Capital gains
International taxation
- Does Spain have a double taxation agreement with the UK?Yes. Spain and the United Kingdom have a double taxation agreement on income and capital gains, signed in London on 14 March 2013. It entered into force on 12 June 2014 and has applied to income tax since 1 January 2015 in Spain and since 6 April 2015 in the UK. It replaced the 1975 treaty and was not affected by Brexit, because it is a bilateral agreement rather than EU law.
- Is there double taxation in Spain?Double taxation can arise in Spain, but in most cases it is avoided through the 99 double taxation treaties that Spain has in force and through the foreign tax credit in Spanish law. If you are resident in Spain, you are taxed on your worldwide income. Spain then deducts the tax you have already paid in the other country on that same income, so you should not pay twice.
- What happens if there is no double taxation treaty?If Spain has no double taxation treaty with another country, each state applies its own laws without limits. The same income can be taxed twice, but Spanish law offers unilateral relief: Spanish residents can offset the tax paid abroad through the international double taxation deduction in article 80 of the Personal Income Tax (IRPF) Law.
- What is international taxation?International taxation is the body of rules governing how individuals and companies are taxed when their income, assets or business involve more than one country. It combines each country's domestic law, double taxation treaties, European Union law and OECD cooperation agreements.
Modelo 720
- Do I have to submit a Modelo 720 every year?No, you do not have to submit Modelo 720 every year. After your first filing, you only need to file again if the value of a category you have already reported rises by more than €20,000 since your last return, if an asset you reported is cancelled, sold or no longer held by you, or if a new category goes above €50,000.
- How to complete and file Modelo 720 step by step?Modelo 720 is completed and filed online through the electronic office (Sede electrónica) of the Spanish Tax Agency (AEAT), using a digital certificate, an electronic ID card (DNIe) or Cl@ve. You create one record for each asset held abroad, stating its asset-type code, the country, the institution, the date it was acquired and its value at 31 December.
- What happens if I file Modelo 720 late?Yes, you can file Modelo 720 late, and it is best to do so as soon as possible. If you file before receiving a request from the Spanish Tax Agency (AEAT), the penalty is €10 for each data item or set of data, with a minimum of €150 and a maximum of €10,000. If you file after a request, it rises to €20 per data item, with a minimum of €300 and a maximum of €20,000.
- What must be declared on Modelo 720?Modelo 720 covers three categories of assets located abroad, whenever any of them exceeds €50,000: accounts with financial institutions, securities and insurance, and real estate. Crypto-assets held in custody outside Spain do not go on this form but on Modelo 721. Once a category exceeds the threshold, every item in it is reported, not just the excess.
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