procedure against Spain for the Form, and
if the Spanish response is not deemed
adequate, the Commission will probably
bring the case to the European Court of
Justice.
Thus far, Form 720 (which is mainly
informative in nature) continues to be
obligatory in Spain – values in the following
categories amounting to more than
€50,000 must be declared:
Thinking of Moving to
Spain? Don’t Forget to
Fill in Form 720
Data obtained from the National Statistics Institute in Spain
indicates that around 4.6 million foreigners live in Spain, around
1.8 million of which hail from the European Union. Around
306,000 of these persons are UK-born, according to European
statistics agency, Eurostat. Numbers have grown since European
recovery from the financial crisis, and indeed do not represent the
totality of Brits who spend a considerable part of the year in Spain
– many own ‘second homes’ without adopting Spanish residency.
The idea of retiring in sunny Spain continues to appeal, yet those
wishing to change their residence should be aware of their tax
duties, which include filling in Form 720 for the Tax Department.
The declaration of Form 720 is a relatively
new obligation under Spanish law.
Introduced in 2012, it requires Spanish
tax residents with overseas assets valued
at over €50,000 to declare these assets.
The first deadline for payment was April,
2013 (for the 2012 tax year). Those failing
to submit the form face hefty fines of
€5,000 for each piece of missing or wrong
information, with a minimum fine imposed
of €10,000. A resident is anybody who
spends over 183 days in the country.
The Form is actually rather polemic; after
receiving various complaints, particularly
72
from foreign residents who have had to
pay large fines, a case was brought to the
European Commission in Brussels, who
deemed Form 720 “illegal” because it
“infringes Community rights”; stating the
fines is imposes are “disproportionate”
when compared to other sanctions.
The EC also noted that the obligations
imposed were not subject to any statute of
limitations; so that Spanish tax authorities
have an unlimited time frame in which
to investigate a case – this could also
possibly go against EU law. The EC
has already opened an infringement
• T
hose who have a mortgage have the
same obligation to declare as those who
fully own a home. The same applies to
those who co-own a home or who share
a mortgage on a home overseas. If the
property has a value of over €50,000
and each of the owners is resident in
Spain, both parties will have to declare
the property in their respective Form
720. They should also declare the type of
property it is, the date of purchase and
the purchase price. Foreign residents
often worry about the extent to which
the security of their mortgage can be
affected by the declaration – the Form is
merely informative in its scope; it does
not impose any sort of tax to property.
• Bank accounts.
• Investments – this includes stocks,
bonds, and other values. Any savings
in insurance companies should also be
declared.
If you have just become resident in Spain
or you have been resident for a few years
and have not yet declared, it is important
to obtain professional advice so that Form
720 can be declared correctly. The fines
which you could face if you were inspected
are considerable. You may have a penalty
imposed if you did not file Form 720 in past
years, but the penalty is much smaller than
it would be if an inspection were carried
out. The risk of losing a significant amount
of your wealth is simply too high; it is vital to
declare your assets as obliged by the law.
• T
here is no automatic need to file Form
720 every year – however, you will need
to do so again if the value of any existing
asset has grown by over €20,000 or if you
sold an asset, purchased a new asset or
closed an account.
• Y
ou should also be aware of your
obligation to prepare a wealth tax
declaration if your net wealth exceeds
€700,000 or if your gross assets exceed
€2,000,000 (even if your net assets are
lower than €700,000). If you are a non-
resident, you will be taxed only on your
Spanish net wealth. If you are resident,
you will be exempt up to €300,000 of the
value of your home.
By Gemma Abrahams
Freelance contributor