Modelo 720, one of the most important Spanish tax forms

What is it?

Modelo 720 is a tax form that requires you to declare all your foreign assets to the Spanish tax authorities (also called ‘Hacienda’) that exceed a value of €50.000. This includes accounts, investments (including cryptocurrencies), properties, securities, life insurances and annuities held at the 31st of December of the previous year. The Modelo 720 should be submitted every year before the 31st of March

 

Important to note is that even when your share of assets is lower than €50.000, you will still need to report it if the joint amount exceeds the €50.000. With joint assets, each owner needs to declare the full value and indicate their percentage. 

 

Exception: If you have filed the Modelo 720 last year and the average balance or joint balances on the 31st of December have not increased with €20.000, with respect to the previous declaration, you do not need to file it again. 

History

The Modelo 720 was initially introduced in 2012 to help Spain fight tax evasion. Previously, not declaring your foreign assets with a value exceeding €50.000, could result in a very high fine. However, the European Court of Justice has recently (2022) ruled that the restrictions on the free movement of capital that Modelo 720 imposes are disproportionate and that the fines were awfully high. According to the ruling, Spanish legislation “goes beyond what is necessary” to guarantee effective tax controls and fight against fraud and tax evasion.

 

While this model now still needs to be filed, the hefty fines have now been removed and debts will expire after 4 years.

 

Where can I find it?

You can file the Modelo 720 via the website of the tax authorities, however, our advice would be hire an accountant. Since it is very easy to make mistakes, bringing in experts could save you a lot of money. Additionally, an accountant will also be able to align the Modelo 720 with your income tax return. This is important since both forms declare the same information, but in a different way. Hence, it is very critical that these two match.

Conclusion

To conclude, the Modelo 720 is about informing the Spanish tax authorities about your assets abroad, before the 31st of March of every year. Although these assets are not taxed, you can risk a fine if you do not declare them.

Share this post

Comments
  • No comments yet.
  • Add a comment

    In week of the Work in Barcelona! month we will discuss the best job search tools and how to level up your social media presence, as well as why you should come to our job fair!

    Read all about ‘working whilst studying’ in Barcelona. German Masters student Riekje fills us in on the pros and cons of working alongside studying.

    A new entrepreneur spotlight covering ‘Her Roomies’, a rental platform in Barcelona offering a safe, female-focused community with a variety of rental offerings.

    Meet entrepreneur Abbie Hibler, who saw the need for new types of books for kids and created a book subscription of books that are a better representation of the world we live in.