Spanish Residents: What is the Modelo 720?

The Modelo 720 is a declaration form that must be submitted by all Spanish tax residents who own any foreign assets exceeding 50,000 euros. Although submission of this form is for informative purposes only, and not tax collection, Hacienda can charge extortionate fines if you fail to submit, file late, or declare incorrect information. Many of those who have moved to Spain are not even aware of this declaration and risk these massive penalties, therefore it is important to know if you meet the criteria and are obliged to file this form.

who is required to submit this return?

All Spanish tax residents who own assets located outside of Spain, that exceed over 50,000 euros in value are obliged to submit a Modelo 720. These assets may fall under any of the categories listed below:

  1. Accounts in any kind of financial institution e.g. banks, building societies.
  2. Investments/ rights of representation in foreign companies or other entities
  3. Investments in foreign collective investment institutions (e.g. unit trusts).
  4. Foreign life/ invalidity insurance;  income from foreign annuities
  5. Property and rights to property.

Where assets are jointly held (e.g. with a spouse), a separate return must be submitted for each person and both must declare the full value of the asset and indicate their percentage holding in the asset.

How do I submit Modelo 720?

There is no option to submit the Modelo 720 form in person, therefore it must be submitted electronically on the Agencia Tributaria website.

All of your assets must be reported in Euros, so any investments that are valued in other currencies must be converted into Euros using the exchange rate as at 31st December of the filing year.

If you find the form too complex to complete yourself, we offer a service to prepare and submit the Modelo 720 to the Spanish tax office on your behalf. We would require the completion of a simple questionnaire to state the different assets owned and their value in Euros. For more guidance and information, please contact us.

When is the deadline to submit the Modelo 720?

You have three months, from 1st January to 31st March following the end of the year in which you are obliged to submit this return.

For the year 2020, the filing deadline is 31st March 2021.

How often do i need to submit the modelo 720?

If you have previously submitted this form, you only need to declare assets where the total value of assets in that class have increased by at least 20,000 Euros in value.

The Agencia Tributaria guidelines state the following:

After the initial return is presented, a new return must be filed in subsequent years when the total of any category of assets increases  (since the last filed declaration) by at least 20,000 Euros, either at 31st December or during the last quarter of the year.

Although the guidelines are extremely uninformative on this issue, it would appear that only the categories of assets that are affected need to be resubmitted.

What are the penalty charges if I do not submit a Modelo 720 or if I miss the deadline?

Late, incorrect/incomplete, or non-submitted returns are taken very seriously and there are considerable fines being imposed by Hacienda, which can reach up to a hefty six-figures. The Agencia Tributaria FAQ’s imply that even the slightest error, even unintentional (e.g. in a bank account number) will be punished by a minimum fine of 10,000 Euros. The guidelines also mention “minimum” penalties of 30,000 Euros for non-disclosure.

European commission and Modelo 720 Fines

These unreasonably high penalties have been challenged by the European Commission in recent years, and they have prompted Spain to change its legislation. However, as revised laws have not yet been finalised, we strongly advise that you file the Modelo 720 by the deadline to avoid any issues.

If you require our assistance to file your Modelo 720, please do not hesitate to contact us and we will get back to you as soon as possible.

Depending on the number of assets that need to be declared, our standard charge for preparation and online filing of each declaration is between 100 and 230 Euros plus IVA.