What has changed for the Modelo 720?

ITS STILL HERE BUT WHAT´S CHANGED……

We are fast approaching the 2022 deadline to file the Modelo 720.

Here we are in March 2022, nine years on from when the Spanish authorities launched their new “anti-fraud” plan to prevent tax evasion. We were initially advised it was aimed at Spanish nationals trying to hide their assets overseas, but quickly realised that most people affected were the International community with assets back home……

This law was introduced back in 2013, at the time the authorities didn’t really highlight this requirement very well and most of the country were not aware it had been passed. Fast forward to 2022 and I am still meeting people on a regular basis who have never heard of it.

So here it is, a brief outline of the Modelo 720 and what you need to do.

WHO HAS TO REPORT?
Any person, permanent establishment or company who is tax resident in Spain and is the owner, titleholder, representative, authorised person, beneficiary, or has disposal powers of assets located outside of Spain worth more than €50 000 (see assets below), must report the value of these assets.

WHEN DO YOU REPORT?
Between 1 January and 31 March of each tax year.

WHICH ASSETS MUST BE REPORTED?
There are three main asset classes that need to be reported if the total value of each class is over the €50 000 limit:

Bank/Building Society accounts located outside of Spain – It is important to note that if you hold several bank accounts and the TOTAL amount held exceeds the €50 000 limit, then ALL the accounts need to be reported, even those with a nil balance.

Investments / Life or disability insurance policies – If you are the owner or policyholder of an investment or insurance policy then these will need to be declared if they exceed €50 000. Again, there is a requirement if you have multiple investments or policies, that if the total value exceeds the limit then they will all need reporting. Interestingly if you are holding what we describe as Spanish compliant Life Insurance Bonds, then the onus of reporting on the Modelo falls to the institution themselves.

Property – Owners or part owners of an overseas property where the value exceeds the limit must report these properties.

NOTE – You need to report the Modelo 720 again if any of your asset classes have increased by over €20.000 since they were last reported

WHAT IF YOU DON’T REPORT IN TIME / CORRECTLY / OR AT ALL?
This is where things have changed in 2022. Previously The Spanish Tax Authority had implemented a series of heavy penalties for those who do not comply with the regulation.

These penalties can be imposed for late filing, incomplete/inaccurate filing and even for presenting the information to them in a way not deemed acceptable. Pre 2022 these fines could equate to 150% of the asset value. In a recent European court ruling these fines were deemed excessive and have been ruled out by the authorities. It is important to note though that the courts did agree a need for the Modelo 720 itself.

Whilst the excessive fines have been struck out please don’t think that there are no repercussions for not filing. The Spanish authorities will release a new penalty / fine structure that will be more acceptable to the European courts.

For further information you can visit the Agencia Tributaria website here Modelo 720 to see the latest information, in Spanish.

If you need any guidance or have any queries regarding your Modelo 720 please let me know.