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If you live more than half the year in Spain, you will be considered tax resident in Spain for all your global income.
If you still have bank accounts or own property in your country of origin you will need to declare these assets in Spain, even if this does not mean you have to pay taxes based on these assets.
Simply put, it is a tax form to inform about foreign assets to intensify the fight against tax evasion.
It is one form to declare three different obligations which are divided in the following groups.
Each group also have some exemptions.
The form is regulated by the following law.
“Orden HAP/72/2013, de 30 de enero, por la que se aprueba el modelo 720, declaración informativa sobre bienes y derechos situados en el extranjero, a que se refiere la disposición adicional decimoctava de la Ley 58/2003, de 17 de diciembre, General Tributaria y se determinan el lugar, forma, plazo y el procedimiento para su presentación.”
https://www.boe.es/diario_boe/txt.php?id=BOE-A-2013-954
It first emerged with the intention to make assets hidden abroad to be declared and came about in conjunction with an amnesty for hidden assets during 2012. You could during a period declare assets from abroad with few sanctions even if you never had declared the assets before. After that period all future assets abroad would have to be declared with the aim of avoiding undeclared assets.
The form is followed by heavy sanctions for not reporting, without mentioning the tax charge relative to the undeclared assets. We will later in this article get back to the sanction’s regime, let’s get into some more background.
The form is made of three groups as mentioned where the obligation to declare arises independently in each group. So, if any of the groups reach the requirement you need to declare.
Modelo 720 is a mandatory tax form to inform about foreign assets if you are a tax resident in Spain where missing to declare can lead to so high penalties that the Spanish sanctions are contested by the European Commission. On this page we will go through the background of the form, how it is implemented today and what might happen to it in the future.
The tax form is informative only and does not lead to any tax that needs to be paid.
The story of the tax form began around the financial crisis that struck Spain heavily in 2011-2013. Usually when a financial crisis occurs, states and regulators will try to find out ways to prevent similar events happening again.
When the crisis hit Spain, a lot of focus was put on avoiding tax evasion and collecting all the taxes that were mandatory in Spain. It was not uncommon to hear stories about people who owned big houses and were living large while having small reported taxable incomes. The Spanish government like many others in the world began a search for taxable assets that were hidden from the state.
This finally led to the implementation of Modelo 720 in 29/10/2012 which requires Spanish residents to inform the state of their foreign bank accounts, properties, shares, funds and other assets. The idea is that if everybody reports their assets, they will also need to report income received from these assets in their yearly income tax declaration.
If an asset is not reported and later found to exist, the state would automatically assume that this is an attempt to hide the asset from the tax agency and that the source of the assets is illegal and thus the whole amount to be taxed as late reported earned income including heavy penalties.
We will get back to the possible sanctions which are so high that the European Commission has decided to take Spain to the European court of justice because the tax form is considered abusive, disproportionate and hinder free movement of capital according to the European treaty.
We will get back to the future of the Modelo later in this article. Let’s check out more about the purpose of the Modelo – why does is exist?
The purpose of the Modelo is as mentioned to declare any foreign bank accounts or assets than Spanish Residents may have abroad. It is only an informative declaration and no tax it collected – so what’s the big deal? The idea is that if a person declares the assets, then it will be very difficult not to declare any income received from the assets which in turn are taxable in Spain. So even if you do not have to pay taxes on the asset itself, you will need to pay income tax later during the normal tax declaration period.
Imagine that you are a Spanish resident and have shares worth of 30 000 GBP in a bank account in England. You earn 1000 GBP a year in interest income every year.
If you have not declared that you have 30 000 GBP in a bank account in the UK, the Spanish tax authority might not be aware this income of 1000 GBP.
So, when you report the 30 000 GBP, it will be more difficult for you not to include the 1000 GBP earned interest when you have to present your yearly tax return “La Renta” in Spain.
The tax for the 1000 GBP might be around 200 GBP that the Spanish tax agency would not receive. This is a small example of how Spain would miss 200 GBP in tax payment, but imagine if it is a house worth 700 000 GBP where you earn 70 000 GBP in rental income a year? The Spanish tax authority would miss almost 15 000 GBP in taxes unpaid from the foreign asset! So, there are good reasons for the Modelo 720 to exist from the perspective of the Spanish state and Spanish taxpayers in general.
You might think, oh, so if I do not declare my assets in the UK, in Netherlands, in Switzerland or Sweden I might be able to avoid paying income tax on these assets – Spain will never find them!
