March is certainly the mad season for people contacting me in a panic about filing their Modelo 720. Who has to file it, what do I file, I’ve done one before and do I have to do it again, or do I have to pay
any tax? And on and on the questions go.
Hopefully, I can clarify the whole 720 situation by looking at it in simple terms, because it really isn’t complicated.
The Modelo 720 is an annual declaration of foreign assets that has to be filed by anyone who is a tax resident here in Spain, and was passed on October 29 th 2012.
What is it?
It is an annual declaration of your overseas assets as of the 31st of December each year.
When does it get filed?
It has to be filed between the 1 st of January and the end of March. This is the following year ( i.e
March 31 st 2023 deadline for the 31 st of December 2022 assets )
Do I have to pay any tax?
No. This is the biggest concern for most people. This form simply tells the Spanish authorities what you have outside of Spain. Any tax due will be dealt with via your annual tax returns in June.
What ‘assets’ do I have to declare?
You have to declare assets in the following categories if their collective value is in excess of €50,000 (i.e if you have bank account with €100 in it, and another one with €50,000, they both have to be declared as the asset class total exceeds the €50,000)
What are the categories?
Category 1. Property or rights to property outside of Spain
Category 2. Bank accounts outside of Spain
Category 3. Assets outside of Spain (Investments, Shares, ISA’s etc)
Do I have to file the form every year?
This is a big area of confusion. You only have to file the form again if the asset value in any of the
categories has gone up that year by more than €20,000 in the previous 12 months,(everyone has to
file the form the first year they are here if they have any assets in any of the classes over the
Commonly asked questions (Please remember the €50,000 cut-off point)
What if we own a joint bank account with a value of €90,000, do we divide the value by 2?
You have to declare the asset’s total value and the fact you own 50%
What value of a UK property do I put down?
The purchase price.
Do I deduct the mortgage from the value of my UK property?
What do I do about currency fluctuation if I have an asset based on GBP?
Unfortunately, you have to apply the exchange rate at the time, so this alone can cause a
variance each year.
Do I have to declare my UK private pension?
I have an Investment Portfolio of shares with my UK bank. Do I just declare the account
No, you have to declare each and every individual share.
Of course, there are many other questions, and there are also products designed for the Spanish Marketplace which alleviate many of the problems of modelo 720 by being exempt from annual declarations regardless of their value.
This article has been contributed by Jeremy Ferguson. Jeremy has been a trusted service partner of Upsticks for the past 3 years and is a specialist in working with British moving to Spain since 2000 and is a partner with The Spectrum IFA Group. www.spectrum-ifa.com
No need to worry about the modelo 720, as Jeremy and his team are here to help with exactly the sort of planning you need, making sure you leave the UK in the most tax efficient way before starting the next stage of your life here in Spain. You can contact him following this LINK