Specialized advisor in Spanish Form 720 in Barcelona

All individuals or legal persons resident in Spain, permanent establishments in Spain whose owners are non-resident individuals or entities, and all other entities provided for in Article 35.4 of the Spanish General Tax Law 58/2003 of December 17, 2003, are obliged to file Form 720, provided that the value of their assets or rights exceeds 50,000 euros. You must file Form 720 if:
If you have legal or real ownership of the goods or rights.
If you can dispose of those goods even if you are not the owner.
Also, if you are a representative, attorney-in-fact, authorized, beneficiary of those assets or rights.
As we have already mentioned above, it is a single form, although there are three blocks independent of each other. In order to have the obligation to file Form 720, the accumulated value in at least one block must exceed €50,000. Therefore, if we have goods and rights in more than one block, and even if adding several blocks of a value higher than 50.000€ in each individual block does not exceed 50.000€, there will be no obligation to declare.

• Example 1
  Mr. Raimond has an account with a foreign financial institution with a value of €40.000 and a property located abroad with a value of €30.000. Although the sum of the assets and rights abroad is greater than €50.000, Mr. Raimond is not required to file Form 720 as each block does not exceed €50.000.
• Example 2
  Mrs. Ivana has an account in a foreign financial institution with a value of €40.000 and a property located abroad with a value of €60.000.
  Mrs. Ivana is obliged to file Form 720 since the block of real estate abroad exceeds €50.000. However, she will only have to declare the real estate, since the blocks are completely independent and the block of the foreign accounts would not exceed €50.000 and would not entail the obligation to declare it.

The valuation of assets and rights is also of great importance, since it is decisive to know whether it is mandatory or not to file Form 720. We will focus on the most common assets, such as bank accounts, shares, and real estate abroad, although this does not mean that there are no other types of assets and rights that have to be declared.

• Regarding foreign bank accounts, the highest value between the balance as of December 31 or the average value of the fourth quarter of the fiscal year being reported should be recorded.
• Regarding traded shares, they are to be valued at the market value as of December 31 of the fiscal year being reported.
• Finally, real estate located abroad will be valued at their acquisition price, including taxes and expenses deriving from their acquisition.
  It should be noted that the values of the assets are not prorated among the number of holders, but rather each holder will have the obligation to declare the total value of the asset.

The deadline for filing Form 720 is from January 1 to March 31 of the following year, during which the obligation to declare the assets and rights abroad arises.
All assets and rights abroad must be detailed in this form.

Last January 27th, the Court of Justice of the European Union declared contrary to the Treaty on the Functioning of the European Union, the excessive penalty regime that supported the Informative Tax Return on Goods and Rights Held Abroad (Form 720).
This situation leads to the complete elimination of the penalty regime of Form 720, applying in its absence the general regime of fines and penalties provided for in the General Tax Act.

The main controversy over this statement is that the sanctions are disproportionate. There are several cases:

• Failure to comply with the obligation to file the return. A penalty of €5.000 will be imposed for each inaccurate, incomplete, or not included data, and a minimum penalty of €10.000 will be imposed if the infringement is typified as tax-related.
• Filing the tax return after the deadline or not filing it online. A penalty of 100 euros will be imposed for each incomplete or inaccurate piece of data, with a minimum penalty of 1,500 euros.

All those assets and rights that have not been declared by the taxpayer will be considered an unjustified capital gain for income tax or corporation tax purposes. This assumption will entail a financial penalty equal to 150% of the value of the undeclared assets and rights.