Modelo 720: declaring foreign property from Spain

Who has to file

The obligation falls on individuals and entities resident in Spanish territory, on the Spanish permanent establishments of non-residents, and on certain entities without legal personality (Real Decreto 1065/2007 art. 54 bis.1; Orden HAP/72/2013 art. 2). Tax residence is decided by the personal income tax law: you are resident if you spend more than 183 days in Spain in the calendar year, counting sporadic absences unless you prove tax residence elsewhere, or if your main base of activities or economic interests is in Spain (Ley 35/2006 art. 9.1).

The return covers three main groups of assets abroad, each in its own article: bank accounts, securities and insurance, and real estate. This guide concentrates on real estate and rights over real estate abroad, including multi-ownership and timeshare contracts, usufruct and bare ownership (art. 54 bis.3-4).

What counts and when

• Date. The position is taken at 31 December (art. 54 bis.1). Anyone who held the property at any time during the year but lost it before 31 December must also report, giving the transfer value and date (art. 54 bis.5).
• Data. The return gives the type of property, its country, town, street and number, the acquisition date and the acquisition value (art. 54 bis.2).
• Threshold. There is no duty to report any property if the values do not exceed €50,000 together. If that combined limit is exceeded, all the properties must be reported (art. 54 bis.6.d).
• Later years. After the first return, you file again only if the combined value rises by more than €20,000 over the figure that led to the last return, or if you ceased to hold a property (art. 54 bis.7).
• Exclusions. Some entities and properties recorded in the individual books of a business are excluded (art. 54 bis.6.a-c).
• Deadline and format. Between 1 January and 31 March of the year after the one reported (Orden HAP/72/2013 art. 7), filed electronically, signed with an electronic certificate (art. 6).

Calculation, not a quote. A new Spanish resident owns a flat abroad acquired for €180,000. The value exceeds €50,000, so the return for the year in which they hold it at 31 December as a Spanish resident is due by 31 March of the following year. If the next year the value declared is €190,000, the rise is €10,000, below €20,000, and no new return is needed unless a property is sold.

The same return also covers foreign bank accounts, where there is no duty if balances at 31 December and the average for the last quarter do not exceed €50,000 together (art. 42 bis.4.e).

Why the penalties changed

Before 2022, the Ley General Tributaria (DA 18ª) set fixed penalties for failing to file, or filing wrongly, of €5,000 per data item with a minimum of €10,000, falling to €100 per item with a minimum of €1,500 for a late return filed without a prior request. A separate rule (DA 1ª and 2ª of Ley 7/2012) fined at 150% of the tax on gains not justified by declared income.

The preamble of Ley 5/2022 (section IV) states that the judgment of the EU Court of Justice (First Chamber) of 27 January 2022 in case C-788/19 found that certain aspects of the legal regime tied to the duty to declare assets abroad (modelo 720) breached EU law, and that the regime had to be modified. The law then:

• rewrote DA 18ª LGT, which now keeps the duty to supply the information but no longer has the fixed-penalty paragraph;
• repealed DA 1ª and 2ª of Ley 7/2012, the 150% penalty and the rule about the year of imputation;
• reworded article 39 of the income tax law: unjustified gains go into the general tax base of the year they are discovered, unless the taxpayer proves they have held the assets since before the limitation period.

The judgment itself was not opened for this guide; the account above rests on the BOE text. The texts read do not state which penalty rules now apply to modelo 720. The general rules on information returns stay in articles 198 and 199 of the LGT (for example, a fine of €20 per data item, with a €300 minimum and €20,000 maximum, for failing to file an information return on time (art. 198.1), halved if it is filed late without a prior request (art. 198.2)). Whether and how the tax agency applies them to modelo 720 is for the tax agency to say.

If you are moving to Spain

The obligation attaches to residents, and residence is judged under the income tax law (art. 9.1), so moving to Spain can bring the duty with it. Check the residence test with your adviser before the year ends. If you also plan to sell the foreign property, the Spanish rules on selling a home concern property in Spain, not abroad; see selling a home in Spain: costs for the Spanish side.

Which professional to consult

A tax adviser or a lawyer registered with a Spanish bar association (colegio de abogados) can decide whether you are resident and file the return: property lawyer. Keep the purchase deed of the foreign property, since the acquisition value and date are required fields.