¿Is it necessary to present the modelo 720 to the Treasury in 2020?

IT is getting to that time of the year when people are questioning what is the modelo 720 and who is it for.

If you have a property or bank account located outside of Spain, remember that you have to present Form 720.

The deadline to present the model 720 of the Treasury is from January 1 to March 31

What is the Model 720?

Model 720 is an informative return that any taxpayer who has assets or rights abroad is required to present it

If you already presented the model 720 in 2019, you will not have to file again for the same group of goods if its value has increased by less than 20,000 euros, or you acquire new assets.

For this reason, it is easy that you do not have to complete this procedure every year.

What assets have to be declared?

1. Accounts and open deposits in banking entities located abroad.

for instance if you have five bank accounts overseas and the total value between them all is €50,000 or over each account must be reported.

2. If you have assets in joint names the assets must be reported if they are €50,000 or over.

3. Immovable property (real estate) Again if they are over €50.000.

In certain cases where assets have been relinquished i.e. one investment closed and another put in its place, or a property has been sold etc. Therefore the advice is to check every year to make sure that this does not apply to you. Remember a change in the exchange rates could push you over the €20,000 limit.

What does not have to be declared?

Those owned by entities totally exempt from Corporation Tax (State, public entities ...).

When the value of € 50,000 is not exceeded for each set of goods indicated in above

If said joint limit is exceeded, information must be provided on all the elements that are owned in each group of goods, regardless of their individual value.

Those that are registered in the owner's accounting duly identified and individualized. In these cases there is no obligation to declare for the holder, but the responsible or proxies are not exempt from declaration.

Only with regard to current accounts , those opened in establishments abroad of credit institutions domiciled in Spain, which must be the subject of a declaration by credit institutions , provided that they could have been declared in accordance with the regulations of the country where the bank is located. account.

What happens if I do not present the form 720 in Spain?

Late, incomplete or non-submission is penalised with extremely severe fines. Every piece of information which is wrong or has been left out will generate a fine of €5,000 per asset, with a minimum penalty of €10,000.

Every mistake in the form 720 will cause a fine of €100 per data not provided, with a minimum fine of €1,500. To avoid any possible errors, we recommend you to find help from a professional tax advisor.

If the taxpayer files the statement outside the stipulated time limit, he/she risks that Treasury may assume the assets abroad constitute “an unjustified capital gain,” in which cases, the penalty amounts to 150% over said fee, “even if those assets and rights originate from prescribed periods.”

Will this change in the future?

If there is a model that generates doubt among investors, this is model 720 of the Informative declaration on assets and rights located abroad.

The reason is that the courts are throwing back the penalties of the Treasury for not delivering the model 720 in accordance with European regulations to the presto. Now that it is time to comply with it, the question arises of who should present the model and if it is really necessary to do so.

Behind the question is the reasoned opinion that the European Commission sent to Spain in February 2017 regarding the 720 model and that the Treasury does not quite comply with the extent that Europe wants.

Brussels considers that this regime and informative statement constitutes a restriction on the freedoms of the treaty on the functioning of the European union. Specifically, it considers that it threatens the freedom of movement of workers, the freedom of establishment, the provision of services and the movement of capital.

The reason is that the obligation of specific information could negatively influence the decision to invest outside of Spain . Among its reasons is how complicated it is to fill in the form, which makes it necessary in many cases to have a specialized advisor.

To this are added, some EC sanctions considered disproportionate, especially compared to other tax crimes, and that for Brussels it does not make sense to impute the lack of information as unjustified capital gains in income, regardless of the year of which are treated as prescribed.

For now we continue, but let's see what the future holds.

If you are in need of any help in filing the Modelo 720, please do not hesitate to get in touch and we can file it sooner, rather than later and ensure it is correct.