There are many doubts about the new regulation of the so-called Model 720: the informative declaration of assets and rights located abroad. The law firm Pellicer & Heredia, informs us of all the changes in the model 720 that have taken place in recent times to remind those who must complete it that, unlike what is believed, the tax is still in force and must be presented, being the fines what, for the moment, is being discussed.
This office also has a specific team dedicated to informing and executing all the documentation and procedures related to get the non-lucrative visa or the golden visa: two of the most common ways to obtain Spanish nationality.
These are some of the most common doubts related to the filing and
processing of Form 720:
Is it necessary to file a separate form for each type of property located abroad?
The answer is no.
Everything is declared through the same form.
What are the main consequences of not filing the information model on time?
This is the controversial point today.
First of all, it is important to differentiate whether there is a prior requirement or whether, on the contrary, it is being regularised extemporaneously, i.e. after the deadline.
The penalties for late filing of Form 720, but without a prior request from the Administration, are reduced, and the minimum surcharges provided for in the law will be applied.
The penalties in these cases are €100 for each tax return filed, with a minimum of €1,500.
Thus, in the event that the Administration summons the submitter, the fines may reach €5,000, with a minimum of €10,000 for each of the 3 sets of goods that the Model establishes.
In this last case, it should be added that, if the Form is not filed, the fine could reach €150 of the full tax liability when the taxpayer cannot prove that the assets or rights declared come from income declared or obtained in tax periods in which he/she was NOT an IRPF taxpayer.
This tax must be filed from 1 January to 31 March of the tax year following the one to which the information in the Form refers.
Significant changes in Form 720
In its judgment of 27 January 2022, Case C-788/19, the Court of Justice of the European Union (CJEU) ruled on the infringement action brought by the European Commission on 23 October 2019.
The CJEU has finally declared this tax to be contrary to EU law and clarifies that, although it remains in force, the penalties entailed by its non-filing are manifestly disproportionate.
Moreover, the Court of Justice of the European Union stresses that Spain has failed to comply with its obligations regarding the free movement of capital, and that this situation may discourage the acquisition of assets abroad.
Form 720 was approved in 2013 and now, although it will continue to be in force, it will incorporate important changes regarding
– Limitation periods.
– Amount of penalties.
In this regard, it is Spain that must move quickly to avoid the financial penalties that could be imposed in the event that the European Commission goes to court again on this tax issue.
The Spanish Government has stated that the CJEU does not question the model, which will remain in force, and they assure that the modifications to the rule will be made, at the latest, before the end of March 2022.
In this way, taxpayers will be able to recover the amount of the penalties of this tax model and the Treasury will have to return the penalties, even if they are final, by means of the State’s financial responsibility.
Other important questions about Model 720
Is there an obligation to declare pension plans contracted abroad?
The taxpayers of this tax are mostly elderly people.
This question is therefore of interest, and the answer is reassuring. There is no obligation to declare pension plans (contributions to pension plans) as long as the event giving rise to the pension payment is not of a temporary or lifelong nature.
According to Spanish law, pension plans are the following:
Rights of the persons in whose favour they are constituted to receive income or capital for retirement, survival, widowhood, orphanhood or disability.
Therefore, these rights do not fall into any of the three categories of assets and rights located abroad that are reportable, which are:
– Real estate.
In short, in order to classify a foreign financial product as a pension plan, for the purposes of non-inclusion in form 720, one important element must be taken into account: that the contingency covered is exclusively retirement, survival, widowhood, orphanhood or disability. In this way, it will not be possible to access any of these contributions without one of these circumstances occurring.