Modelo 720 - declaring assets outside of Spain

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 obligation to report is divided in three parts so we need information of ALL the assets in each of the below groups if the group total is above 50 000 €.

a) Property/real estate
b) Shares, investment funds, values, rights
c) Bank accounts

For example:
  • If you have a property worth 80 000 GBP and 5 bank accounts in the UK with 3000 GBP each, then you should only report the property.
  • If you have 20 000 GBP in a bank account and 40 000 GBP in investment funds you would not have to report anything.
  • If you have 60 000 GBP in a bank account and then 3 other bank accounts with 30 GBP each, then you would have to report all four bank accounts.
  • If you have access to accounts owned by other people through a power of attorney you will also need to include these accounts.
  • If you are married and the assets would be transferred to the other person in case of divorce/inheritance then you have to include these as 50 % owned “marital assets” even if you are not the account holder.

Pension plans do not need to be declared unless they are private pension savings which you can freely redeem. If you are unsure, please do contact us.

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.

A foreign LLC company does not fit the Spanish tax laws and it is not possible to say with certainty how any LLC assets should be reported nor the income received from it.
 
If it is a large company, listed  on a stock exchange and you just bought some shares and it is registered as an LLC (S-corp), it should most likely be reported as one item on the Modelo 720. If it is an LLC setup by you or it is a small business where you have been active it will be difficult to report it correctly.
 
A foreign LLC is many times considered to be taxed in Spain in a special tax regime called “renta imputada / attribucion de rentas”. This refers to a foreign entity which is a legal person but not a tax subject in the foreign jurisdiction and that is comparable to Spanish civil companies or “comunidad de bienes”.
 
In these cases the net income is to be taxed in Spain for the participant in the entity. You would not have to have formal accounting in Spain but you should have the documentation available if ever asked. If the LLC has activity in Spain it might have to be registered an a tax entity in Spain even though the taxation would be on a personal level.
 
If you are the sole owner of the LLC, the Spanish rules do not allow a person in this regime to be 100 % owner of the entity, so that would make any foreign LLC automatically disregarded from this regime.
 
This leaves two options, that the LLC is considered a company and you would pay tax on the dividends or that the company pays you salaries and you would pay tax on the salaries received. In the Modelo 720 it would be reported as one asset.
 
The second option would be not to consider the LLC at all and pay taxes as if any property would be directly owned and the activity was done as self-employed. All the assets owned by the LLC should be reported separately in the Modelo 720. 
 
We will not be able to determine which one of these options would be correct and so you would need to clarify this with a tax lawyer. It is possible to make a formal query to the tax authority and ask them to clarify a tax situation but this is a long process which will most likely take +6 months of proceedings. This process would also have to be done by a tax lawyer. Our firm focuses on tax preparation/accounting but we do not have an internal tax lawyer available who could do this.
 
If you can not provide us with the clarification on HOW you would like to report the LLC in the Modelo 720, we will not be able to help you.
 
 

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