Declaration of Foreign Assets Due This Month
March is the month when all residents of Spain, including expats living in Spain need to submit their Modelo 720. This form is how those living in Spain need to declare their assets and rights held abroad. Modelo 720 is also known as the Worldwide Asset Declaration Form. All residents in Spain who own assets in other countries of €50,000 or more in any particular category for example property need to inform the government of this in order to be correctly taxed. This means that those with foreign trust funds, savings, bank accounts, property or pension funds have to declare their assets. If you have more than €50,000 in a foreign trust fund as well as more than €50,000 invested in property abroad you have to declare in two categories. However if you have €20,000 in a foreign bank account and €50,000 in foreign property you would only have to declare in the property category. Similarly if you have €30,000 in foreign trust funds and €30,000 in foreign bank accounts you wouldn’t have to declare in either category as the criteria is €50,000 in each category not in all the categories together.
Modelo 720
The Modelo 720 was introduced in 2013 requiring all residents of Spain - expats and Spaniards to declare their assets outside of Spain. Although the law applies to all those living in Spain, residents and foreign residents alike it effects foreigners more than it does your average Spaniard. Foreign expats living in Spain tend to have assets outside the country; most of which they accumulated before even thinking of living in Spain. So intentionally or inadvertently the foreign residents are taking the brunt of this law. The original intention of this law was probably to prevent Spaniards from moving assets abroad to avoid paying Spanish taxes. The law was also intended to prevent money laundering and tax evasion. Retired Europeans living in Spain just happen to be the group which is more likely to have assets abroad.
Asset holders who fail to submit the form; fill it in incorrectly; lie on the form or file late face heavy fines. Fines start at €10,000 and can reach 150% of your foreign assets. It is advisable to consult with a tax lawyer before submitting your Modelo 720 which must reach the government offices by the last day in March.