Spanish residents who hold assets abroad are legally required to declare them through the Form 720 (Modelo 720) — an informative return introduced to fight tax evasion and improve transparency.
At Frau Legal, our tax lawyers in Mallorca and Ibiza advise residents and non-residents on how to comply with this obligation correctly, following the latest criteria set by the Spanish Tax Agency (Agencia Tributaria) and the European Court of Justice (CJEU) rulings.
1. What is Form 720 and who must file it?
Form 720 is a mandatory declaration for Spanish tax residents who hold assets or rights abroad exceeding €50,000 in any of the following categories:
- Bank accounts (current, savings, deposits, etc.)
- Securities, insurance policies, or shares in entities located abroad
- Real estate or rights over properties located outside Spain
Non-residents are not required to file this declaration, unless they become Spanish tax residents during the fiscal year.
📘 Reference: Agencia Tributaria – Modelo 720
2. Deadline for submission
The declaration must be submitted between January 1st and March 31st of each year, covering information from the previous fiscal year.
It is only necessary to file again in subsequent years if:
- The value of the declared assets increases by more than €20,000, or
- New assets are acquired that meet the declaration threshold.
3. What happens if Form 720 is not filed or filed incorrectly?
Until 2022, the penalties for non-compliance were extremely high — often disproportionate to the undeclared amount. However, the CJEU ruling of January 27, 2022 declared these penalties contrary to EU law, forcing Spain to reform its system.
Currently:
- The fines have been significantly reduced.
- The Tax Agency may still impose standard administrative penalties for failure to report, but not exceeding 50% of the unreported amount.
- The statute of limitations for tax liability is now 4 years, in line with other tax procedures.
This reform ensures compliance while protecting taxpayers’ rights and legal certainty.
4. Why this declaration matters
Even though the penalties have softened, the obligation to declare remains in force. The Tax Agency continues to cross-check international financial data through automatic exchange systems like CRS (Common Reporting Standard).
Filing Form 720 correctly:
- Demonstrates full tax transparency.
- Avoids future inspections and sanctions.
- Facilitates wealth and inheritance tax planning for individuals with international assets.
5. How Frau Legal can help
Our tax and legal team provides personalised guidance to ensure accurate compliance with the 720 declaration. We assist clients with:
- Determining tax residency status in Spain.
- Analysing which assets must be reported.
- Preparing and submitting Form 720 securely.
- Advising on Wealth Tax (Impuesto sobre el Patrimonio) and Inheritance Tax implications.
💼 Learn more about our Tax and Fiscal Law services or contact us directly for confidential advice.