Wrong, the Spanish government has signed information sharing agreements with the European countries and many other countries (which do include tax heavens) to share information about owners of assets who are Spanish nationals or Residents. These days it is not that easy to hide assets and the risks are very high as you will find out later in the article.
If a person would hide assets abroad, not declare Modelo 720 and the Spanish government would find the assets, for example through an information sharing agreement the penalties are high. Spain would consider the assets being “not declared income”, as in earned income. You would risk having to pay full income tax on all of the assets including late paying fees and penalties. This leads to the sanction’s regime being extremely tough!
So, if the sanctions are so high and the European Commission is challenging the Spanish state, what will happen?
The future of the Modelo 720 is uncertain but until now the Spanish tax agency continues to issue sanctions. Read more a bit further down and you will see why we might expect a change in the Spanish tax laws regarding the modelo.
Why we talk about the future of the Modelo is simply because there has been talk about stopping the use of it as well as questions if the Modelo still is valid. Sometimes you can hear people saying that it is no longer needed since the Spanish courts have gone against the tax agency – unfortunately this is not true in the year 2025.
The European Commission has sent Spain a letter in 2017 regarding the tax form where it is stated that the form constitutes a restriction against the freedom of movement and capital in the European treaty. The idea is that the form hinders the movement of people who might choose not to move to Spain because of the risks inherent of not declaring the modelo as well as risk of hindering Spanish residents of having accounts outside of Spain because the increased bureaucracy.
If I wish to invest in shares abroad or with a Dutch broker instead of a Spanish one, why should I need to fill in an extra form? If I wish to buy a holiday home in Biarritz instead of San Sebastian, why I am required to declare this when the Spanish property does not need to be declared in the same way? So, the form might hinder the movement of capital. But does a simple form really do this you might ask yourself?
Well, it is motivated by the complexity of filling in the modelo, which in most cases require a specialized advisor to do it for you. This and the extremely tough sanctions regime which are considered disproportionate by the European Commission, especially compared with other economic crimes. It does also not make sense to sanction wealth created by income abroad which were not declared in Spain if the year of the income tax is far back in time and the tax payment for the income has prescribed.
For example.
If a person earned capital income during 1980-1990 on accounts abroad and did not declare the income in Spain (because it might not have been required to do so), now the account has over 50 000 euros and the person would need to declare the account. Even if the income generated never was taxed, it would be impossible for the tax agency to require a late declaration of income from 1980-1990, but it could in this case regard all the assets as illicit funds and place a sanction even if the income was created over 30 years ago.
After the latest ruling in the EU courts the ability for the tax agency to sanction far back in time has been severely limited and now the limit is usually 4-5 years back in time.
Before going too much down to details, let’s start with – do I have to care about this?
As we mentioned earlier, the tax form is valid for Spanish Tax Residents, meaning you are considered by the Spanish state to be a Tax Resident in Spain. To be regarded as a Spanish Tax Resident there are a few different criteria but the most common is that you have decided to reside in Spain more than 183 days a calendar year.
If you want to read more about the criteria to be regarded as a Spanish Tax Resident, please do read our article about Taxes for Spanish Residents which goes through the topic in detail.
Now, let’s assume that you are considered a Spanish Tax Resident.
Do I have to declare?
Well, it depends. There are various thresholds for the tax, but in general if you do have assets valued at more than €50 000 the last day of the year you will need to declare Modelo 720 the following year.
Who else needs to present it? Here is a short list
Among the assets that need to be declared are deposits in other countries, investment funds which are deposited abroad, properties outside of Spain and brokerage account which are registered outside of Spain without a branch in Spain, for example the online broker, Degiro.
If you have already filed Modelo 720 in the previous year or earlier, you only have to do it if the value of your assets outside of Spain have increased more than 20 000 euros or if you have other changes, such as opened new accounts or closed accounts during the year. For most people you only have to file it the first year you move to Spain and then if there is some change regarding the assets.
Who needs to file it?
If you have more than 50 000 euros of assets outside of Spain in total, including accounts shares, funds and properties per the last day of the previous year.
We will talk more about the controversy around the Modelo but so far Spain has not followed the demands from the EU and still requires the form to be filled.
So, to sum up:
If you have;
for example, in the UK, in Netherlands, Switzerland or Sweden, you have to file the form. Remember, this does not mean that there will be a direct tax for the declared assets.
