Foreign Asset Declaration Model 720:

A extract of news, for those, thought to be around 30,000 , who decided they would not declare their foreign assets because they knew better than the 5% who did declare.

From:-    http://economia.elpais.com/economia/2015/06/03/actualidad/1433352237_785765.html

A retired gentleman from Granada had worked offshore for some years and saved €340,000 in USB in Switzerland.

According to his lawyer, he had not known about the overseas asset declaration process (Modelo 720), and voluntarily made his first declaration a year late.

As a result he has been fined a total of €439,267. – 150% because it was a “very serious infringement”.

Are you sure the contents of this article are strictly true?

http://www.speedfinancialsolutions.com/modelo-720-new-reporting-requirements-2013-part-1-2/

If I understand this correctly, if he can prove that the income was earned whilst he was not a spanish resident, then he should be able to reduce his tax liabilities substantially, paying only the 1500 euro late declaration fee.

If he was not a Spanish resident at the time the earning were made,  of course he  was not liable to pay income in Spain.

.

However, as the web page 'Theline' quoted,  shows,  form 720 does not apply to income tax and it is  only applicable to those who are resident. 

Being resident and failing to submit the details of assets as required,  carries substantial penalties.   

He has been caught, as maybe will the other 30,000, who wrongly thought Hacienda was stupid and would not find out.

Looks like he only got busted because he made a voluntary, late declaration.

Anyway, the EU court has ruled that the penalties/fines are excessive so it's unlikely he'll have to pay anything like the figure quoted.

I thought late payments have a set fine of 1,500 euros

if someone leaves Spain, and has spent more than 183 days there in the year, does he have to submit a  720 the following year, due to his UK bank balance being vastly increased due to transfer of  money from house sale proceeds?

does it apply, as he is no longer a resident?

That's a good question, and one best put to the idiots in Hacienda. You'll get at least threee different answers no doubt!

I thought late payments have a set fine of 1,500 euros

Campo,  are you splitting hairs?

He did not make the declaration that is what the penalty is for, not for making it late (in the same year).

This this the 3^rd year when one was required to make the 720 declaration, thus I would imagine it was not this year that he ‘forgot’ but that he has ‘forgotten’ since the requirement became law.  I believe up to 150% of the asset not declared is the penalty.  He has been told to pay that. Tough.

As  I said, it is thought there are around 30,000 who have ‘forgotten’.   It  is reported an estimated 5% who had to declare  actually ‘remembered’.    Being one of that group who made the declaration,  I have no sympathy for the 95% of ‘forgetfuls’ !       I am just surprised that it has apparently taken the tax office so long to act.

If the other 95% have similar undeclared sums,   that means about 14,000,000,000 euros is about to swell the treasury coffers.

"about 14,000,000,000 euros is about to swell the treasury coffers." - more likely the pockets of the corrupt barstewards who run the show - it will probably mostly end up back in Swiss bank accounts, just somebody elses.

Residents who fail to declare assets outside Spain exceeding EUR50,000 are liable to punitive sanctions, these include a fine of EUR5,000 for each undeclared asset discovered, plus income tax at the marginal rate (of up to) 56 per cent on the asset value plus a fine of 150 per cent of the income tax. 

Perhaps the above explains it slightly better.

Thanks Baz, knew I could rely on you to spell it out in words of one syllable, for those who were nor aware..

Thanks Baz, knew I could rely on you to spell it out in words of one syllable, for those who were nor aware..

Nothing to do with me, I just pasted what I looked up.

I think everyone is aware of the fact that they should declare "Assets" outside of the taxing country they live in because in almost every country they have similar tax rules, but people are just sick and tired of paying tax to watch it get spent on wasteful items, let alone in the pockets of the government crooks.

Just about everyone I know does this to some degree or another one way or the other, it's a fact of life.

What is sad about this law, is that despite it's (what I believe to be) noble intentions (i.e. it was aimed at those who are evading taxes in Spain, including several politicians and football players), due to the bad drafting and lack of consideration of the people it may effect, it has caused a great deal of harm to a lot of people. Not only financial harm, but also mental harm, particularly to those who want to be legal with regards to taxes in Spain, but now cannot be.

What I don't like about this law is that it basically gives the government free-reign to take peoples assets, often earned legally and outside Spain, very easily, and without giving people any way to rectify their tax situation in the future, without facing the serious and very real risk of losing that asset.

My experience of Hacienda in the past has generally been postive, and if you can explain your position, generally they are fair, even if you have technically broken the law. However, in a country with 17 autonomous communities and 50 provinces, each with a large degree of independence in managing their taxes, along with the facts that there are financial incentives in place for Hacienda employees to "win" money for their government, and that state employees in Spain rarely lose their jobs (even if they are grossly incompetent), there is a massive risk for this law to be abused by communities struggling to pay their debts.

I suspect the man in the article had a little more to hide than he was letting on, and there is a good chance he "voluntarily" made a declaration following a tip-off from a friend, family member or gestor with links to the hacienda who was aware that his assets had been discovered. However, without knowing any details about the case, I cannot know that for sure, and as I said before, there is a real chance that this was an average retired man who has just lost his entire life savings (and more) due to an administrative error which he was not allowed to rectify with the Spanish authorities.

johnzx, unfortunately not everyone speaks spanish and understands the law as well as you do. I can tell you from personal experience that paying less tax is often not the main reason for not declaring assets to the Hacienda. Lots of people don't declare assets because they don't know how to, because they can't afford the (often extortionate) fees offered by many English speaking asesors/gestors, because they've placed their trust in people who have given them bad advice, because they are worried that the spanish government will try and take their assets anyway because they were unaware of their obligations previously and would have to declare them late, and many other reasons. 

