Modelo 720 is an informative declaration that must be submitted by both individuals and legal entities residing in Spain to the Tax Agency to report on assets and rights located abroad. The term “informative declaration” means that its main purpose is to provide information to the Tax Agency about certain assets and rights that the taxpayer owns or controls outside Spain, without this directly implying the payment of taxes at the time of its submission.
This model is not intended to calculate or settle a tax but to inform about assets located abroad, fulfilling a duty of fiscal transparency. This model was established as part of the measures to prevent and combat tax fraud, coming into force in 2012.
Its main goal is to increase transparency and ensure that all assets and rights that Spanish tax residents own outside the country are known by the tax administration, thus facilitating fiscal control and inspection.
Who needs to submit Modelo 720?
Those required to submit Modelo 720 include all residents in Spain (individuals, legal entities, entities, and permanent establishments of non-resident entities) who own or have authority over assets and rights located outside Spain, and whose total value exceeds 50,000 euros in any of the following categories:
- Accounts in financial institutions located abroad: Includes any type of account in which the taxpayer appears as the holder, representative, authorized person, beneficiary, or in which they have powers of disposition.
- Values, rights, insurances, and annuities: Refers to values or rights representative of participation in any type of legal entity, as well as life or disability insurances and temporary or lifetime annuities contracted with entities located abroad.
- Real estate and rights over real estate located abroad.
How is Modelo 720 submitted?
The submission of Modelo 720, an informative declaration about assets and rights located abroad, is a procedure that tax residents in Spain must carry out under certain conditions. This process is carried out electronically, through the website of the State Tax Administration Agency (AEAT). Below, the procedure for its submission is detailed:
Prerequisites
Before starting the submission of Modelo 720, it is necessary for the declarant to have a system of identification and electronic signature accepted by the AEAT, such as the electronic ID, digital certificate, or the Cl@ve PIN system. These systems ensure the security of data transmission and the identity of the taxpayer.
Steps for submitting Modelo 720
- Access to the Electronic Office of the AEAT: The first step is to access the official website of the Tax Agency and head to the electronic office to start the submission process.
- Taxpayer identification: Through one of the mentioned identification and electronic signature systems, the taxpayer must identify themselves to access the Modelo 720 submission service.
- Filling out the form: Once in the system, the taxpayer will access the Modelo 720 form. They must fill it out in detail, providing all the required information about the assets and rights located abroad. This includes data on bank accounts, investments, real estate, and any other relevant asset.
- Review and confirmation: Before finishing, it is crucial to review all the data entered in the form to ensure they are correct and complete. Any error or omission can have consequences in the form of sanctions.
- Electronic signature and submission: Once the form is completed and reviewed, the taxpayer will proceed to sign it electronically using their digital certificate or electronic ID. Finally, the declaration will be sent to the AEAT electronically.
- Receipt acknowledgment: After submission, the system generates a receipt acknowledgment that includes a reference number. This document is important as it certifies that the declaration has been correctly submitted and should be kept as proof.
When must Modelo 720 be submitted?
The deadline for submitting Modelo 720 is between January 1 and March 31 of the year following the year to which the declared data refers. It is important to respect this deadline to avoid penalties.
Do I have to submit Modelo 720 every year?
Modelo 720 must be submitted annually in Spain, but only if certain conditions are met. The obligation to submit this model each year depends on two main factors: the acquisition of new assets or rights abroad and/or changes in the value of already declared assets or
rights that exceed the thresholds established by law. Specifically, taxpayers must submit Modelo 720 in the following cases:
- New assets or rights: If, in the corresponding fiscal year, new assets or rights located abroad that had not been previously declared are acquired, and the total value of the category of assets exceeds 50,000 euros.
- Increase in value: If the combined value of any of the categories of assets or rights already declared previously experiences an increase that exceeds 20,000 euros compared to what was declared in the last declaration.
It is not necessary to submit a new declaration for the assets or rights that have been previously declared if their value has not increased by more than 20,000 euros, although it must be submitted if the balance or value as of December 31 is lower than what determined the obligation to declare these assets in previous declarations, provided that a declaration has not been submitted in which the cessation of the obligation to declare has been reported.
Consequences of not submitting Modelo 720
If Modelo 720 is not submitted in Spain within the established deadline, there can be significant consequences, as the Tax Agency imposes strict sanctions for non-compliance with this informative obligation. Consequences can vary depending on the case, including economic fines, regularization of the fiscal situation, and, in certain cases, the application of interest on arrears and additional sanctions.
Economic sanctions
- For not submitting or submitting out of deadline: The law foresees sanctions of 100 euros for each data or set of data referred to each undeclared asset or right, with a minimum of 1,500 euros if the declaration is submitted out of deadline without prior requirement from the Administration. If non-compliance occurs after a prior requirement, the sanction rises to 5,000 euros per data, with a minimum of 10,000 euros.
- For inaccurate or incomplete data: In addition to fines for not submitting the declaration, there are also sanctions for submitting it with false, inaccurate, or incomplete data.
- Extensive declaration and fiscal consequences: If you do not declare your assets abroad and later decide to do so or the Administration discovers them, you will be obliged to regularize your fiscal situation. This implies declaring undeclared income and paying the corresponding taxes, in addition to interest on arrears.