The Tax Form 720, regulated by the Spanish Royal Decree 1558/2012, dated 15th November 2012, introduces the obligation to declare bank accounts, securities and life insurance contracts/rights, as well as real estate located abroad and owned by Spanish residents.
It is imposed without discrimination on all Spanish taxpayers, natural persons or legal persons.
As Tax Consulting experts we summarize below the most important aspects
Tax Form 720. Information to declare
Accounts in financial entities located abroad:
- the information includes balances of these accounts on December 31st.
- Average balance for the last quarter of the year.
- the date of opening and the term of the ownership (holder, representative, authorized, beneficiary, usufructuary, with power of disposal). This obligation to inform is regulated in article 42 bis of the Royal Decree 1065/2007, dated 27 July.
Values, rights, insurances and incomes deposited, managed, or obtained abroad. This obligation to inform is regulated in article 42 ter of the aforementioned RD 1065/2007, dated 27 July.
Real estate assets and rights on real estate located abroad: the information includes the address, date and the value of acquisition. This obligation to inform is regulated in article 54 bis of the RD 1065/2007, dated 27 July.
Tax Form 720. Obligation to declare
The obligation to declare 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, and be renewed only if the value of the assets in a particular category increases by more than €20.000.
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 Tax Form 720, informing about all the goods and rights with regard to which there is an obligation to inform.
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 Tax 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