What is The Modelo 720?

The modelo 720 is a form that must be completed by all residents of Spain and submitted to the tax authority if you hold assets overseas over a certain amount in certain financial categories. Here we explain the details.

The modelo 720 states that all individual assets with a value of over €50,000 located abroad as at 31st December each year must now be declared to the Spanish tax authorities. This includes all accounts with financial institutions, custodian accounts, real estate, assets held in companies abroad, shares, trusts, etc.

There are three asset classes - Immovable property (real estate), Bank Accounts and Investments. If the value in any category exceeds the €50,000 threshold as at December 31st (or on average over the three proceeding months for bank accounts) then a declaration must be made. 50,000€ is the total for any one asset class, so for instance if you have five bank accounts overseas and the total value between them all is €50,000 or over each account must be reported. The same applies to all the asset classes. If you have assets in joint names the assets must be reported if they are 50,000€ or over. The value of the assets reported is at 31st December each year. The report needs to be completed between January and March for the previous tax year. Failure to comply will mean a heavy fine (a minimum of €10,000 and a further €5,000 on top per asset) and in some cases a prison sentence.

There is no statute of limitation, so the tax offices can ask for information on your assets from the date it was set up. Every year the Asset Declaration here in Spain needs to be considered. For most who have completed the Modelo 720 (the Asset Declaration form) they are not required to do it again unless; 1) The valuation in any of the three Asset classes increases/decreases by more than €20,000 with respect to the previous year. 2) You acquire new assets. 3) In certain cases where assets have been relinquished i.e. one investment closed and another put in its place, or a property has been sold etc. Therefore the advice is to check every year to make sure that this does not apply to you. Remember a change in the exchange rates could push you over the €20,000 limit.