Do you have assets or rights abroad? If the answer is yes, you should know how to inform the Spanish Tax Agency. This article provides you with the five essential points for properly understanding Form 720.
What do you use Form 720 to declare?
Form 720 relates to the declaration of taxes on assets and rights held abroad. Despite the tax requirement being used for information purposes only, it has generated a great deal of controversy in recent years due to the heavy penalties that can be imposed in the event of non-compliance.
What sort of assets and rights are declared?
Three types of assets and rights must be declared on Form 720:
- Real estate and rights to real estate located abroad. Their identification, location (country, town, street, number), the date of acquisition and the purchase value should be detailed (dependent on whether the property is owned in full, with usufruct or in bare ownership, among other cases).
- Accounts with financial entities located abroad. You should include the name of the banking institution, its address, account identification, opening and closing dates, the balance on 31 December, the average balance for the last quarter and the date on which you ceased to be the holder, representative, authorised agent, beneficiary or person with the power of disposal.
- Securities, rights, insurance and annuities deposited, managed or obtained abroad.
- With regard to securities, the trading name of the entity or third-party assignee must be stated, as well as the address, balance on 31 December and the number, type of shares and their value.
- With regard to rights, the rights relating to the transfer of equity capital to third parties are included.
- With regard to insurance, the name of the insurance company, the address and the surrender value of the policy on 31 December must be reported.
- With regard to temporary or lifelong annuities, information must be provided regarding the trading name of the insurance company, its address and the capitalisation value on 31 December.
There are several nuances to be taken into account in relation to the assets and rights that must be declared, such as those detailed below:
- Shared bank accounts must be declared when there is a balance on 31 December of more than 50,000 euros.
- Shared ownership of real estate must also be declared when the purchase value exceeds 50,000 euros on 31 December.
However, it is advisable to go to a tax expert to review your specific case and provide guidance regarding your tax liabilities and the cases in which tax exemption may be available.
Who needs to file this return?
Individuals or entities resident in Spanish territory must file Form 720 with the Spanish Tax Agency. This includes residents of the Basque Country and Navarre.
The above points in the previous section regarding bank account and real estate co-ownership must also be taken into account in regard to those who are obliged to file Form 720.
How and when to submit Form 720
Information regarding assets and rights abroad must be provided electronically through the use of Form 720. The form must be submitted between January 1 and March 31 of the year following the one to which the information provided relates, meaning that information relating to the year 2016 must be submitted between January 1 and March 31, 2017.
Penalties in the event of non-compliance
As mentioned at the beginning of this article, one of the most controversial aspects of the Form 720 regulations is the sanctions for non-compliance. The fines are as follows:
- A fine of 5,000 euros for each item or set of data that is not included in the declaration when required, or when it is partially, inaccurately or falsely provided, with a minimum fine of 10,000 euros.
- A fine of 100 euros for each item or set of data when the return is submitted after the deadline without being requested by the Tax Agency, with a minimum fine of 1,500 euros.
The declaration of information in the submission of Form 720 requires an in-depth knowledge of what assets and rights should be declared, who the obligated parties are and what sanctions can be imposed in the event of non-compliance. For this reason, we advise you to go to an expert. Our Form 720 specialist team is at your disposal, ready for you to contact them to address any doubts you may have.