The Modelo 720, also called “Form 720″ or “Overseas Asset Declaration”, was introduced in November 2012 creating the obligation of submitting the return for the first time in 2013. It is intended for all fiscal residents of Spain to report details of assets held overseas if they exceed certain values. There is no tax to pay on these assets BUT the records will be used and compared against your Income and Wealth Tax Return to ensure that any income generated from these assets is being reported, for example, rental income or bank interest, which is typically not reported by a few people against our recommendations.
DATES TO SUBMIT: The declaration has to be submitted each year before 31st March in respect of assets held at 31st December of the previous year.
THE EXCHANGE RATE: The rate of exchange to be applied as at 31 December 2015 is, according to the European Central Bank:
- £1 = 1.36€
- $1 = 0.92€
WHAT HAS TO BE DECLARED: The assets are divided into three groups, Bank Accounts, Investments and Property.
If you have assets which in total exceed 50,000€ in any of these groups, then you need to report them. If the assets are held in joint names, then each individual needs to submit a report and declare their share, e.g. 50%. The value of the assets has to be converted at the rate of exchange as at 31st December. You only have to report the Group(s) in which your assets exceed the reporting limit. With regard to property the value is the purchase of the property not the current value.
ANY CHANGES: If you have already reported, you need to report again in subsequent years if there are changes; i.e. your assets have increased in value by 20,000€ or more in any Group or individual asset previously declared or you have acquired a new asset in any Group or disposed of or close an asset in any Group. This includes any increase as a result in the change of exchange rate. We strongly recommend our clients to let us know the valuation of your assets and any changes every year so that we can check them against previous years to ensure that you do not fall foul of the reporting rules.
FINES: If you do not make the presentation or give false or incorrect information the fine is set at 5,000€ for every piece of information with a minimum fine of 10,000€.
If you make the presentation late then the fine is set at 100€ for each piece of information that has not been declared with a minimum fine of 1,500€.
IMPORTANT: This year, as the exchange rate has increased from previous years, you may have the obligation of reporting all your assets again if its value is around 120.000 GBP even if there is no change in the value of your assets in Pounds. We think this is going to give the Tax Office the opportunity of investigating many people and you will only be safe by declaring everything properly.
Please be aware that the tax offices are reviewing every declaration made since this new Modelo was introduced and if you should have declared again in a subsequent year you will be contacted by them.
We invite you to contact us to clarify your situation because we work to make your life easier in Spain and preventing problems in one of our principal targets.