Tax form 720

Raymundo Larraín Nesbitt, April, 20. 2018

The following blog post has been summarised to avoid unnecessary tax technicalities. The quoted tax rates are subject to change from one year to the next. Seek professional legal advice on your matter – see disclaimer below.

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
20^th of April 2018

This tax form is only for reporting purposes, you do not actually pay any tax on filing it. I have structured this blog post as a FAQ for ease of comprehension.

Who needs to declare?

Spanish residents who own overseas assets over €50,000.

E.g. Mr and Mrs Smith live in Mijas Costa all year round. They own two houses in England, have open bank accounts in the UK and receive UK-based pensions. They consider themselves non-residents in Spain and only pay taxes in the UK.

Mr and Mrs Smith are in fact tax resident in Spain and need to file each a tax form 720.

Again, and for the avoidance of doubt, if you are non-resident in Spain you do NOT need to file this tax form.

Who is considered tax resident in Spain?

The Spanish Tax Office applies the following criteria:

You spend more than 183 days in a calendar year in Spanish territory.
Your centre of financial interests is located in Spain.
Your spouse and/or underage children live in Spain.

Reporting categories

There are three reporting categories, based on bank accounts, investments and immovable property.

Obligation to report?

You must report all assets in a particular category if the value of your total assets in it exceeds €50,000.

2018 submission period

From the 1^st of January until the 2^nd of April 2018.

Can I file it after the submission period?

Yes, but penalties may apply. Ask us.

If you have already filed tax form 720 in the past

You only need to file it again if:

The value of an existing asset grew by more than €20,000, or
You sold an asset, or
You obtained a new asset.

Penalties for non-compliance

The fines levied are stiff.

Failing to file 720 or filing it incorrectly: €5,000 per infraction.
Minimum fine of €10,000 for each group of assets.
Penalty of 150% on unpaid income tax.

Tax form 720 challenged in Brussels

The disproportionate fines have led to it being challenged in Brussels. And rightfully so.

In the meantime, this tax form is enforceable.

If you haven’t been filing it, for whatever reason, but you voluntarily file it before the tax office inspects you, the above fines are vastly reduced (you pay 15 - 20% as opposed to 150%). Which is why we strongly advise you to come clean and file it, even after the deadline.

The Common Reporting Standard

Please take good note that with the advent of the Common Reporting Standard, signed by over 100 countries to combat tax evasion, as from the 1^st of January 2018, the Spanish Tax Office is being spoon-fed fiscal information by your home tax office.

For example, both HM Revenue & Customs and Ireland's Revenue Commissioners, are supplying the Spanish Tax Office with detailed information (and vice versa) on all your overseas assets and reported income derived abroad as from January 2018.

We strongly advise you to file tax form 720 if you are resident in Spain.

Larraín Nesbitt Lawyers, small on fees, big on service.

Larraín Nesbitt Lawyers is a law firm specialized in taxation, conveyancing, inheritance, and litigation. We will be very pleased to discuss your matter with you. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 952 19 22 88 or by completing our contact form to book an appointment.

Tax services Larraín Nesbitt Lawyers can offer you

Tax form 720
Non-Resident Income Tax (Fiscal Representation)
IRPF (Spanish Resident Income Tax)
Holiday Rentals Accounting Service (HRAS)
Spanish Inheritance Tax (IHT)
Spanish Inheritance Tax Assessment Report (SITAR)
Wealth Tax

Taxation-related articles

Spain’s Wealth Tax Reloaded – 8th September 2011
Spanish Wealth Tax (Patrimonio) – 8th November 2011
Fiscal Novelties Affecting Spanish Property Owners – 8th December 2012
Buying and Owning Spanish Property through Companies: Pros and Cons – 7th March 2014
Taxes on Selling Spanish Property – 8th December 2014
Changes to Spain’s Inheritance and Gift Tax Law – 21st February 2015
La Complementaria or ‘Bargain-Hunter Tax’ – 8th May 2015
Taxes on Buying Spanish Property – 8th July 2015
Dispelling Spanish Inheritance Tax Myths – 8th August 2015
Non-Resident Taxes in Spain – 8th December 2015
Spanish Inheritance Tax for Non-residents (Part I) – 8th February 2016
Spanish Inheritance Tax for Non-residents (Part II) – 8th March 2016
Spain’s Non-Dom Tax Scheme – 8th July 2016
Inheritance Tax Novelties in Andalusia. FAQ on IHT – 8th September 2016
Renting in Spain - Landlord´s Taxation – 8th of January 2017
Renting in Spain: Non-Resident Landlord's Rental Tax Relief – 14th of January 2017
Which beneficiaries are hit worst by Spanish Inheritance Tax (IHT)? – 2nd June 2017
Holiday Home Taxation in Spain – 8th of July 2017
Andalusia to slash Inheritance tax for inheritances under 1 million euros – 21st September 2017
Spanish Inheritance Tax Assessment Report (SITAR) – 8th of October 2017
Non-Resident Income Tax – 1st December 2017
Non-Resident Income Tax – 8^th December 2017
Tax advantages on becoming resident in Spain. – 8^th March 2018
Tax form 720 – 20th April 2018

Please note the information provided in this blog post is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. VOV.