatSpain’s 'Modelo 720' foreign assets declaration form was “extremely repressive” and breached community rules. As a result the Spanish government made changes that relaxed the process.

Previously, income abroad that was not declared, or which was reported after the March 31st deadline, would be treated as an unjustified capital gain and the resident who failed to file would receive a penalty of up to 150 percent of the value of the amount. But now these penalties can’t exceed 50% of the value of the amount.

The fine for non-completion was also shifted to be in line with other tax fines in the country.

What Happens Is I Don’t Complete The Modelo 720 Form?

If you don’t submit the Modelo 720 form when you should have, or if you fill it in incorrectly or make a mistake on the form then you will be penalised in the form of a fine. Penalties currently sit at €100 for each piece of data that is submitted incorrectly (even if this was a mistake) and if you submit the form late then you could be subjected to a fine of up to €1,500.

Don’t submit the form at all? Then the penalties can be truly eye watering.  Fines for not declaring are now set at a maximum of 50 percent of the value of your assets.

If you haven’t filed but you should then it’s time to take action before it’s too late. If you’re newly arrived in Spain then completing the form should be fairly straightforward. If you have only just crossed over into the €50,000 threshold then you should be fine to complete your application now and submit it as soon as possible.

But if you have been living here for longer than a year and realise that you should have filed a modelo 720 but didn’t, the legal advice is don’t put it off again. The fines for this may be smaller than they used to be but they are still incredibly significant, so you don’t want to risk being caught out for not declaring your assets. It’s time to come clean and hope for the best.

The good news is that there have been no reports of fines being levied since the EU declared them illegal in February 2017 so you may find you face nothing more than a slapped wrist.  Speak to a tax specialist if you have any doubts about what to do.

You can find the online form  for your Modelo 720 declaration  at the Tax Office website HERE.

Are you thinking of moving to Spain? Looking to make an escape to the sun? Then why not get in touch with our local property experts, who are perfectly placed to help you buy the Spanish home of your dreams. We’re excited to help you make your next move your best move.