Wealth declaration for RESIDENTS iN SPAIN: modelo 720
Here we discuss the wealth declaration of modelo 720.
Many Belgians in Spain forget this declaration obligation while facing heavy penalties.
What is the wealth declaration?
As a tax resident in Spain, you are obliged to declare that you own assets outside Spain using the form modelo 720.
And this starting from 50,000 euros per asset category
- real estate located outside Spain
- non-Spanish financial investments and pension funds
- non-Spanish bank deposits
For example:
If you have a Belgian bank account of 25,000 euros and you own a property worth 190,000 euros located in Belgium then you only need to declare that you own foreign property.
Attention: if you share a bank account with your partner for a value greater than 50,000 euros, you will both have to declare this separately.
When am I a tax resident in Spain?
According to Spanish law, you are tax resident when you stay in Spain for more than 183 days a year.
Fiscal residency is independent of nationality.
The double taxation treaty between Belgium and Spain may possibly deviate from this rule.
For example, if your vital life interests are still in Belgium.
Will you be taxed if you own more than 50,000 euros in non-Spanish assets?
Not necessarily. The wealth tax is different from region to region.
In the Comunidad Valenciana, you will only pay wealth tax if you have assets greater than 600,000 euros.
Modelo 720 is therefore purely informative for the Spanish tax authorities.
When should you file modelo 720?
Always between 1 January and 31 March.
Do You have to file this declaration annually?
Once you have completed the modelo 720, you will only have to file the declaration again if an already declared non-Spanish asset class has increased in value by €20,000 or if an undeclared category would exceed €50,000.
Example:
You moved to Spain in November 2016.
The sum of your non-Spanish bank balances was then 70,000 euros.
You then filed your first modelo 720 in 2017.
At the end of 2017, the sum of all your non-Spanish bank deposits was 75,000 euros.
You are then not required to file a tax return in 2018.
However, at the end of 2018, you have €90,000 in all your non-Spanish accounts.
In that case, you will need to file Modelo 720 again in 2019.
What if you do not file a return?
This is a risk you take as failure to file modelo 720 can be severely penalised.
The minimum fines are €10,000 and can go up to 150% of the undeclared value of the foreign assets.
Late returns can be penalised with a minimum fine of 1,500 euros.
Undeclared assets can also be taxed as capital gains.
So it is important that you definitely do not forget modelo 720!
Update June 2020: high penalties may violate the free movement of persons within the European Union.
There is currently a court case pending before the European Court of Justice against the Spanish government in which the European Commission is challenging the existence of the sanctions.
