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Form 720 – Modelo 720

Form 720 of the AEAT: Report of all assets abroad. This form must be filed by all Spanish residents owning assets abroad, only if they are over the limits described below. It is required to file this form every year before March 31. This first year 2013, the deadline is April 30.

The Form has three different blocks:

1. Accounts in financial institutions abroad, which includes current accounts, savings accounts, term deposits, credit accounts… Information on each account should include the balance of these accounts on December 31st, the average balance for the last quarter of the year and the date of opening. Also if you are account holder, authorized… Holders and authorized holders, who have ceased to be during the year, must indicate only the balance of the day ceased to be holders or authorized holders.

2. Stocks, bonds, values, financial rights, and savings in insurance companies, deposited, managed or obtained abroad

  • Securities or rights located overseas representative of participation in any type of legal entity; values located overseas representative of the transfer of capital to third parties or provided for its management or administration to any legal instrument, including trusts though lacking legal personality, capable of acting in the course of trade.
  • Shares and participations in share capital or equity fund of collective investment institutions located abroad.
  • Life insurance (savings not risk) or pensions or annuities, whose insurance companies are located overseas.

3. All types of Real Estate and rights over Real Estate abroad, which include ownership of the property, actual use or enjoyment and bare ownership rights over real estate, timeshares, timeshares shifts, part-time property or similar formulas on real estate, other rights in rem over real estate.

Form 720 t must be file if any of these blocks exceeds the amount of 50,000€ and only the block in which the amount is exceeded. Assets not declared, that cannot be proved its ownership arousing from declared income or assets, will be considered income to be taxed, and a 150% penalty over the value of them. Penalty for not filling, filling incomplete, filing with non-accurate data, will be punished with 100 euros per data with a minimum of 10.000 euros.

Interesting links for this report:

* Official text of the regulation: http://www.boe.es/boe/dias/2012/11/24/pdfs/BOE-A-2012-14452.pdf

* Ministry Order 72-HAP-2013 governing the presentation of Form 720

* Official exchange rates that should be used: BOE-Bank of Spain resolution

Cooperation with other States

On the other hand, Royal Decree approved transposes the Community directive on administrative cooperation in the field of taxation. Thus, reinforcing cooperation in the exchange of information between countries needed for the liquidation of taxes. Among other issues, is attributed to the tax agency competition to formulate requests for mutual assistance to other States or international organizations. This provides legal security to be achieved greater agility in the process of mutual assistance. And the tax agency already began, a few years ago, to provide tax information for citizens of the EU to their respective countries through the Form 299 which is filled by Spanish financial institutions, collected and processed by Tax Authority.

The Government aims to deepen in the coming months in this type of agreements for the exchange of information, both to improve the collection of taxes, and to enhance the fight against tax fraud.

FAQ: Frequently Asked Questions.

Important note: the obligation to submit a report in the case of co-ownership of a good relies on the value of the asset, not in the value of the percentage owned.

1. Form 720 must be filed when ownership of a bank account abroad is shared and whose balance at 31 December exceeds the €50.000, but whose ownership corresponds to several people?

Yes, there is a reporting obligation when the balance exceeds the 50.000€ (if none of the other exceptions to the obligation to declare apply) regardless of the number of the account holders. The Form will include the total balance, indicating the percentage of participation.

2. Form 720 must be filed when sharing ownership of Real Estate located abroad whose acquisition value exceeds the €50,000, at 31 December but whose ownership corresponds to several people?

Yes, there is a reporting obligation when the value of the real state exceeds the 50.000€ (if none of the other exceptions to the obligation to declare apply) regardless of the number of owners. The Form will include the total acquisition value, indicating the percentage of participation.

3. If a person ceases to be authorized in an account of a financial institution located abroad on June 2012 must file form 720? In this case, which has to be balance and the date to be reported?

There is obligation to declare if the balance that existed in the account on the date of the revocation of the authorization would have determined obligation to declare by 31 December. Should be reported the balance of the account on the day of the cease.

4. Is there obligation to declare the pension plans obtain abroad?

No, there is no obligation to include the pension plans, as long as it does not happen the event that implies the distribution of the pension either for life or for a period of time. 5. In the case that the pension plan is distributed ¿Should I report the income received? Yes, in case of any form of distribution, if it happens you should repot it.

6. ¿Should I report stock options?

NO

7. Form Field “Tax Number in the country of fiscal residence”. There are no instructions what should be put in this box?

The instructions on how to fill concrete boxes are in the link that is up on the design of the model 720 records: It will indicate the tax identification number of the entities declared in the previous field, assigned in the country or territory of residence tax. This field will be blank when the “type of asset” takes the value “B” (ownership and real rights over properties located abroad).

8. Do I need to declare asset which has been sold during the financial year and before 31 December has been reinvested in other assets?

No. When the loss of the status of owner or real owner referred to in the last paragraph of article 42 ter.1 have his origin in the transmission of values and rights, and the amount obtained had been entirely used in the acquisition of other securities or rights which must be declared. You only must declare the balance at December 31.

9. What exchange rate is used to value goods in foreign currency?

The exchange rate publish by the European Central Bank will be used.

10. What would be the minimum penalty for no filing Form 720?

The minimum penalty fee for no reporting each block of the report would be 10.000€, so if you fail to report the three block the minimum penalty would be 30.000€

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