Modelo 720

1. Modelo 720
Alejandra Pastor – Sagardoy Abogados
Antonio Rodriguez – US Tax Consultants
2018

2. Modelo 720
• Annual informative tax return.
• For tax residents in Spain with assets abroad.
• Introduced in tax year 2012 by Fraud Prevention
Law 7/2012.
• To reinforce the cooperation in the exchange of
information between countries needed for the
liquidation of taxes.

3. Modelo 720 legality
• Investigation of the European Commission (EC):
▫ Disproportionate penalties for the non-
submission or incorrect submission
▫ No statute of limitation on submission
• Meanwhile, there is the obligation to declare.

4. Who must declare
• All Spanish tax residents on 2017.
• Spanish permanent establishments
owned by non-residents.
• All Spanish entities such as
community properties and estates.

5. Tax residency in Spain
Tax year: from January 1st to December 31st.
Who is tax resident in Spain?
1. Individuals that are present in the Spanish territory for more that 183
days during the calendar year, or
2. Those who have the main center of their economic interest in Spain.
3. Thus, there is a presumption of tax residency when the spouse and
children are tax resident in Spain.
The status of resident or non resident will be held during all the
natural year

6. How to determine your residence
• Anyone who resides in Spain over 183 days is
presumed to be a Spanish tax resident.
▫ EXCEPTION: Those certified by the IRS as US
Tax Residents. Form 8802
▫ Certificate of tax residency issued by another
country (US)
• Those granted special non-resident five years tax
status (Beckham Law), NOT obliged to file 720,

7. If you have residence in Spain
Tax residents in Spain
Taxed for their worldwide income regardless where the
income has been generated or the tax residency of the tax
payer.
Tax obligations:
• Personal Income Tax return (IRPF)
• Informative return for assets and rights held abroad (720)
• Other taxes for residents:
▫ Impuesto de patrimonio. Wealth Tax
▫ Impuesto de trasmisiones/donaciones. Gift Tax.

8. 720 Assets outside Spain
Informative annual return Form 720 from January 1st to March 31st.
Spanish tax residents with assets abroad when any of the following blocks exceed 50.000 €
1. Accounts (deposits, credit, etc)
1. Complete identification of the bank and domicile
2. Complete identification of the account
3. Date of opening/cancelation
4. Balance at December 31st and last quarter.
2. Stocks, bonds, values, financial rights, insurance, shares.
1. Complete identification of the entity
2. Value at December 31st number and type of shares
3. Real Estate and rights over real estate.
1. Complete identification of property
2. Date of acquisition
3. Value of acquisition

9. Reporting assets outside Spain
• Once Form 720 has been filed this form should
only be filed again when, in relation to one or
more of these obligations, there is an increase of
the overall limit established for each information
block above 20,000 euros compared with what
the last declaration determined.
• If you sold and asset/closed and account that
was previously been declared.

10. Reporting assets outside Spain
Year ACCOUNT 1 ACCOUNT 2 TOTAL INCREASE FILING
31/12 LAST Q 31/12 LAST Q 31/12 LAST Q 31/12 LAST Q
2012 20,000 18,000 40,000 23,000 60,000 41,000 NA NA YES
2013 20,000 21,000 50,000 38,000 70,000 59,000 10,000 18,000 NO
2014 20,000 24,000 45,000 38,000 65,000 62,000 5,000 21,000 YES
2015 30,000 35,000 50,000 35,000 80,000 70,000 15,000 8,000 NO
2016 36,000 35,000 50,000 40,000 86,000 75,000 21,000 13,000 YES

11. Exchange rate
• Accounts: exchange rate applicable at 31/12. For accounts
canceled, exchange rate at the day of cancellation.
• Real Estate: the acquisition value will be updated at the
exchange rate applicable at 31/12.
For real estate, variations in the exchange rate that take place in
the following years will not be taken into account to determine
an increase in the value for the purposes of filing a new
informative Tax return.
For the rest of goods and rights, changes in exchange rates must
be taken into account for the purpose of valuing the entirety of
each group of goods and determining if they should be re-
declared.

12. Estimated value
When the assets belong to more
than one owner / beneficiary,
all owners must declare the
assets for the full amount,
indicating percentage of
ownership.

