Decaration of assets abroad- end of term 31st March

Obligation to declare

Obligation is to declare any of the assets exceeding 50.000 € falling into one of the three categories below:

1. Accounts in any kind of financial institution e.g. banks, building societies.

2. a) Investments/ rights of representation in foreign companies or other entities.                                                                  b) Investments in foreign collective investment institutions

    c) Foreign life/ invalidity insurance; income from foreign annuities.

3. Property and rights to property.

The threshold is for the total value of each of the three categories.

Where assets are jointly held, it is the total value of the asset which is relevant. A separate return must be submitted for each person.

Presentation deadline

This tax declaration must be submitted by 31st March following the end of the year in which the taxpayer is obliged to declare.

Posterior declarations

After the initial declaration is presented, new declarations must be filed when the total of any category of assets/ income increases by 20,000 Euros or more, either at 31st December or during the last quarter of the year.

Valuation of assets

Property: purchase price;

Investments which are traded on the open market: market value as at 31st December;

Other investments: value on last published balance sheet.

Penalties for non-disclosure

Up to 30.000€ 

I understand there may also be a penalty of 150% on any unpaid tax

https://www.blevinsfranks.com/News/BlevinsFranks/Article/modelo-720-spain-2016

The EU took Spain to court, not for the declaring bit but for the punitive amount of the fines. That was February last year. After 6 months, the EU got a bit frustrated with Spain for not answering questions and simply said they must introduce a fine more fitting with the alleged offence.

Spain hasn't and still continues to levy these fines. I spent a rather tearful weekend with an elderly couple of my acquaintance who moved to Spain in 2012, the first year these were required. They submitted a nil to declare as they had bonds which they couldn't touch for 5 years and a current account. Although the total came to 52,000 euro (at the time) each, they were under the impression the bonds were a separate category to the current account.

Last year they received a small inheritance which took the amount in savings to over 50,000 euro so declared it on the 720. The tax people then demanded to know when the current account was opened (some 50 years ago) and have come back with a €6,000 fine which equates to 1500 each for each account not declared fo4 2012.

Now, they declared the interest on both accounts for tax purposes (none on the current account) so haven't defrauded or tried to hide anything and it was a genuine misunderstanind of the rules in the time they were just moving here. They were told if they hadn't "voluntarily" declared the 2012 amount they could be liable for a 40 to 60 thousand euro fine.

Their first reaction was to sell up and move home as this smacks of 3rd world countries trying to get money any way they can. Their solicitor told them it was set up to catch pop stars and oligarchs hiding money in Swiss bank accounts. How come the little people are the ones to get it and I'll bet those with all the cash have clever advisers on how to hide it.

I really felt sorry for them but Spain still hasn't abided by the EU ruling to reduce the  fines to a more realistic level and especially when taxes were paid on the interest earned.

The only advice I could give them was to contact their MEP but I doubt that'll do any good.

''Decaration'' did you mean Declaration?.

I can understand the attraction of Spain, sun, sand and lager. But at times the police state regime becomes intolerable. There are other countries and it’s about time Spain realised that.

This is everyones worst nightmare re 720 Mariedav - dreadfull story! And they are expected to grin and bear it ! leaves a sour taste when you are only trying to do the right thing!

Yes, I went through it with them and the thing that gets them is that they did everything they thought was correct. They took out residency, signed on the padron, compeleted their tax returns each year (and paid extra taxes in Spain), changed their driving licences etc etc. 

They are now approaching 80 and are extremely upset about it all. No idea if they can appeal against it but I would very much doubt it. As said, the only thing I could suggest was contacting their MEP regarding the EU judgement on lowering the fines. It's not as if they tried to get away with paying taxes and they even declared the inheritance they received from her brother and paid inheritance tax on that. Now to get a huge fine like this just seems so unjust.

I am a non-resident with a modest holiday home in Andalucía, Spain.

Does this declaration apply to non-residents?

Laurdan. No only the tax residents

As a non-resident you should be paying non-resident tax.  Your Spanish solicitor will be able to advise.

I pay non- resident tax in December, council tax in June and a payment to our Spanish bank allowing them to notify the local authorities.

My question was as a non- resident do we/I have to make an asset declaration??

No.

The couple Mariedav mentions have had a bad experience, and i would also advise them to appeal the court ruling. The problem is the cost of such an action. They would be probably be paying out more than what they were fined to hopefully win the appeal. Maybe it would be easier to pay the fine and resign themselves to the outcome. When all is said and done they have been living ok to that point financially, and the inheritance maybe would cover the fine? It would just leave a very bitter feeling to have to put up with it.

It does make you wonder why they did not declare the finances in the first place though. Was it just ignorance, bad advice from a financial adviser, or were they trying to hide the bonds? There is probably more to this story than it appears.

The first post on this thread states:-

Posterior declarations

After the initial declaration is presented, new declarations must be filed when the total of any category of assets/ income increases by 20,000 Euros or more, either at 31st December or during the last quarter of the year.

Is this correct? I understood that a new declaration had to be filed if the total changed by €20,000, i.e. a decrease would also create the obligation. Also that a new declaration had to be made when any new accounts were opened or any existing accounts were closed, even if the overall total was unchanged. Can anyone clarify this?

Esteban    Yes and if in the system, if a new account is opened or an existing one closed

Was it covered that a joint account of over 50,000 must be declared by both parties albeit that one can claim that it 50/50 owned

I'm sorry but I'm not sure I  understand your posting. I was asking if the first posting was correct  in referring only to increases. Could you please clarify if your "yes" mean that the first posting is correct and so a decrease of more than €20000 does not have to be declared? Thank you.

@robert

It does make you wonder why they did not declare the finances in the first place though. Was it just ignorance, bad advice from a financial adviser, or were they trying to hide the bonds? There is probably more to this story than it appears.

No more to the story at all. They had just moved here and were very busy. Their current account had something like 12,000 euro when they moved over but was down to around 1,000 at the end of the year after having paid for lots of things (like you do when you first move as everyone seems to want money). They were under the impression bonds (which paid no interest in that first year) were a different category like shares. The thing is, the "average" amount in the current account put them just over the 50k and should have been declared.

Honest mistake, not being advised properly, confused as  to the rules? Don't know but trying to "hide" the bonds would have been pointless as they declared the interest the following year for tax purposes.

Sometimes the story is just that. Still think a very harsh penalty when no attempt was made to avoid or evade any taxes from the Spanish. 

@estebandos

You have to make a declaration if:

1) You have declared assets previously and the value of these assets has increased over 20,000 Euros in any of the 3 categories since your last declaration.
2) You have declared assets previously and you no longer have these assets (e.g. closed bank accounts, sold shares or sold property) or you have new assets in any of the 3 categories.
3) You didn´t have more than 50,000 Euros in any of your previous declaration years but now do have more than 50,000 Euros in 2017 in any of the 3 categories, either jointly or as an individual.

Thank you. I understand that an increase of over €20000 has to be reported but just to be clear could someone say specifically whether a decrease of over €20000 also has to be reported. That was what I originally asked.

No. Only if they have grown or you have closed or sold them. (From BlevinFranks website).

If you have already submitted Form 720 in the past few years, you only need to report again if:

• The value of an existing asset grew by more than €20,000, or
• You sold an asset/closed an account, or
• You obtained a new asset.

Nothing there about a decrease in the value of the asset.

Thanks for that, mariedav. It does make sense that they would only be interested in increases, but sometimes here what seems to make sense is not necessarily the same as the required procedure. Anyway, I'm clear about it now.