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Form 720 is nothing more than an informative declaration on 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 form 179 (informative quarterly declaration of the transfer of use of housing for tourist purposes). 

Well, nothing is further from reality. Since its approval in 2013, form 720 has only generated controversy, and the latest and most notorious has been the Judgment on the sanctions that Spain imposes for declaring form 720 erroneously or incorrectly, issued on January 27, 2022, by the Court of Justice of the European Union (CJEU). 

As a result of the publication of the Judgment, doubts have arisen about whether form 720 is annulled or not. That is if the obligation to present it is still in force. I will answer this question below because now I want to explain to you why the CJEU has prohibited Spain from applying the specific sanctioning regime of form 720.

Modification of Form 720 (with effect from 11/March/2022)

In Law 5/2022, certain measures have been adopted to adapt form 720 to European regulations. As expected, the specific sanctioning regime (which we explain in the next point) has been repealed, just as the imprescriptibility of unjustified capital gains has been eliminated.

In this way, non-compliance or non-submission of form 720 within the term are tax infractions that are subject to the general regime of infractions and sanctions of the LGT in its articles 191 and following.

Specific sanctioning regime of form 720 (not valid from 11/March/2022)

I will remind you briefly what that sanctioning regime consists of. 

Non-compliance or imperfect or untimely compliance with the reporting obligation relating to assets and rights located abroad had 2 types of fines:

1. 150% penalty

Fine of 150% of the tax calculated on the amounts corresponding to the value of the assets or rights held abroad.

2. Fixed amount fines

– €5,000 for each omitted, incomplete, inaccurate or false data or set of data, with a minimum of €10,000.

– €100 for each data or set of data declared after the deadline, with a minimum of €1,500.

As you can see, the amount of the penalties was disproportionate, and that disproportion is what has led the CJEU to prohibit that specific sanctioning regime.

The aim of form 720

The objective that motivated the creation of form 720 was: The Spanish Administration needed to get information from its tax residents about their assets and rights abroad since it is more difficult to access that information than what they have within Spain. Therefore, it argued that the information exchanged with other EU member countries was insufficient.

The CJEU has considered that this legislation goes beyond what is necessary to achieve this objective and considers that Spain has failed to comply with its obligations concerning the free movement of capital.

Form 720 continues to exist

Therefore, form 720 is still in force and the obligation to submit it continues to exist. Still, the CJEU has prohibited the application of the disproportionate specific sanctioning regime that I have commented on above. 

Therefore, in non-compliance or imperfect or untimely compliance, the general sanctioning regime regulated in the General Tax Law will be applied (arts. 27 and 28, and 178 hereinafter LGT). 

In short, form 720 is current. If you must submit it, we advise you to do so within the established legal deadlines, between January 1 and March 31 of each year, in relation to the previous fiscal year.

Obligated to present the 720 form

These are the taxpayers who must present the form 720 if they are in any of the three cases that we list in the following point:

1. Individuals and legal entities resident in Spain.

2. Permanent establishments in Spain of non-resident natural/legal persons.

3. Entities of 35.4 LGT (remaining inheritances, community property).

Circumstances that require reporting on form 720

1. Bank accounts

Being the owner, co-owner, representative, authorized or beneficiary of accounts in financial institutions located abroad, whose average balances for the last quarter or as of December 31 jointly exceed €50,000.

2. Securities

Being the owner of securities, rights, insurance and income deposited, managed or obtained abroad, when they jointly exceed €50,000. Pension plans are exempt.

3. Real estate

Real estate and rights over real estate located abroad, with their joint limit of €50,000.

4. Cryptocurrencies in form 720?

Finally, there will be no need to include information about cryptocurrencies in Form 720.

If as of December 31, 2023, you were the owner, authorized person, or beneficiary of cryptocurrencies abroad worth over 50,000 euros, you will be required to file the informative declaration on virtual currencies abroad (Form 721) between January 1 and March 31, 2024.

You have already presented it for the first time. Do you have to present the form again in later exercises?

You should only present it in those years in which any of the three types of assets (bank accounts, securities or real estate) have increased their valuation by €20,000 in relation to the valuation reported in form 720 already submitted.

Also, you will have to resubmit form 720 when you sell a property or cancel a previously declared account.

More…

If you are a Selfemployed Spain client, we can help you with this form! Please contact your advisor for further information.

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