This also includes if you control assets through a power or attorney for example or you are beneficiary of a trust which you can control.
There is no obligation to inform any of the assets in these groups if the sum of the assets does not reach 50 000 euros. In the groups where the sum is higher than 50 000 euros, there is an obligation to report all the assets in the group.
In the following years it will be sufficient to declare if any of the groups have had an increase of more than 20 000 euros in relation to the last reported declaration.
Even if you are not a direct owner of an asset you will have to declare if you are the beneficial owner of the asset. For example, if you own a unit linked insurance account which holds assets, the strict owner of the assets might be the insurance company, but you are the beneficiary and control the assets – so you need to declare them.
This does include if you hold a power of attorney on behalf of other owner and you control the assets through the power.
One example is if a woman is owner of assets on a bank account outside of Spain and her husband holds a power of attorney and right to use the funds, both persons need to make a declaration.
The deadline for the declaration is 31st March each year, a year after taxable year. You can start to declare 1st of January every year.
Let’s take a look at an example.
“I have lived in Spain entire 2024 and on the 31/12/2024 my bank account in England has 60 000 EUR. “
You would have to declare the tax before end of March 2025.
What happens if you moved to Spain in October 2024?
Well, as we have mentioned earlier, the basic requirement for becoming a Spanish Tax Resident is living more than 183 days in the calendar year in Spain. So, if you moved in October 2024, you would not be considered a Tax Resident in Spain for 2024. This means that you would not have to declare the Modelo 720 during the year 2025. But, if you continue living in Spain during 2025 and you have a bank account or other asset outside of Spain by 31/12/2025, you will need to declare Modelo 720 in 31/3/2025.
Assets that are held outside of Spain for the taxable person.
The assets that need to be declared are divided in three groups.
The obligation to declare is for any person who have been the title owner, representative, authorized or the beneficiary, who have had a power of attorney or been the beneficial owner any period during the taxable year. This means for example that if a married couple has a bank account which is owned by of the persons, both need to declare if both have access to the account.
If the assets hold abroad are less than 50 000 euros per 31/12 and the average held in bank accounts per the last quarter is less than 50 000 euros you will not need to declare.
Our standard fee starts at 148 € plus VAT. If you have a lot of accounts, investments and properties the fees might be higher but usually you pay around 150 € plus VAT.
Unfortunately the tax form is one of the most complicated and detailed which requieres lot of resources to get completed.
Please do start the process as early as possible since it can take time to get the information from banks.
What does need to be declared about assets and rights?
Mandates of assets to others of own funds, life or unit linked insurances, temporary as well as life insurances. The reporting is required when the rights have been deposited, managed or obtained abroad. This group also includes investment funds, trusts and other collective investment schemes.
For assets, the name of the asset and name of the entity where the asset is held and address. The value of the assets per 31/12 for every year, the number of shares and value.
For insurance products, the name of the insurance company, the address and value for redemption per 31/12.
Income products and life insurances, the name of the entity, address and capitalized value per 31/12.
For property and property rights
This group includes houses, dwellings, apartments and terrains owned abroad.
Normally you do not have to present the form in certain cases:
The general rule is that assets below the 50 000 euro thresholds do not need to be declared, but beware that if the assets do reach that amount, even if it is a joint account you have to declare.
If some cases businesses who have the assets stated in the accounting do not have to declare. Although their representatives might have to declare.
If you have declared previous years, you only have to declare if the value has increased 20 000 euros in any of the assets declared and if there have been non closures of accounts or cancellations of policies.
If the entity is exempt from corporate taxes in Spain (for example public entities).
If the amount in total in any of the three groups is greater than 50 000 euros, you will need to declare all assets within the group, even if the amount is smaller. For example if you hold a bank account with 60 000 € and another with 100 €, you will have to file both.
If the accounts are registered individually and identified in the accounting of an entity.
If you do not declare you risk heavy sanctions from the Spanish tax agency. The Modelo 720 is famous for the strict sanctions that the tax agency requires if you have not declared your foreign assets and that are later found at an inspection or through information sharing agreements between states.
Some news articles have gone as far as saying that the Modelo 720 is the weapon of mass destruction for the Spanish tax agency in their fight against tax evasion. Every year since 2012 there are thousands of Residents who have just discovered the Modelo 720 and got frightened that they have missed something and risk sanctions.
