Model 720 – Are expats obliged to declare their foreign income in Spain?

Since 2013, the Spanish tax authority has required every person having a tax residence in Spain to declare all foreign assets using the 720 Form. The original purpose of this measure was to fight fraud and discover all hidden assets that belonged to Spanish citizens. But in practice, the obligation to submit 720 has become applicable to all Spanish taxpayers – regardless of their nationality – as long as they are considered to have a tax residence in Spain.



The purpose of Form 720

During the last years, one of the main priorities of the Agencia Tributaria (Spanish tax authority) has been to control assets which were located offshore, but still subject to the Spanish tax law. Form 720 helps the Agencia Tributaria keep an updated record of these assets and any affecting changes.

When are you considered a Spanish tax resident?

There are two possible scenarios that can make a natural or legal person become a Spanish tax resident:

  • the person has been living in Spain for more than 183 days within the same tax year. This means actually spending that amount of time in Spain. Single absences are also counted as a part of this period unless one can prove a 183-day stay in some other country.
  • the person’s main economic and vital interests are based in Spain, whether directly or indirectly.

The obligation to submit Form 720

Not only citizens but also corporations that are permanently established in Spain are considered to be tax residents and must, therefore, submit the 720 Form online between January and April. This applies to individuals and legal persons who own, represent or have disposal powers over foreign assets worth more than €50,000.

Find more information about the current deadline in this link:

The procedure only needs to be performed once, unless the assets increase by €20,000 at some stage, for example, after selling a property.


Procedure for declaring foreign assets in Spain

Form 720

What assets should be declared?

As long as the total value of the foreign assets exceeds 50,000 euros, Spanish taxpayers will have to declare all their:

  • Bank accounts
  • Shares, bonds, pensions, rental incomes, dividends
  • Real Estate,

which are located, earned or managed abroad. This does not include pension plans, but it does apply to life insurance. The asset value should be calculated based on the highest balance on December 31st or the average balances at the end of each quarter.

Consequences of failing to submit the 720 Form

Late, incomplete or non-submission is penalised with extremely severe fines. Every piece of information which is wrong or has been left out will generate a fine of €5,000 per asset, with a minimum penalty of €10,000. Every mistake in the 720 Form will cause a fine of €100, with a minimum fine of €1,500. To avoid any possible mistakes, we recommend you to find help from a professional tax advisor.

Because of these disproportionate penalties, the European Commission has requested the Spanish government to revise the law. Up until now, no changes have been approved by the government. The Regional Economic Court from Valencia has annulled several of these fines based on the fact that many taxpayers aren’t aware of this duty. In order to be accepted, the Tax authority must be able to prove the person guilty of not declaring foreign assets. For this reason, it is generally recommended to fight back these penalties. Fortunately, it is possible to avoid these penalties if there is proof that the assets were generated before the person became a tax resident in Spain.


The European Commission opens an infringement procedure against Form 720

At the beginning of 2017, the European Commission opened an infringement procedure against Spain (procedure number 2014/4330) in relation to Spanish tax obligation to declare assets abroad – known as Model 720 – imposing fines of up to 150% of the unjustified capital gain, violates five fundamental rights contained in the Treaty on the Functioning of the European Union (TEU).

“It establishes a discriminatory and disproportionate penalty regime for failing to file or filing late Form 720”

The Commission concluded that the Spanish legislation infringes several European fundamental rights : the free movement of people (article 21 of the TFEU)and workers (article 45 of the TFEU and Article 28 of the European Economic Area Agreement – EEA), (article 49 of TFEU and article 31 EEA), the freedom to provide services (Article 56 of the TFEU and article 36 of the EEAW) and the free movement of capital (article 63 of the TFEU and Article 40 of the EEIG).

We can add that other constitutional principles are also violated under this tax reporting system: legal security, judicial protection and economic capacity.


Spain is called to adopt the required measures

In application of article 258, the Kingdom of Spain is called to adopt the required measures to comply with this circumstance within two months from the date of receiving the opinion.

The Commission is not aware that there is an equivalent exhaustive information obligation for resident taxpayers in possession of similar assets and rights located in Spain. Thus, taxpayers resident in Spain with similar assets and rights located in the country are not subject to comparable penalties.

The sanctions imposed in case of non-compliance or incorrect fulfilment of the information obligation are considerably more onerous than those applied in a purely internal situation of non-compliance or incorrect fulfilment of the tax obligations.


Legal & Tax Help is an English-speaking law firm based in Malaga and Costa del Sol, specialised in property conveyancing, inheritance tax, residence for foreigners, self-employed tax declarations and most legal and financial aspects of relevance to foreigners and expats living in Spain. For any questions and enquiries, don’t hesitate to contact us either by phone or e-mail.

Author: Rosana Tejada
Biographical Info: Rosana Tejada Crespo is a tax advisor holding a Master’s Degree in International Taxation. She specialises in companies and freelancers, tax regulations concerning foreign employees (Beckham Law), non-resident tax, inheritance tax and Spanish income tax. She is one of the founders of Legal & Tax Help (2000), which comprises a group of English speaking solicitors, economists and architects.

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