Form 720, or the declaration of information regarding assets and rights located abroad, has generated considerable criticism because of its high penalties for non-compliance despite being for information purposes only.
What is declared on Form 720?
This form is used to make declarations in three respects:
- Accounts in financial institutions abroad.
- Securities, rights, insurance and annuities deposited, managed or obtained abroad.
- Real estate or rights to real estate located abroad.
Who needs to file Form 720?
Those required to submit Form 720 are as follows:
- Natural and legal persons residing in Spain.
- Permanent establishments in Spanish territory belonging to non-resident persons or entities.
- Entities such as recumbent inheritances and community property.
Recumbent inheritance (sometimes known as hereditas jacens in English) refers to the status of the estate of the deceased from the time of death until the inheritance is accepted by the inheritors.
As for inheritances, inheritors must declare when there is a tacit or express acceptance of inheritance.
How is a real estate asset valued when it is inherited using Form 720?
In the case of foreign inheritances involving real estate, they must be valued and declared according to the acquisition value, i.e. according to the value of the real estate at the time it was acquired.
When should Form 720 be submitted?
Form 720 is declared between 1 January and 31 March of the year after that to which the information contained in the form refers.
When it has already been submitted a first time, it is important to know that it should only be resubmitted when, concerning one or more of the declaration obligations, there is an increase in the limit set for each block of information of 20,000 euros in relation to the previous declaration.
In the case of inheritances, it is possible that once the division has been completed and Form 720 has been declared, new assets of the deceased could be discovered to be distributed among the beneficiaries. If the limits stipulated in the regulations are exceeded, Form 720 must be declared again.
Form 720: Regularisation
It’s possible that you could have inherited some property or money abroad and that you are unaware that you have an obligation to file Form 720. In these cases, you should know that it is important to regularise your affairs as soon as possible because the penalties are heavy.
The penalty for not submitting a declaration or for doing so with errors or omissions is considered a very serious offence and there will be a penalty of 5,000 euros per item or set of data, with a minimum fine of 10,000 euros for each group of assets.
If the declaration is submitted after the deadline, the penalty is 100 euros for each item of data, with a minimum fine of 1,500 euros for each group.
If you have any questions about Form 720, please don’t hesitate to contact our tax advisors for guidance and assistance.