The deadline is approaching for Spanish taxpayers to declare any assets they hold abroad to the Spanish tax authority.
Both Spanish citizens and foreign residents are obligated to submit a Modelo 720 form with this information each year that their asset ownership status changes.
This has been a requirement since 2012, when the form for declaring assets was introduced with the aim of reducing fiscal fraud and preventing money laundering.
While you may not actually have to pay taxes on assets held outside Spain, you could receive a fine if you fail to declare them by filling out the specific form on time.
Keep reading to learn more about who is required to file a Modelo 720 and when.
Who has to declare foreign assets in Spain?
Like Spanish nationals, if you are a Spanish tax resident who lives in Spain for 183 days a year or more, you will need to file a Modelo 720 form declaring foreign assets to the Spanish tax agency if you have:
- ⦿ Bank accounts abroad with a sum total exceeding 50,000€ – including deposit and savings accounts
- ⦿ A property abroad worth over 50,000€ (purchase value) – including private properties and business premises
- ⦿ Other assets abroad that exceed 50,000€ – including pensions, annuities, stocks and shares, bonds, or life insurance
If any of these foreign assets have a total value of 50,000€ or more on 31st December before the deadline the following March, then you must declare them all in Spain by filing the form.
For any joint assets, every individual must declare the total value of the asset and the value of their share.
When is the deadline for filing a Modelo 720 form?
The deadline for reporting foreign assets for the previous tax year is 31st March the next year, with the asset ownership status and values for that year calculated and recorded as of the last day of the year (31st December).
This means that asset values may fluctuate depending on the exchange rate at the time, because you have to convert the currency of the country where the asset is located to Euros (unless that country also uses the Euro).
After you have declared an asset, you do not need to declare it again unless your circumstances change by:
- ⦿ Cancelling previously declared assets
- ⦿ Selling currently owned property abroad
- ⦿ Purchasing new property abroad
- ⦿ Obtaining more foreign assets
- ⦿ Investments maturing
- ⦿ Previously declared assets increasing in value by 20,000€ or more
Similarly, if you declared assets in one category in a previous year but different assets in another category now exceed 50,000€ as well, you must declare the new qualifying assets for the latest year.
If you fail to file a Modelo 720 or to declare an asset that should have been reported, you could receive a fine of up to 50% of the value. If you file incorrectly, the penalty is 100€, with a penalty of up to 1,500€ for filing late.
What about Modelo 721 for crypto assets?
As a newer digital currency that uses encryption technologies, cryptocurrencies are considered separate from more traditional assets. The form for declaring foreign crypto assets is the Modelo 721, introduced this year.
Much like the Modelo 720 terms, this foreign crypto asset declaration form must be filed by 31st March for the previous calendar year, reporting any crypto assets held abroad and their value on 31st December if it exceeded 50,000€.
If your total crypto assets held in foreign exchanges were below this value on this date, you shouldn’t need to complete the Modelo 721 form. It may not count as foreign if the exchange is registered with the Bank of Spain. Similarly, if your cryptocurrency is held in a ‘digital wallet’, this does not count as being held abroad.
Instead, these may count as assets within Spain, which both residents and non-tax residents must declare if their value exceeds the threshold for the wealth tax in Spain.
It’s important to remember that this is informative only – if you need to report taxable income from selling crypto assets, you must do so when separately filing your personal income tax return in Spain by 30th June.
Do you need help filing a foreign asset declaration?
If you aren’t sure whether you are obligated to file a Modelo 720 or 721 or not, it’s best to consult an English-speaking Spanish lawyer who can discuss your individual circumstances and advise you on your legal tax liabilities in Spain.
For example, if you only stay in Spain for less than 183 days a year, then you won’t be considered a Spanish tax resident, and therefore there will be no obligation to report or pay tax to the Spanish government on income and assets outside of Spain.
If you’re uncertain about non-resident tax in Spain, or which assets you should report and how to value and declare them correctly, why not seek professional legal advice from Manzanares Lawyers? We have in-depth knowledge of tax regulations in Andalucía and would be glad to assist you.
Simply call us at one of our offices in Málaga or Ibiza, or email your query to clientservices@manzanareslawyers.com and we will be in touch as soon as possible.
