The period to submit the Annual Declaration of Assets and Rights Located Abroad (Tax Form 720) for FY2017 runs from 1st January to 31st March.
This recurring obligation to submit information was established under Act 7/2012, 29th October, which amends tax and budget legislation and adapts financial regulations to step up fraud prevention measures, and does not impose payment of any taxes.
However, failure to submit the declaration leads to heavy penalties.
1.- TAXPAYERS UNDER THE OBLIGATION OF SUBMITTING THE DECLARATION
Any taxpayers who submitted this declaration in previous years will have to re-submit it in the following cases:
- There has been a €20,000 increase in any of the three asset blocks since the last declaration:
- Bank accounts located abroad.
- Stocks, rights, insurance policies and incomes deposited, managed and gained abroad.
- Real estate and rights on real estate located abroad.
- If any of the above blocks had never been declared and exceeds €50,000 in the balances or stocks as of 31/12/2017, 4Q average balances or acquisition values of the different types of assets.
- In any case, this declaration must be submitted in successive years for assets already declared and over which ownership is cancelled or terminated.
Generally speaking, the declaration of assets and rights located abroad will be binding on any individual or company mentioned below and that own assets and rights located abroad subject to the obligation to declare:
- Individuals and companies residing in Spanish territory
- Permanent establishment in Spanish territory of non-resident individuals or companies.
- The entities specified in section 35.4 of the General Law on Taxation 58/2003, 17th December: unsettled estates, joint ownership and other entities that, not having legal personality, represent an economic unit or separate estate that is subject to taxation.
- The owners of the assets and representatives, authorized persons, beneficiaries and people with power of disposal.
2.- EXCEPTIONS TO THE OBIGATION TO DECLARE
- The quantitative value of €50,000 needs to be analysed by group of asset (accounts, stocks and real estate).
- There are other exceptions to the obligation to declare which apply when the Administration has already received the information through other channels:
- When the asset or right is registered in the taxpayer’s books individually, separately from the other assets and is clearly identified.
- When the bank at which the asset or right is deposited has a registered address in Spain and is itself under the obligation of declaring it to the tax authorities.
- Finally, companies eligible for subjective tax exemption under the Corporate Tax Act.
3.- PENALTIES
The penalty for failing to submit the declaration is €5,000 per piece of information, with a minimum of €10,000 for each group of asset.
The penalty for filing the declaration late is €100 per piece of information, with a minimum of €1,500 for each group.
The most serious consequence is imposed on taxpayers who hold assets abroad which are hidden from the Tax Administration. If the Tax Administration discovers that a taxpayer has assets abroad and has not reported them, the Tax Office will treat the non-declared estate as capital gains that are not justified to be included in the general taxable base of the earliest year out of those which have not expired, and will also impose a 150% fine.
Arrabe Integra
Tax Department