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Modelo 720 Reporting Time!

By Chris Burke
This article is published on: 23rd March 2017

23.03.17

Just a reminder that time is running out for submitting your Modelo 720 declaration.

All those tax residents in Spain, (those living in Spain for more than 183 days a year or where Spain is the main base for your business), should be aware that as a result of legislation passed on 29th October 2012 residents in Spain who have any assets outside of Spain with a value of €50.000 or more, are required to submit this declaration form to the Spanish authorities. (that’s €50.000 or alternative currency equivalent).

This declaration can be made online, through the Tax Office`s web page www.agenciatributaria.es where the Modelo 720 (Tax in Spain) can be located and completed. It must be filed between January 1, and March 31, of the first year of residence, to avoid being investigated or fined by the Spanish authorities. I would personally recommend speaking with your accountant / Gestoria to avoid mistakes.

The assets outside of Spain that are subject to this declaration form fall into 3 asset categories:
1. Property
2. Bank accounts (cash)
3. Investments

To warrant a declaration the total value of assets should exceed € 50.000 in each or any one of the categories; e.g. if you have 3 bank accounts and totalling up all the balances it exceeds the €50.000 limit you are subject to making the Modelo 720 declaration. However, if you have a bank account at €30.000 and say, investments valued at €30.000 then there would be no reporting requirement as they are in separate categories and each individual total value does not exceed the €50.000.

A declaration must be submitted individually, regardless of the percentage of ownership (in joint accounts). For example, if you have a joint bank account with a value exceeding €50.000, although your particular (say €25,000) share is below the threshold, each owner would still be required to submit an individual declaration based on the total value of the account.

Although this declaration of assets abroad is solely informative and no tax is charged, failure to file, late filing or false information could result in serious consequences.

For this reason, we recommend that everybody arranges to declare their assets, to avoid the imposition of fines from a minimum of €10,000 to a maximum of 150% of the value of those undeclared assets located outside Spain. Once you have made your first declaration it is not necessary to present any further declarations in subsequent years, unless any of your assets in any category increases by more than €20.000 above the initial value declared.

Parkinson’s Law

By Victoria Lewis
This article is published on: 24th August 2016

24.08.16

Are you familiar with Parkinson’s Law? Originally it stated that “work expands to fill the time available for its completion.”

Parkinson’s Law is the title of the book written by Englishman Cyril Northcote Parkinson in 1958 and today, the more recent understanding of the law is a reference to the self-satisfying uncontrolled growth of the bureaucratic apparatus in an organization.

The Law is also applied to money and wealth accumulation: expenses always rise to match income. Parkinson’s Law can explain why many people retire poor and why some people succeed, whilst others fail.

The law says that, no matter how much money people earn, they tend to spend the entire amount and a little bit more. Their expenses increase in line with their earnings. Many people earn today several times more than they were earning at their first jobs. But somehow, they seem to need every single penny to maintain their current lifestyles. No matter how much they make, it is never enough.

The key to financial success – break the (Parkinson’s) law
Parkinson’s Law explains the trap that most people fall into. This is the reason for debt, money worries and financial frustration. It is only when you have sufficient willpower to resist the urge to spend everything you make that you begin to accumulate money – the perfect environment to help you achieve financial independence.

Reduce your outgoings
If you ensure your expenses increase at a slower rate than your earnings, and you save or invest the difference, you will become financially independent in your working lifetime (and retirement).

Measure the difference between your earnings and the costs of your lifestyle, and then save and invest the difference. You can continue to improve your lifestyle as you make more money.

Take action
Here are two things you can do to apply this law immediately:

Imagine that your financial life is like a failing company that you have taken over. Stop all non-essential expenses. Draw up a budget of your fixed, unavoidable costs per month and resolve to limit your expenditures to these amounts. The aim is to make sure that your ‘company is making a profit’.

Carefully examine every expense. Question it as though you were analysing someone else’s expenses and look for ways to economise. Aim for a minimum of say, 10% reduction in your living costs.

Resolve to save and invest 50% of any increase you receive in your earnings from any source. Learn to live on the rest. This still leaves you the other 50 percent to do with as you desire!