Spanish Income Tax
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2022 Guide To Being A Tax Resident in Spain.

Modelo 720” Form

As a tax resident of Spain one has the legal duty of declaring your worldwide income as well as the ownership of foreign assets. The declaration of overseas assets has to be submitted via the “Modelo 720” form which may sound familiar to some but new to people who have recently become tax residents in Spain.

When

The “Modelo 720” form has to be filed with the Spanish Tax Authorities (Hacienda) between January 1st and March 31st with regards to assets held in the previous year so all relevant information for the year 2021 must be submitted by the end of March of this year.

Please note that the submission of said form is a tax requirement and does not constitute a tax liability on the assets declared.

What

If assets held outside of Spain have a total value of more than €50,000 (in each category) then the “Modelo 720” form must be filed and include the following asset groups:

  • Bank accounts or deposits held in financial institutions abroad
  • Financial securities or equity holdings
  • Property or property rights

The list within each group is extensive and as of last year now includes any cryptocurrency held abroad on a platform or via a wallet outside Spain for example.

How

Unfortunately, the “Modelo 720” can only be filed online and not in person so this may be cumbersome for some people, (language barrier to start with), so the use of a tax adviser is recommended to ensure the form is filed on time and with all the detailed information as this will have to coincide with the information provided on your annual tax return (Declaración de la Renta) to be submitted every year.

A tax adviser is highly recommended as the penalties for late submission or providing incorrect information can be very severe (up to €10,000 in some cases and/or 150% of the tax liability of undeclared assets abroad).

In 2019 the European Union took legal action against Spain with the European Court of Justice regarding the severity of these penalties as they consider them discriminatory. Whatever the ruling on the penalty regime (sentence to be issued on January 29th) the obligation to file the form will remain in place.

If you have filed the “Modelo 720” form in recent years you are only obliged to submit a new one if the value of your assets increase by €20,000 in comparison to the previous year or you dispose of or purchase new assets and/or close existing bank accounts.

We hope you found this short blog informative and useful. European Financial Planning Group or simply “efpg” are not tax advisers and this article does not constitute tax advice. We are here all of your insurance needs from your home, car, boat or motor bike, to your health, life and even funeral insurance for expats living in Spain.

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For further discussion please contact us on 951 81 80 01 or send an email to info@efpg.es

Disclaimer: Please note the above is for information purposes only and does not constitute tax advice

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