In a previous article, the Spanish wealth tax explained. This article will discuss the asset declaration of modelo 720. Indeed, an attentive reader noted that many Belgians in Spain forget this declaration requirement, even though it carries heavy penalties.
What is the wealth declaration?
As a tax resident in Spain, you are required to declare that you own assets outside Spain using the form modelo 720. This starts from €50,000 per asset category:
- real estate located outside Spain;
- non-Spanish bank deposits;
- non-Spanish financial investments and pension funds.
For example, if you have a Belgian bank account amounting to €30,000 and you own a flat worth €130,000 located in Belgium, you only need to declare that you have foreign property.
Note: for example, if you and your partner share a bank account with a value greater than €50,000, you both have to disclose this separately.
For bank accounts you should indicate:
- Bank contact details
- Account details, including IBAN number
- Date of account opening
- Balance at 31 December, and average balance in the last quarter
Contact details of bank/investment platform
- Investment portfolios: portfolio value on 31 December, type, and number of shares/bonds
- Life insurance/pension savings: insurer contact details, payout value on 31 December
- Other investments: contact details company and value of investment on 31 December.
For real estate:
- Notarial deed of sale
- Property address
- Purchase date
- Purchase price
When am I a tax resident in Spain?
You are tax resident under Spanish law when you stay in Spain for more than 183 days a year. Fiscal residency is therefore independent of nationality. The double taxation treaty between Spain and Belgium may possibly deviate from this rule, e.g. if your vital life interests are still located in Belgium.
Will I be taxed if I own more than €50,000 in non-Spanish assets?
Not necessarily. The wealth tax depends on region to region. In the Comunidad Valenciana you 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 I file modelo 720?
This is between 1 January and 31 March each time.
Do I have to file this return annually?
After you have completed the modelo 720 a first time, you only need to re-file the declaration when an already declared non-Spanish asset class has increased in value by €20,000 or when an undeclared category exceeds €50,000.
An example. You moved to Spain in December 2016. The sum of all your non-Spanish bank deposits was €60,000. You file your first modelo 720 in 2017. At the end of 2017, the sum of all your non-Spanish bank deposits was 65,000 euros. You are then not required to file a tax return in 2018. However, at the end of 2018, you have €80,000 in all your non-Spanish accounts. In that case, you will need to file Modelo 720 again in 2019.
What if I do not file a tax return?
Failure to file modelo 720 can be severely penalised. The minimum fines are 10,000 euros and go up to 150% of the undeclared value of 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 not to forget modelo 720!
Update June 2019: the high sanctions may violate the free movement of persons within the European Union. A lawsuit is currently pending before the European Court of Justice against Spain in which the European Commission is challenging the existence of the sanctions.
Last update: January 2021