13. Exceptions
When the assets have already
been declared in Spain,
individually identified, as part
of a business.

14. BLOCK 1 Bank accounts
Accounts in financial
institutions abroad, which
includes current accounts,
savings accounts, term
deposits, credit accounts…

15. BLOCK 1 Bank accounts
Information on each account
should include the balance of these
accounts on December 31st, the
average balance for the last quarter
of the year and the date of opening.
Also if you are account holder,
authorized…

16. BLOCK 1 Bank accounts
Holders and authorized
holders, who have ceased to be
during the year, must indicate
only the balance of the day
ceased to be holders or
authorized holders.

17. BLOCK 2 Stock and investments
Stocks, bonds, values,
financial rights, and savings
in insurance companies,
deposited, managed or
obtained abroad.

18. BLOCK 2 Stock and investments
Information on the investments
should include the acquired date,
purchase price and value at
December 31, sale price and date of
disposition, capitalization and
rescue value at December 31.

19. BLOCK 2 Stock and investments
• Section 1
Securities or rights located overseas
representative of participation in any type of legal
entity; values located overseas representative of
the transfer of capital to third parties or provided
for its management or administration to any legal
instrument, including trusts though lacking legal
personality, capable of acting in the course of
trade.

20. BLOCK 2 Stock and investments
• Section 2
Shares and participations in share capital or
equity fund of collective investment institutions
located abroad.

21. BLOCK 2 Stock and investments
• Section 3
Life insurance (savings not risk) or pensions or
annuities, whose insurance companies are located
overseas.

22. BLOCK 3 Real Estate
All types of Real Estate and rights over
Real Estate abroad, which include
ownership of the property, actual use
or enjoyment and bare ownership
rights over real estate, timeshares,
timeshares shifts, part-time property
or similar formulas on real estate,
other rights over real estate.

23. Due date
• March 31, 2018.
• Applications can be completed only
OnLine by authorized tax consultants
or those with digital signature or PIN.
• Heavy sanctions for noncompliance

24. Fines
Penalty for not filling:
• 5,000 € per data (minimum of 10,000 €)
• Penalty for: filling incomplete, filing with
non-accurate data 100 euros per data
(minimum of 1,500 €)
Assets not declared, that cannot be proved its
ownership arising from declared income or assets,
will be considered income to be taxed, and up to
150% penalty over its value.

25. Consulta vinculante V1434-17
This recent CV of 6/6/2017, which seems to be the
consequence of the very hard Motivated Opinion
that the European Commission sent to Spain in
February 2017 demanding the modification of
Model 720, contradicts what the AEAT had said in
that other CV V3243-13 of 4/11/2013 and what the
Law itself clearly establishes: that declaring out of
time implies imputing the goods as a profit in
IRPF the last year not prescribed and also, always,
a sanction of 150%.

26. Consulta vinculante V1434-17
What the AEAT intends with this Consultation is
to be well with the European Commission, which
censured very hard that the Law will treat
practically the same as the one that does not
present the Modelo 720 and the one that does it
voluntarily but out of time and clarifies that
people who regularize their situation after the
deadline voluntarily, without prior notice,
presenting the pending Modelo 720 and paying
the IRPF will be required a surcharge (15-20%)
and will not be applied the sanction of 150%.

27. Consulta vinculante V1434-17
The AEAT reminds that declaring late can demand
a formal penalty of 100€ x data
An account has 5 data, a value has 2 data and a property has 4 data
with a minimum of 1,500€ for each block
(accounts, values, real estate), while for not
declaring or doing incorrectly that FORMAL
penalty is 5,000€ x data, with a minimum of
10.000€ for each group.
150% penalti  IRPF + 15-20% penalti

28. Consulta vinculante V1434-17
The AEAT also reminds that people
who can prove that their property
abroad comes from declared income
(in Spain) or from income obtained by
being non-residents, can "get out of the
trench" without fear, without being
able to demand personal income tax,
surcharges or sanctions.

29. Consulta vinculante V1434-17
• If the assets come from prescribed periods.
▫ Capital gains on 2013 at IRPF 150% assets.
• If the assets come from periods NOT prescribed.
▫ IRPF of 2013, 2014, 2015 and 2016
Nothing is said on assets from
inheritances and donations

30. Questions
Sagardoy Abogados
Tutor, 27 - 28008 Madrid
Teléfono: +34 915 429 040
www.sagardoy.com
US Tax Consultants
Travesía de las Cañas, 2 - 28043 Madrid
Teléfono: +34 915 194 392
www.ustaxconsultants.net