When it comes time to declare “La Renta” which is the usual income tax declaration in Spain, you might have asked the tax agency for your registered data and encountered a warning saying you have received income abroad and have not declared the source.
This could be for example declared interest income from a bank account without having declared the bank account!
The Spanish tax agency has several data sharing agreements with other states and the cooperation between various countries tax agencies are increasing every year. This means for example that a UK bank who is obliged to report assets and incomes from a UK bank account to the UK tax office will now also share the information with the Spanish tax agency through a cooperation agreement between Spain and the UK.
That means that suddenly information about a foreign interest income is available to the Spanish tax agency and they might start to wonder what is the basis for the interest, what accounts have not been declared? How have the assets been raised, are they illegal funds?
Even if the information sharing is increasing, it is also true that the Spanish tax agency has taken a step back from the most aggressive hunt for tax evasion using the form. A few years back the tax agency often chose to systematically add a sanction of 100 euros times each data point that needed to be declared which meant that a missed bank account abroad could lead to several hundreds of euros of fines even if the amount on the account was 0 euros.
It is also rumored that the amount of inspections focusing on the Modelo 720 has gone down through recent years. Where it earlier was often citing penalties of 150 % of the amounts held abroad. The reason for the decline in inspections and sanctions might be due to the critique the agency has received from the European commission. We will get back to this in a bit.
One of the main problems has been that if you have missed a deadline, there are no easy ways to rectify your situation.
A lot of people simply haven’t been aware of the existence of the obligation to declare. It is probably the most common case, where somebody has recently moved to Spain or who have inherited assets from abroad and not known that this needs to be declared separately even if there is no tax to be paid.
Most of these people also want to rectify their situation and have nothing to hide. In some cases they have already declared the income received from interest or shares in their annual income tax declaration from the assets held abroad but not known that they also have to declare the assets themselves – in a separate form – at a different time of the year.
Since there has been no reasonable way of presenting the form after the deadline without sanctions, many people who would have liked to declare the form have now chosen to become “tax fugitives” and hope that the tax agency does not find the assets.
This phenomenon has had a change during 2022 , not thanks to a change in attitude of the tax agency but rather because the critique of the European commission and subsequent ruling in EU courts which have deemed many of the sanctions illegal.
This means that people are getting less frightened by possible sanctions and confide in the Spanish courts that no unreasonable sanctions will be allowed. For example, if the tax agency issues heavy sanctions for withholding a bank account abroad with 0 euros.
After a change of law in March 2022 you can now declare the Modelo 720 for past years without risking heavy fines.
Over 5000 persons have been sanctioned by august 2019 which you can read more about in El Pais newspaper following this link.
You do not want to be one of them.
The sanctions have previously been so high that the EU courts have ruled them illegal and in March 2022 the Spanish government has changed the law to lower any sanction amounts to the general fines issued by the tax authority.
If you have missed filing or filed incorrectly you might still expect fines but they should no longer be several thousands of euros like they have been until 2022.
If you have missed to declare it for several years you should declare it as soon as possible to avoid further sanctions.
Until 2022 there has not been a good way to regularize your situation if you have missed to file the tax return since you would have got disproportionate fines regardless of how you would have done. This was changed in March 2022 and you will now be able to file past years if you have missed and not risk fines of thousands of euros. You might still get fined but it should be a few hundred euros.
Do I really need to present the Modelo 720? I heard the European Commission has taken a stance and made it invalid.
Yes, you still do need to declare the form in 2022 and going forward.
The European Commission has intervened in the use of the form and there are active Spanish court cases going against the tax agency, but the law and practice of the tax agency has not changed officially.
Since the latest ruling in the EU high court the Spanish government has pledged to change the sanctions regime regarding the form before 31/3/2022. This only affects the fines you might have to pay for not filing but you still have to file.
It is always advisable to declare – in time – if you can.
It is possible that we are coming to the end of the life of Modelo 720 but at the moment it is still in use.
You have mentioned something about the European Commission and the Modelo?
At the beginning of 2013, a Spanish lawyer named Alejandro Del Campo took Spain to the European Commission with regards to the form. Beginning with this claim, the commission started a procedure of an infraction against Spain. Since the Spanish defense against the claim did not have sufficient backing, the commission sent a letter in February of 2017. In the letter there was a requirement of changing the norms within two months, because the form and its sanctions regime was hurting the free movement of capital, the free movement of persons and the free movement of labor, establishment and offering services. You can read more about the case here on the law firms Spanish website
Here is also a good article from Cinco Dias newspaper about the European case if you read Spanish.