Theline:    Whilst a lot of what you say is correct, declaring on the 720 does not carry any increased taxation.   That is unless one has lied about their income for years and then there might be some problems with unpaid income tax over the years.  There is no possibility of the government taking any of the assets, unless the person concerned fails to declare and gets caught. As I said, tough.

That Hacienda do not give a ‘get out of jail’ card to those who have not declared when they should have and either do so much later or when they get caught, is rather like saying a guy who commits a robbery but then comes clean should get off light.   If one does the crime then they must pay fine.

Of course having once declared, the Government will know one’s assets for inheritance purposes when the time comes, whereas before the system was open to tax evasion.

Re the cost:   I use a gestor for the 720 for my wife  and myself, the cost is just 50 euros for the 2 of us,  not exactly a good reason for not declaring.

Ignorance of the law:   I know many people who were fully aware of the 720 coming into force who said they would ignore it. I explained to many friends what was required, most ignored the advice.  If they now get caught, they have only themselves to blame.

A friend’s wife has been nagging him and me for the past 3 years  as I persuaded him to make the declaration against the wishes of his wife.   I guess she may stop nagging us now.

"Lots of people don't declare assets because they don't know how to" - well, yes, and the same goes for a great many other things here in Expatlandia. There was a time when blissful ignorance sometimes seemed to be the best state to live in (and indeed, often seemed like the only way to remain sane), but those days are long gone. As someone who has at times over the last 18 years struggled to do things correctly in the belief that in the long run that's the best policy, I have to say I agree with John. And yes, I don't mind admitting to a touch of schadenfeude whenever I hear of someone getting caught out because they cut corners, either through ignorance or a sense that they would get away with it.

Tough.

Hi all,

I am a French citizen but I feel it nice to exchange with English-speaking people.

I started working in Spain in July 2015. This year I gave my IRPF declaration, which I found was fairly simple, but I honestly didn't have a clue there was something like Modelo 720. I only found out this week, chatting with a colleague. And some of them hadn't heard of it ever. I was completely despaired, because the deadline is now over and there's barely anything reasonable I can do. I just own a flat in a small town in France, which used to be my home until I left... I pay taxes for it in France, of course. As I wasn't managing selling it, I had to keep it, and I still have it. The market is very low in France at the moment, so there is little chance that I might sell my flat, at least without losing money!

I would like to ask you for your opinion, as I know there are many British expats in Spain, and probably many of you in the same situation. How probable is it that Spain looks into my file or finds out I own a flat? Is it less probable if I sell it? Knowing that I have a relatively average salary here... In fact, I earn the same that I did in France, I am a normal employee. Or should I consider declaring my flat now that 2016 is not over, paying the fine and all? I am pretty scared of what they could investigate if I declare, even though I have no account in Switzerland or anything of the kind...

Thanks a million

I would suggest you speak to Hacienda, a lawyer or gestor for advice. 

There have been a couple of cases reported in the press that the tax office (Hacienda) is taking actions for non disclosure.

 Friend of mine, who had made the 720 declaration previously forget to up date  the info. He did so a few days late and no penalty was imposed.

Hi John,

thanks for your reply. That's what I am starting to think indeed. So you mean there is no automatic penalty? I have been reading the penalty was always applied. Or maybe because it was just an update, or it was only a few days late?

In my case, it would be for first declaration, and almost two months late. Plus I am considering declaring my income in France from January 2015 to June 2015, which I didn't know I had to declare either, or better said, I have already declared in France. But I understand it is necessary so that the proper tax rate should be applied to me, and it would imply to pay more taxes than I have done. And it would show that my flat was acquired with declared income in France. Am I right so far?

I started working in Spain in July 2015

You don't say when you arrived in Spain! or if your arrival and subsequent resident registration coincided with when you started work. If these two events did coincide you could argue that you were a French resident in 2015 (seven months) and therefore pay tax there. On that basis you were not a Spanish tax resident until 2016 and therefore no need to complete the Modelo 720 until end of March 2017

As johnzx said. best to seek professional advice

Good point. Well I arrived in Spain just two days before my work started, at the very beginning of July. So just for a few days I think I was a Spanish resident. But I will seek professional advice anyway, as the issue is rather complex.

Besides, I have read at some places that it could be advisable to challenge the penalty, if it is applied, because the European Commission started an infringement procedure against the high level of penalty for late declaration (from January to March is really a very short time!). Do you know anything about this?

I am just wondering how many people are actually not declaring their assets... According to the official figures it seems to be a lot, and just 7000 people are being investigated! Do they not try to focus on specific categories of people? How probable is it that they know everything about everyone?

I have been told by a well know writer on the law in Spain, that the Gov will use the  720 legislation against those with assets in Panama who failed make the declaration.  With the max penalty 150'% of the assets not declared that would seem to be a very easy way of dealing with them. 

The same person told me,  that was the reason the 720 Declaration was introduced.