Do You Have Properties or Bank Accounts Abroad? Be Careful with Form 720!
Form 720 is nothing more than an informative declaration about goods and rights located abroad. Seen in this way, it does not seem more relevant or complicated than other informative declarations, such as form 347 (annual declaration of operations with third parties) or the recent form 179 (quarterly informative declaration of the cession of housing use for tourist purposes).
Well, far from reality. Since its approval in 2013, the form 720 has only generated controversies and will continue to generate them until Spain does not definitely adapt its regulations to the Motivated Opinion that the European Commission sent to Spain in February 2017. In this expert opinion the European Commission makes the following assessments on form 720:
1. It constitutes a restriction on the freedoms of the Treaty on the Functioning of the European Union.
2. It threatens the freedom of movement of workers, the establishment, provision of services and capital movements.
3. It could negatively influence the decision to invest outside of Spain, especially as complicated as it is to fill in the model.
4. The penalties that are imposed for late filing are considered disproportionate compared to other tax offences.
5. The Commission declares that it makes no sense that in the absence of information on a good or right, the value of that good or right is included as an unjustified capital gain in income, regardless of whether the exercise in question has been prescribed.
The situation in which we find ourselves is the following: The Treasury has imposed very large penalties for submitting the form 720 after the deadline, but the issuance of this opinion by the European Commission opens the possibility of changing the Treasury criteria and starting to give the reason to those who claim these sanctions. In fact, we already have an example in a resolution of the Regional Economic-Administrative Court (TEAR) of Valencia that before the imposition of sanctions by the Treasury for late submission of form 720 considers insufficiently proven guilty of the taxpayer cancelling the sanctions.
In any case and until the regulations do not adapt to the requirements of the European Commission, the form 720 is in force, and if you are obliged to submit it, we advise you to do so within the established legal deadlines, between January 1 and 31 March of each year, in relation to the previous tax year.
Required to submit the form 720
These are the types of taxpayers who are required to submit the form 720 if they are found in any of the three cases that we relate in the following point:
1. Individuals and legal persons resident in Spain.
2. Permanent establishments in Spain of non-resident legal persons or individuals.
3. Entities of 35.4 LGT (lying inheritances, property communities).
Assumptions that require reporting in form 720
1. Bank accounts
To be holder, co-owner, representative, authorized or beneficiary of accounts in financial entities located abroad, whose average balances of the last quarter or til December 31 together exceed € 50,000.
Be the real owner or holder of securities, rights, insurance and income deposited, managed or obtained abroad, when they exceed € 50,000 together. Pension plans are exempt.
Real estate and rights over immovable property located abroad, with a joint limit of € 50,000.
You have already submitted it for the first time. Should you resubmit the form in subsequent exercises?
You will only have to submit it in those years in which any of the three types of assets (bank accounts, holdings or real estate) have increased their valuation by € 20,000 in relation to the valuation reported in the submitted form 720.
And if you don’t submit the form or you miss the deadline … What will happen?
1. As we have said before, the Treasury will include in your income, as an unreported capital gain, the assets that have not been declared in the form 720, and will add a 20% surcharge on the IRPF fee for those undeclared assets.
2. A penalty of 100 euros for undeclared data with a minimum of 1,500 euros for declaring late.
3. A penalty of 5,000 euros per data with a minimum of 10,000 euros for not declaring or declaring incorrectly.
If you find yourself in this case, do not hesitate to appeal the sanctions, because as we have said before the Treasury itself is giving the reason to those who claim, as well as different courts.