After the latest ruling in the EU courts, the Spanish government changed the law in March 2022 to reduce the sanction amounts but you will still have to declare.
The easiest way to get it done is with our help, so you can click here to start the process wth us.
If you would like to try to do it yourself you can follow the below steps but we strongly recommend enlisting help with this specific tax form is it is highly complex and comes with high fines. The good news is that you often just have to file it the first time you move to Spain.
The form needs to be filled in online at the tax agency’s website. You will need a digital certificate valid for filing taxes. There also exists a program to help filing the taxes correctly in Spanish.
You have to enter the website of the tax agency and Access Modelo 720 Declaración informativa sobre bienes y derechos situados en el extranjero. Then continue todeclaración con la firma electrónica and select your digital certificate.
If the form is correctly presented, you will receive a verification number with the time and date or presenting the form.
You should keep a copy of this for future reference.
The tax agency reviews the information and checks that everything complies with the norms.
The form may be presented by the taxable person or by a representative. If you need any help, please do check out our site for declaring the form or send any questions to info@taxadora.com.
If you speak Spanish, here is a video about the norms surrounding the form which is shares by the tax agency. https://youtu.be/yBs9epZN3yk
Here is also a video in Spanish about filling in the form which might be help if your spanish is OK.
Does filing the tax affect my other taxes?
As we have explained, the tax form is of informative nature only, without collecting any taxes.
The tax form may have implications for your other taxes in the following ways.
Wealth tax
If you declare amounts abroad these may be included in the Spanish Wealth taxes. If the amounts abroad exceed 500 000 euros it is quite probable that the person would need to file a tax return for Wealth tax.
Income taxes
If the assets declared in the Modelo incur some form of income, for example dividends from shares or interest from accounts, this would be taxable income in Spain for residents. As a resident in Spain you are responsible for declaring your global income, for example rents obtained from property abroad. You might later be able to claim back tax from one of the countries according to a double taxation treaty.
We have also earlier mentioned the relationship between possible sanctions and undeclared income.
Modelo D6
The Modelo D6 has been abolished in December 2021 for most private investors. If you own more than 10 % of voting rights or Capital of a company you might still have to file it.
If you have read all of this, you already know the following
More information and articles in Spanish.
An article in El Pais newspaper.
Los tribunales frenan las multas de Hacienda por los bienes en el extranjero
Hacienda señalará en la campaña a contribuyentes con cuentas en el extranjero
If you have previously presented the Modelo 720, you do not need to present it again, unless there has been a change of 20 000 euros or more in any of the assets reported in the earlier Modelo or if you have opened/closed accounts or bought/sold complete investment holdings. If you are unsure, please contact us at info@taxadora.com
Please read the instructions below and fill in your details in the form at the end of the page.
You can familiarize yourself with the form at first so you know what data you will need from your banks. You can then collect the information and come back and fill in the details. You only need to report assets outside of Spain.
The Modelo 720 is extremely detailed and it can be difficult to find the information so please start collecting information about accounts and properties with plenty of time before the filing deadline.
Once we receive your information we will start the process of presenting the tax form. We will need the information at least 5 banking days before end of march to file it on time.
We appreciate complete details of what needs to be declared. We are happy to help find the information and answering any questions you might have but we can for example not contact your bank to ask for details or receive bank account statements.
The Spanish tax law does not recognize the concept of a foreign based Trust. The tax law is unclear about both the reporting requirements for income taxes for Trusts as well as how they should be reported in the Modelo 720. We can therefore not guarantee you correct reporting of Trust assets, regardless if you are the Trustee, Beneficiary or other stakeholder in a foreign Trust.
We can file the Modelo and the income taxes but need you to provide us with guidance on HOW you would like to report it. You would therefore need to solicit the help from a law firm to establish how you would like to report the assets. The Modelo 720 does requiere the reporting of trust assets both for the Trustee and the Beneficiary but it is unclear exactly how. It is also not possible to call the tax authority and ask them how they would like to have it reported – as they simply will not answer.
Each trust setup also differs from another and the only 100 % correct way to do it is soliciting advance decision from the tax authority which might take more than 6 months and we will not be able to do this for you. Unless you are prepared to provide us with how you wish to report trust assets after soliciting help from a law firm then we will not be able to file your Modelo 720.
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