Informative declaration of Assets and Rights located Abroad

A new tax form was approved in Spain in 2013 by way of Order HAP/72/2013 (Tax form 720). The purpose of this is for the Spanish Tax Authority to collect information on any assets or rights of residents (mainly, although not exclusively) located abroad. This measure was adopted as a means of combating tax fraud by establishing a certain level of control over those with assets abroad.

As a way of obtaining the necessary information regarding these assets and rights of Spanish residents located abroad, tax form 720 also facilitates the use of tools for the improvement of mutual support with other countries. The exchange of tax information between states and their general collaboration is the basis for its creation.

Who has the obligation to submit this tax form? (Article 2 Order 72/2013)

Those taxpayers required to inform of their assets and rights held abroad, in accordance with this regulation are:

  • Individuals and legal entities resident in Spain.
  • Individuals or legal entities not resident in Spain, with a permanent establishment in Spanish territory if they belong one of the following groups: owner, representative, agent, beneficiary, individual or entity with powers of disposal or real beneficial owner.

What must be declared? (Article 3 Order 72/2013)

With regards to the information that has to be disclosed to the Spanish Tax Authority, this new obligation includes specific information on assets and rights situated abroad including:

  • Bank accounts located abroad.
  • Stocks, rights, income and insurance policies deposited, managed or gained abroad.
  • Real estate and rights on real estate located abroad.

This obligation implies that the taxpayer will have to declare bank accounts abroad, even if he/she doesn’t own stocks or real estate abroad.

However, there will be no obligation to submit this tax form for bank accounts located abroad if neither the final balance (on 31st December), nor the average balance reaches a total of 50000 €. The obligation to submit said disclosure in the following years will only exist when this limit has been increased by more than 20000 € in a year. Regarding the obligation to declare stocks, rights, insurance and income deposited, managed or gained abroad, and properties or rights on real estate located abroad similar limits are applied.

Deadline to file (Article 7 Order 72/2013)

In order to comply with these obligations, the tax form has to be filed during the first quarter of each year, starting from 2014.

How the declaration has to be made (Article 4-6 Order 72/2013)

The tax declaration form must be filed on the internet. Each category of information (bank accounts/stocks/real estate) constitute a separate obligation, but all the blocks of information will be filed through a single tax form (form 720).

What are the penalties? (18th Additional Provision of the General Tax Law 58/2003, 17th December)

A strict penalty regime has been adopted for cases in which a taxpayer fails to comply with this tax regulation.

Firstly, in the case of failure to comply with the obligations to provide tax authorities with the information on all three categories (bank accounts, stocks, rights, income and insurance deposited, managed or gained abroad, real estate and rights on real estate located abroad), the minimum penalty will be 30000 €.

Secondly, in the case of an existing obligation to provide the tax authorities with the information referring to just one of the mentioned categories, if the tax declaration is not filed a minimum penalty of 10000 € will be imposed.

Thirdly, if a taxpayer has omitted to report a piece of information, submitted incomplete information or submitted inaccurate or false information, the penalty in these cases will be 5000 € for each piece of omitted/incomplete/inaccurate/false information, with a minimum of 10000 €.

Order HAP/72/2013 is the first step towards more restrictive tax regulations. Misunderstandings of tax form 720 may result in a heavy fine, as a result of which errors in completing this form are undesirable.

In conclusion, this informative declaration, that refers mainly to tax residents in Spain, designed to fight tax fraud, involves a very complex and severe regime, which can result highly compromising for a taxpayer if not properly advised on the matter.

Gabriella Mary Trussler
4408 Ilustre Colegio de Abogados de Almería

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