Am I required to submit a declaration for my bank accounts, shares, holdings, life insurance policies, real estate, land, or other assets abroad? What is the deadline, and what information should I provide if this applies to me? What penalties or consequences might I face if I fail to comply?
If you’ve ever asked yourself these questions and feel a bit lost regarding this matter, don’t worry. Below, SettleDown provides a summary to give you a much clearer understanding.
Form 720 of the Spanish Tax Agency
Form 720 is an annual informative declaration that combines the following three tax reporting obligations:
Article 42 bis: Obligation to report on accounts held in financial institutions located abroad.
Article 42 ter: Obligation to report on securities, rights, insurance policies, and incomes deposited, managed, or obtained abroad.
Article 54 bis: Obligation to report on real estate and rights over real estate located abroad.
In other words, we can see how its purpose lies in the necessary and imposed communication to the Tax Agency of the rights and assets located abroad by those obliged to file them.
Who is obligated to submit the declaration?
The obligation applies to all individuals and legal entities residing in Spain, permanent establishments (such as offices, workshops, shops, warehouses) located in Spain owned by non-resident individuals or entities, and entities without legal personality that constitute an economic unit or a separate estate. However, this obligation applies only in the following circumstances:
- If, at any time during the year referenced in the declaration, the individual is or has been the owner, representative, authorized person, beneficiary, or holds disposal powers or is the actual owner of any account in a financial institution abroad, except:
If the balances on December 31 do not collectively exceed 50,000€ (or if the average balances for the last quarter of the year do not exceed this amount). If any of these thresholds are exceeded, all accounts must be reported. - If, at any time during the year referenced in the declaration (losing that status on 31 December of that year), the individual is or has been the owner or actual owner of:
- Shares, holdings, or equity in any type of legal entity abroad.
- Bills, bonds, notes (public or private), loans, and credits issued or granted abroad.
- Securities (shares, holdings) managed or administered through any legal instrument abroad.
- If, at any time during the year referenced in the declaration (losing that status on 31 December of that year), the individual is or has been the owner or actual owner of shares and units in the share capital or investment funds located abroad.
- You are the policyholder or beneficiary as of December 31 of each year for life or disability insurance policies when the insurance company is located abroad, or for temporary or lifetime annuities resulting from the delivery of capital in money, economic rights, or movable or immovable assets to entities located abroad.
As with accounts, there is no obligation to declare:
When the balances as of December 31 for the values listed in the second point, the net asset value of shares and holdings in the share capital or investment funds, and the surrender or capitalization value of life or disability insurance policies and temporary or lifetime annuities do not collectively exceed 50,000€. If this total threshold is exceeded, all securities, assets, values, rights, insurance policies, or annuities must be reported.
- If, at any time during the year referenced in the declaration (losing that status on 31 December of that year), the individual is or has been the owner or actual owner of real estate (houses, land, factories) or rights over real estate located abroad, except:
When the acquisition values or the values as at 31 December for timeshare contracts, shift-utilisation, part-time ownership and rights in rem of use or enjoyment and bare ownership of immovable property do not exceed 50,000€ together. If this joint limit is exceeded, all immovable property and rights to immovable property must be reported.
Deadline and Information to Include
The declaration must be submitted electronically via the Internet (either by the declarant or a representative using an NIF and electronic certificate) between January 1 and March 31 of the year following the one referenced in the declaration. The required information includes:
- Bank Accounts: The full name or corporate name of the financial institution, its address, the complete identification details of the accounts, the opening or closing date, or, where applicable, the dates of granting or revoking authorization, and the balances on December 31 as well as the average balance for the last quarter of the year.
- Securities or Rights: The full name or corporate name of the legal entity, third-party assignee, or identification of the legal instrument, as applicable, its address, and the balance as at 31 December of each year of the shares, holdings, equity, bills, bonds, notes (public or private), loans, credits and securities contributed to the legal instrument concerned.
- Shares and units in the share capital or endowment fund of collective investment undertakings: The full name or corporate name of the collective investment institution, its address, the number and type of shares or holdings (including their compartment if applicable), and their liquidation value on December 31.
- Temporary or Lifetime Annuities obtained as a result of the surrender of a capital sum, economic rights or movable or immovable property: The full name or corporate name and address of the insurance company, as well as the surrender or capitalization values.
- Real Estate and Real Rights: Identification of the property with a brief specification of its typology, as determined in the corresponding ministerial order, country or territory in which it is located, locality, street and number, date and value of acquisition.
In the case of timeshare contracts, part-time ownership or similar formulas, the date of acquisition of these rights and their value as at 31 December must also be indicated.
In the case of rights in rem of use or enjoyment and bare ownership of immovable property, the date of acquisition of such ownership and its value as at 31 December must also be indicated.
Penalties
If the declaration is not submitted when required, a penalty of 20€ per omitted item or set of items related to the same person or entity will apply, with a minimum of 300€ and a maximum of 20,000€.
If the declaration is submitted late without prior notification from the tax administration, the penalty and its minimum and maximum amounts will be halved.
If the declaration is submitted but contains errors, a proportional penalty of up to 2% of the undeclared or incorrectly declared operations will apply, with a minimum of 500€.
For further information and advice regarding Form 720, please don’t hesitate to contact us!