The Form 720 or Annual Mandatory Information Statement of Goods and Rights located abroad is open for filing until the next 31/March. We refer to the one corresponding to the 2019 fiscal year.
From our Tax Consulting Department we remind you what it consists of, as well as the corresponding obligations and responsibilities.
In practice, Model 720 combines three separate reporting obligations. They refer to the following blocks of assets or rights abroad, each block being independent from the others:
- Accounts in financial institutions located abroad.
- Securities, rights, insurance and income deposited, managed or obtained abroad.
- Real estate and rights to real estate located abroad.
This reporting obligation, which is of a recurring nature, was established by Law 7/2012, of 29 October. It amends tax and budgetary regulations and adapts financial regulations to intensify actions to prevent and combat fraud. And to emphasize that it does not determine the payment of any tax installments. However, failure to file a tax return carries very serious penalties.
Form 720 Mandatory Information Statement. Obligation to declare
This obligation to declare has to be analyzed independently for each of the three blocks of assets or rights mentioned in the previous point. And only applies if the value of the assets at stake exceeds at the end of the year (or the average of the fourth quarter) the amount of 50.000€.
The declaration must be submitted only once for each block and be renewed in the following years only if the value of the assets in a particular category increases by more than 20.000€. Or if any of the assets or rights previously declared is no longer owned. The obligation to declare could also apply if no declaration has been submitted for one of the blocks of assets or rights, and the 50.000€ threshold is exceeded.
Each of the three types of goods constitutes a different obligation to inform, but the three obligations to inform can be recorded on the same informative form. This way the three obligations to inform can be complied by filling out Form 720, informing about all the goods and rights with regard to which there is an obligation to inform.
Deadline
The deadline for submitting the declaration is set at 31 March of the tax year. It was raised that the deadline is difficult to be respected, particularly when the data that must be declared is not available, as the taxpayer holds the assets in other Member States that operate different tax years.
Consequences of late filing or not filing. Fines and unjustified capital gains.
The fines applied either for non-declaration, or for late declaration are:
Not submitting the form: Monetary fine of 5.000€ for each item of information not included, with a minimum fine of 10.000€.
Submitting the form out of the legal deadline, but before the request of the Spanish tax authorities to submit it: Monetary fine of 100€ for each item of information in each category, with a minimum fine of 1.500€.
Assets located abroad and undeclared under Form 720 or declared outside the set deadline will be taxed as unjustified capital gains obtained in the last tax year still not barred by the statute of limitations. In practice and by contrast with the domestic regime, the taxpayer may not prove that these assets were acquired in a tax year barred by the statute of limitations. In addition, a fine amounting to 150% of the tax to be paid is applied. Nonetheless, no sanction applies if the resident taxpayer proves that the undeclared assets located abroad correspond to legitimate income.
If you have any questions, do not hesitate to contact us.
Arrabe Integra
Tax Consulting
