Modelo 720: Meaning, Due Date, Rate, and Penalties

As a Spanish resident, you must use the Modelo 720 to report your overseas financial holdings when the total value of all the specified overseas assets in which you have ownership in, is more than the specified reporting threshold. The form provides three reporting categories including bank accounts, investments and immovable property.

The Modelo 720 is designed to help the tax authorities obtain information regarding the amount of specific type of assets held by Spanish residents outside Spain. Also, information on income, insurance, securities or rights obtained overseas is a substantial part of the declaration. The Modelo 720 is an important document in the Spanish tax system, let’s review its meaning, due date, rate and associated penalties.

Who should use the Modelo 720 form?

The obligation to file Form 720 and declare all financial entities located overseas lies on the owners, beneficiaries, representatives, whether individuals or companies with rights of disposal or full ownership. Spanish tax residents are legally mandated to fill out the 720 tax form, indicating to the relevant tax authorities of their fiscal activity in other nations.

According to the Spanish Tax Office, Modelo 720 applies to all Spanish residents and legal persons who, at any time in the year owned overseas assets worth €50,000 or more. You must report on Modelo 720 all specified foreign holdings, regardless of whether some or all of the foreign holdings was sold before the end of the year.

The €50,000 threshold is based on the cost amount of the asset. When it comes to foreign assets acquired as a gift or inheritance, the cost amount is considered as the fair market value at the time the assets were received.

The components to submit in the Modelo 720 also includes values such as:

• Homes
• Shares, stocks, and bonds
• Trusts
• Life or disability insurance policies
• Cryptocurrencies
• Pension funds

For individuals who have already filed Modelo 720 in the past, you will have to file it again in case the value of an existing asset grew by more than €20,000 or you traded in new assets.

Can I file Modelo 720 electronically?

Form 720 is submitted electronically at the Spanish Tax Agency, so you cannot file it in person. The taxpayer must have an identification with a digital signature (electronic ID or an electronic certificate. Submitting the Modelo 720 with professionals guarantees greater peace of mind.

In case the taxpayer does not have an electronic signature, the individual in charge of submission must be authorized to submit the declaration on behalf of third parties. Consequently, only a registered tax office collaborator or legal professional can submit the form on your behalf.

What is the due date for filing the Modelo 720 form?

The tax form needs to be submitted before 31st March of every year. You can file it after the submission period but you will have to pay a penalty.

Are there any penalties for not declaring foreign income?

There are considerable fines imposed for non-compliance with the Modelo 720, starting at €5,000 and can reach six-figure sums. Therefore, advisers and taxpayers must take great care in their Modelo 720 compliance, and when handling enquiries and disclosures.

Get advice for filling in your Modelo 720

The taxation of income and all gains from foreign interests can be complex. At SublimeSpain, we help our clients ensure compliance, especially concerning issues of residence and tax liability.

The importance of filing Modelo 720 for Spanish residents cannot be overstated. In this regard, maintaining proper records of all foreign holdings is critical to minimizing the time, hassle and potentially the cost of completing this form. Based on Spanish tax laws, errors or omissions, even if accidental, could lead to penalties. As a result, it’s essential that you complete the form correctly and subsequently file it on time.

As a Spanish taxpayer, you want to take advantage of existing treaties and tax laws to mitigate double taxation when dealing with foreign assets. We strongly recommend consulting a professional tax advisor, especially if you are not very familiar with the existing tax regime. We can help you, just fill in the contact form and we will contact you back right away.

Disclaimer: Information on this page may be incomplete or outdated. Under no circumstances should the information listed be considered professional legal advice. We highly recommend seeking guidance from a legal expert if you lack extensive knowledge or experience dealing with any of the procedures outlined in these articles.