Spanish Tax Office to fine 5,000 taxpayers over tax form 720

Raymundo Larraín Nesbitt, September, 1. 2019

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By Raymundo Larraín Nesbitt
Lawyer - Abogado
1^st of September 2019

Tax form 720. Only this form has been single-handedly responsible for a mass exodus of expatriates, let alone Brexit and the CRS.

The Spanish daily El País reports that over 5,000 taxpayers have been fined as a result of non-compliance with the now infamous tax form 720.

We publish this gentle reminder on who is obliged to submit this tax form. Please note that on submitting it, there is NO tax to pay, it is just for reporting purposes only.

On being tax resident in Spain, you are already taxed on submitting once a year your IRPF (personal income tax) and, if you are affluent, you are also taxed by Patrimonio (Wealth tax) in some regions. In Madrid no one pays for Patrimonio, which goes on to explain the huge concentration of HNWI and UHNWI in the capital. Hopefully, Andalusia will soon follow suit and suppress it as well, becoming Spain’s leading low taxation area.

Who needs to declare?

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

E.g. Mr. and Mrs. Smith live all year round in Mijas Costa, Spain. They own two houses in Berwickshire, England, have open bank accounts in the UK and receive UK-based pensions.

Mr. and Mrs. Smith are in fact tax resident in Spain and they both need to submit 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; it’s only for residents.

Who is considered tax resident in Spain?

The Spanish Tax Office applies - amongst others - the following broad 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.

Obligation to report?

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

Reporting categories

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

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 disproportionate fines levied are (very) 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.

The Common Reporting Standard and you

Please take good note that with the advent of the Common Reporting Standard (CRS), 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 busy supplying the Spanish Tax Office with detailed information (and vice versa) on all your overseas assets and reported income derived abroad as from the 1^st of January 2018.

We strongly advise you to submit tax form 720 if you are resident in Spain to avoid steep penalties.

Larraín Nesbitt Lawyers offers this tax service: Tax form 720

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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) 951 894 675 or by completing our contact form to book an appointment.

Tax services available from Larraín Nesbitt Lawyers

Non-resident 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
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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
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Holiday Home Taxation in Spain – 8th of July 2017
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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
Holiday Rental Taxation in Spain – 8th July 2018
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You are taxed at source on renting out in Spain – 30^th November 2018
Taxes on Buying Spanish Property – 8th December 2018
Property portals and rental platforms to pass on landlord details to the Spanish tax Authorities. Are you prepared? - 12th January 2019
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Spanish Tax Office to fine over 5,000 taxpayers on tax form 720 – 1^st September 2019

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