Owners of assets and rights located abroad as of December 31, 2024 may be required to file the declaration of assets and rights located abroad (Form 720) until March 31, 2025.
We remind you that personal income tax or corporate income tax payers who own assets and rights located abroad as of December 31, 2024 may be required to file a declaration of assets and rights located abroad (Form 720) until March 31, 2025.
This form must be filed electronically (Internet), without the possibility of filing on paper. Those who, for technical reasons, are unable to file the Form 720 by Internet within the established deadline, may file it during the four calendar days following the end of said deadline.
For those who filed the Form 720 previously, the filing will only be mandatory when any of the joint balances of the three different blocks of assets that are of mandatory information (bank accounts, shares or real estate) experienced an increase of more than 20,000 euros with respect to those that determined the filing of last year’s return. In any case, it will be compulsory to file the tax return for those assets already declared and in respect of which the taxpayer loses the condition that determined the obligation to file the tax return.
Taxpayers must report on the assets and rights they have abroad, both accounts in financial entities and real estate, securities, rights, insurance and income deposited, managed or obtained outside Spain. It is excluded from this obligation to declare when the value of the same does not exceed 50,000 euros for each type of asset or right.
What types of goods and rights are declared?
- Real estate and rights over real estate located abroad. The identification, location (country, locality, street, number), date of acquisition and acquisition value (depending on whether it is full ownership, usufruct, bare ownership or other cases).
- Accounts in financial entities located abroad. The name of the banking entity, its address, the identification of the accounts, the dates of opening or cancellation, the balance as of December 31, the average balance of the last quarter, the date on which they ceased to have the status of holders, representatives, authorized people, beneficiaries or person with power of disposal should be included.
- Securities, rights, insurance and income deposited, managed or obtained abroad.
- In the case of securities, the corporate name of the entity or of the third-party transferee, as well as the address, balance as of December 31 and number, class of shares and value, must be stated.
- In the case of rights, this includes rights representing the transfer of own capital to third parties.
- Regarding insurance, the name of the insurance company, the domicile and the surrender value of the policy as of December 31 must be disclosed.
- In the case of temporary or life annuities, the corporate name of the insurance company, its domicile and the capitalization value as of December 31 must be reported.
In relation to the assets and rights that must be declared, there are several nuances that you must consider, such as those detailed below:
- Bank accounts in which there is shared ownership must be declared, when there is a balance on December 31 greater than 50,000 euros.
- Shared ownership of real estate must also be declared when the acquisition value exceeds 50,000 euros as of December 31.
Attention. If you filed form 720 last year because you had bank deposits, securities (shares, investment funds, etc.) or real estate abroad valued at more than 50,000 euros, you will have to file the form again in either of these two cases:
- If the value of your assets increases by more than 20,000 euros.
- Or if you are no longer the owner or authorized holder of any of the previously declared assets.
Who are the obligated parties?
Individuals and legal entities resident in Spanish territory, permanent establishments in said territory of non-resident individuals or entities and entities in attribution of income (communities of property, civil societies, inheritances, etc.) will be obliged to file this annual informative return, if they are holders or authorized holders of accounts abroad whose combined balance exceeds 50,000 euros.
Likewise, holders of securities, shares, funds, life insurance, real estate or any other assets located or deposited abroad, for an aggregate amount exceeding 50,000 euros, are obliged to file the information. In addition to the legal holders, and unless an exemption applies, which must be analyzed in detail, those known as beneficial owners, i.e., those who own or control more than 25% of the assets through entities with or without legal personality, are obliged to report.
There may be many people obliged, particularly foreign residents, because it is enough to have a small part (even if it is 1%) of one or more foreign accounts with a balance of more than 50,000 euros (or even to have nothing and be a simple authorized person), or to have a small part of a property with a value of more than this amount.
Penalty regime
Law 5/2022, dated March 9, and effective as of March 11, 2022, amended the wording of several tax regulations with the rank of law (Personal Income Tax Law, Corporate Income Tax Law and the General Tax Law) in order to eliminate the aspects of the regulation of the obligation to report assets and rights located abroad that had been declared contrary to European Union Law by the recent judgment of the Court of Justice of the European Union (CJEU) dated January 27, 2022 (case C-788/19). The judgment concluded that the specific sanctioning regime associated with the failure to comply with the obligation to declare assets and rights abroad (form 720) was contrary to European Union law because it established a disproportionate restriction to the free movement of capital.
Instead of reintroducing a separate and differentiated sanctioning regime, the legislator has limited itself to eliminating the wording of the precepts considered by the CJEU to be incompatible with the free movement of capital, which, in practice, only has a merely formal scope.
Specifically:
- Fixed pecuniary fines for not reporting on time or for reporting incomplete, inaccurate or false information are eliminated.
- The precepts that qualified the value of assets not declared in due time as an unjustified capital gain or as undeclared income attributable to the oldest tax period among those not prescribed are eliminated.
- The proportional pecuniary fine of 150% of the tax liability derived from the unjustified capital gain or undeclared income is eliminated.
Since the above has not been replaced by a specific regime, any failure to comply with the reporting obligation is subject to the general penalty regime provided for failure to file returns on time or incorrectly, which do not cause economic damage to the Treasury.
It should be remembered that:
- The penalties eliminated consisted in the imposition of a fixed pecuniary fine of 5,000 euros for each piece of data or set of data, with a minimum of 10,000 euros, or 100 euros for each piece of data or set of data, with a minimum of 1,500 euros, for cases of late filing without prior notice.
- In addition to this penalty, the regulation established another serious consequence both for not complying with the obligation to report and for doing so after the deadline, and that is that the Treasury may consider that the assets abroad are unjustified capital gains and charge for Personal Income Tax a fee up to its maximum marginal rate or in the Corporate Income Tax, on its value plus an additional penalty of 150% on such fee. And this even if those goods and rights come from prescribed periods.
You can contact this professional firm for any questions or clarification you may have in this regard.
For further information, please contact Tax consulting
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