Unbeknownst to scores of foreign Spanish residents, there is a tax obligation to file tax form 720 if you own assets abroad in excess of 50,000 euros.
Legions of foreign property owners, who are resident in Spain, may ignore the existence of this tax obligation. They are unaware they are under a legal obligation to report to the Spanish Tax Authorities they own real estate, investments, or bank accounts located outside of Spain.
Very stiff fines apply (starting, and normally exceeding, five figures) if you fail to disclose assets abroad.
Please note that with the advent of the Common Reporting Standard in 2018, signed by over 100 countries to combat tax evasion, the Spanish Tax Office is being spoon-fed tax information by other countries on foreign taxpayers who happen to be resident in Spain.
Over 7,000 taxpayers have already been (heavily) fined since 2013, the year in which this tax law was enacted.
If in doubt, please speak to one of our friendly staff who will guide you through this tax obligation.
Who needs to declare?
All Spanish tax residents who own assets overseas on or over €50,000.
Again, and for the avoidance of doubt, if you are non-resident in Spain you do NOT need to submit this tax return; it is only for residents.
Who is considered tax resident in Spain?
The Spanish Tax Office applies – amongst many others – the following broad criteria:
- You spend more than 183 days within 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: 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 within it exceeds €50,000.
2021 tax submission period
From the 1st of January until the 31st of March 2021.
Can I file it after the submission period?
Yes, but hefty penalties 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 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.