720 Form
You may have heard that if you are a Spanish Tax Resident, you have the obligation to inform the assets you may have abroad.  That is correct! If you find yourself wondering the specifics, please let us explain you a bit more on the 720 Form.

WHAT IS 720 FORM?

720 Form is an Informative Form on Assets Abroad. Informative form means that you don’t have to pay in anything when filing in, although it will have effects on your Personal Income Tax  and Wealth Tax Return.

 

Knowing this, Lexidy has identified 6 of the most frequently  questions  regarding  720 Forms:

1. WHO MUST FILE IN THIS 720 FORM?

Those taxpayers who are Spanish Tax Residents must file in this 720 Form. This applies also to those who are under the Special Expatriate Tax Regime (Beckham Law).

Therefore, Spanish Non-Tax Residents do not have the obligation of filing in this form.

The obligation to file in the 720 Form applies when the taxpayer is the owner of the asset or right abroad, and also when is a legal representative or an ultimate beneficiary of assets in trust companies.

2. WHAT ASSETS MUST BE DECLARED AND WHAT INFORMATION MUST BE PROVIDED?

1. Accounts and deposits in banking institutions abroad.

  • Business name or name and address of the bank entity.
  • Complete identification of the account
  • Opening and/or closing date of the account.
  • Account balance at December 31st of the year and average balance of the last quarter of the year.

2. Securities representing the holding in equity for any kind of entities abroad.

Rights representative of the investment on third parties (shares, for instance), insurances in which the taxpayer is the policyholder and temporary or life-time annuities, if it has been deposited, managed or obtained abroad.

This group also includes securities contributed for the administration or management of any legal instrument, such as trusts, and contributions to Collective Investment Institutions located abroad.

2.1. Shares:

  • Business name or name and address of the entity or the transferee.
  • Balance at December 31st of the shares, including number, class of the shares and value.

2.2. Shares in Collective Investment Institutions:

  • Business name or name and address of the entity or the Collective Investment Institutions.
  • Balance at December 31st of the shares, including number, class of the shares and value.

2.3. Insurances

  • Business name or name and address of the entity or the insurance institution
  • Redemption value at December 31st

2.4. Temporary or life-time annuities

  • ­Business name or name and address of the entity or the insurance institution
  • Capitalization value at December 31st

 

3. Real Estate abroad and/or rights on them.

  • Identification of the real estate.
  • Real estate location, country, city, street and number.
  • Acquisition date
  • Acquisition value (note that there are certain rules on usufruct, bare ownership, multiproperty)

3. WHEN DO THIS BANK ACCOUNTS, SHARES AND REAL ESTATE HAVE TO BE DECLARED?

There is the obligation to declare the referred assets when the whole value for all the assets included under paragraphs 1, 2 or 3 is over 50.000 Euros.

If such is the case, a 720 Form must be filed including only the assets and goods included under the corresponding group. If two groups are over 50.000 Euros, the 720 Form will have to include all the assets and goods included under the two groups.

4. WHEN AND HOW MUST THE 720 FORM BE FILED?

The Informative form on assets abroad must be filed through Form 720. This form can only be filed through internet.

Deadline for filing in this Form is March 31st of the year after you have become Spanish Tax Resident. i.e. if you have become Spanish Tax Resident on 2019, you will have to file in this form no later than March 31st, 2020.

5. WHAT HAPPENS IF I DO NOT FILE 720 FORM?

Although Informative 720 Form on assets abroad is informative and not to pay in, although not filing in this form or include wrong information can have serious penalties.

There is a penalty of 5.000 Euros for each data or group of data that should have been included in the Informative form or have been wrongly, inaccurate or incomplete included, with a minimum of 10.000 Euros.

There is a penalty of 100 Euros for each data or group of data, with a minimum of 1.500 Euros, if the 720 form has been filed in after the deadline without previous request from the Spanish Tax Agencies.

Additionally, and most importantly, is you do not file in 720 Form and Spanish Tax Authorities discover the assets placed abroad:

Spanish Tax Authorities will understand that this asset was a non-justified capital gain, that will be included in the latest and non-expired Personal Income Tax Return or Corporate Income Tax of the taxpayer.

This means that, in case you had the obligation of filing in this 720 Form and you have not filed it, the value of all the assets will be taxed at a progressive tax rate that goes from 19% to 23%. You will have to pay in the corresponding amount, plus interests on late payment (an annual 3,75%). Additionally, there will be a penalty of the 150% of the unpaid tax liability.

WHAT SHOULD YOU DO IF YOU ARE NOT SURE WHETHER YOU SHOULD FILE THIS 720 FORM OR WHAT TO INCLUDE?

Contact us!

Take advantage of the resources at your disposal to assist you and make the process much easier. Taxes are complicated, that is for sure. But, with the right help, they can be made much simpler.