Form 720 or the declaration of assets and rights abroad has required many people to declare what they own in other countries. However, to this day there are still people who have not submitted Form 720 to regularise their situation for fear of the heavy penalties that are prescribed by law.
With a process of exchanging information between the Spanish Tax Agency and the agencies of other countries set in motion, now is the time to regularise your affairs. If you have property or rights thereto abroad, the Treasury will find out sooner or later.
What’s Form 720 used to declare?
The assets and rights located abroad that must be declared with Form 720 are, among others, as follows:
- Accounts located abroad.
- Securities, insurance rights and annuities.
- Real estate and property rights.
Such assets, securities and accounts must be declared by:
- Natural and legal persons residing in Spain.
- Permanent establishments in Spain owned by non-resident persons or entities.
- The entities referred to in article 35.4 of Spain’s General Taxation Law (recumbent inheritances, community property etc.).
Regularisation may not be that expensive
The biggest controversy stemming from Form 720 is that it is believed that for a purely informative statement (i.e., it is not supposed to relate to payment, but rather is intended to prevent tax fraud), a failure to file or errors in filing can result in the imposition of high penalties.
To give you an idea, the law stipulates that if you don’t declare your assets and rights abroad or do so incorrectly, it can result in a penalty of 150% of your personal income tax (IRPF) fee and, in addition to this, 5,000 euros for each item or set of data with a minimum fine of 10,000 euros. If you declare outside the deadline, the penalty is 100 euros per item, with a minimum of 1,500 euros for each group of goods to be declared.
Faced with this, the European Union prepared a Reasoned Opinion that was sent to Spain in February last year to modify the regulations of Form 720 since the penalties for those who did not submit Form 720 at all and those who did so after the deadline were practically the same. As a consequence of this, the Treasury issued a Binding Consultation stating that the penalty of 150% would not be applied to persons who voluntarily filed Form 720 after the deadline, instead of having a surcharge of 15-20%.
If you have assets and rights abroad and you have not yet filed Form 720, you can contact our tax experts who will help answer your questions about penalties and surcharges and speed up the filing process.