If you are a tax resident in Spain and own assets or rights outside the country, you are likely familiar with the Modelo 720. While this declaration does not entail direct tax payments, it plays a crucial role in ensuring fiscal transparency. This article provides a comprehensive overview of the procedure and outlines everything you need to know.
The Modelo 720 is an informational declaration that must be submitted by tax residents in Spain who possess assets or rights abroad, provided that their value exceeds certain thresholds. Although it is not a tax payment form, it holds significant importance for the accurate declaration of these assets.
The Modelo 720 must be filed by all tax residents in Spain who hold assets or rights abroad that surpass certain established limits. The primary thresholds are as follows:
- Bank accounts: If the combined balance of all foreign accounts exceeds 50,000 euros.
- Securities, insurance policies, rights, and income: If the total value of these assets exceeds 50,000 euros.
- Real estate: If the total value of real estate located outside Spain exceeds 50,000 euros.
If you have previously filed the Modelo 720, you will only be required to submit it again if there has been an increase in the value of these assets greater than 20,000 euros.
It is important to note that the Modelo 720 must be submitted between January 1st and March 31st of each year, with reference to the assets and rights held during the preceding fiscal year. As such, you are required to adhere to a specific deadline for this obligation, making it imperative not to delay the submission.
In terms of penalties for non-compliance, the consequences can be considerable. Failure to submit the Modelo 720, or submitting it incorrectly, can result in substantial fines. Initially, a fixed fine of 5,000 euros is imposed for each omitted data item or set of data, with a minimum fine of 10,000 euros. Furthermore, if the declaration of foreign assets or rights is incorrect, the penalties may be significantly higher, underlining the importance of ensuring compliance.
In Conclusion
The Modelo 720 is a fundamental tool to uphold fiscal transparency and avoid penalties for non-compliance. If you own assets abroad, it is essential to fulfill this annual obligation and accurately declare your assets. The filing period is between January 1st and March 31st, and you will only be required to submit it again if there has been an increase of more than 20,000 euros in the value of your assets.
Should you have any questions or require assistance with this procedure, please do not hesitate to contact MDG Advisors.
Sandra Gámez Chaves