We talked about what declarations a newly-made resident of Spain must submit.
Now we would like to dwell in more detail on the Model 720 (Modelo 720) . Moreover, the deadline for filing in Spain is already open and will last until March 31 inclusive.
Who is required to file a 720 Declaration:
- Any individuals and legal entities that became tax residents in the previous reporting period. For example, if you became a tax resident in 2020, then the filing must be from January 1 to March 31, 2021.
What Does the Model 720 Declare?
All movable and immovable property located outside Spain, the amount of which in one block exceeds 50,000 euros in the equivalent on December 31 of the reporting year.
- Bank or any other accounts in financial institutions, as well as Cash Pool accounts. The balance is declared as of December 31 of the reporting year for each account (even if one of your accounts has only 2 cents), expressed in euros.
- Securities, shares, bonds, rights and shares in authorized capital, personal funds of legal entities, as well as amounts and loans that were given to third parties from their sources. The assessed value is declared as of December 31 of the reporting year in euro equivalent.
- Real estate outside of Spain. The real assessed value of the property is declared as of December 31 of the reporting year in euro terms. It is important to note that in this case, if the property was purchased a long time ago and its purchase price does not coincide with the real one, it makes sense to revalue an independent appraiser.
Well, maybe this Declaration?
I will not declare and that’s it, no one will know anyway.
Let’s figure it out . At some point, you may need to sell any property abroad to transfer funds to Spain. In this case, the bank will need to confirm the origin of the funds, and at this moment the bank may ask you for Declaration 720 and notify the tax office of the sold and not declared property.
In addition, let us not forget that agreements on the exchange of information have already been signed with many third countries, including the former countries of the post-Soviet space. And to be honest, the use of these channels, namely the tax one, has not yet been encountered in our practice. Nevertheless, everything can change in an instant. Moreover, given the fact that SEPBLAC (Commission for the Prevention of Money Laundering) is already actively using these resources.
The most sensational cases and the largest fines in the history of the tax service were, among other things, for non-declaration of property according to the Model 720.
What does the tax service itself say on this issue? “If the Model was not submitted and all three blocks were not declared in accordance with Form 720, then the minimum fines start from 30,000 euros, but if you do not submit just one block, then you can get by with 10,000 euros.”
The maximum penalty can be up to 150% of undeclared property. So it’s easy to go from plus to minus😉
The fines under this Model, of course, could not fail to produce a public outcry in Spanish society, and today there are several interesting court decisions regarding the disproportionality of these fines with the actual damage to the state, as well as their inconsistency with the European fundamental rights and values of the citizen.
With us you can get full advice and assistance in filing all declarations and much more.