Do you know if you need to submit Form 720? Are you aware of the penalties for failing to submit it or doing so after the deadline? While we’ve talked about Form 720 (the declaration of assets abroad) in previous articles, in this one, we want to focus on the penalties regulated by law so that you’re aware of them and know how to avoid them.
From the outset, there has been controversy about Form 720 and the penalties imposed for non-compliance with its requirements due to it solely being for information purposes.
Form 720: Violations and penalties
The violations and penalties related to Form 720 are regulated in the eighteenth additional provision of Spain’s General Taxation Law.
The General Taxation Law states that these are considered tax violations:
- Failure to submit the declaration by the deadline.
- Submitting the declaration incompletely, inaccurately or with false data.
- Not submitting the declaration by electronic or digital means where there is a requirement to do so.
The above violations are considered to be very serious and are punishable as follows:
- If the requirement to report accounts with credit institutions abroad is breached, the penalty is 5,000 euros for each item or set of data that should have been included in the return. The minimum fine is 10,000 euros.
- If the declaration of accounts in entities located abroad is submitted after the deadline without a prior request to do so from the Spanish Tax Agency, the penalty is 100 euros for each item or set of data, with a minimum fine of 1,500 euros. This penalty is also imposed when the requirement to use electronic or digital means is breached.
- If the requirement to report on shares, assets, securities, rights, insurance or annuities deposited, managed or obtained abroad is breached, the penalty is 5,000 euros for each item or set of data with a minimum fine of 10,000 euros.
- If the declaration regarding shares, securities, etc. is submitted after the deadline without a prior request from the Treasury, the penalty is 100 euros for each item or set of data, with a minimum fine of 1,500 euros.
- Finally, if the requirement to report real estate located abroad or rights thereto is breached, the penalty is 5,000 euros for each item or set of data with a minimum fine of 10,000 euros.
- If the declaration of real estate or rights is made after the deadline without being a prior request from the Treasury, the penalty is 100 euros for each item or set of data with a minimum fine of 1,500 euros.
In addition to the above, penalties may be imposed for personal income tax (IRPF) and corporate income tax (IS), depending on the case.
Controversy over Form 720 and penalties
We have previously mentioned the controversy over the penalties under Form 720 and, in fact, the Mallorcan firm DMS Consulting reported it to the European Commission for considering the penalties to be excessive and infringing on the free movement of people and capital.
Currently, although the European Union has issued a ruling, the law has not changed. However, the courts are beginning to rule against the application of penalties by understanding that the Treasury is in violation of the presumption of the taxpayer’s innocence because they have not demonstrated their guilt. The courts believe that not delivering Form 720 on time does not imply guilt.
If you think you are required to file Form 720, you should consult a tax expert who can advise you and take care of the formalities.