One of the hardest aspects of moving to a new country is having to deal with an entirely new bureaucracy. It’s hard enough paying taxes in your own country, but trying to sort them out in a different country, especially with a language barrier, can be especially trying.
One particularly nasty reality in Spain involves what is known as the Modelo 720 form. This form is required for all residents that hold significant assets abroad, and it’s meant to let Spain known exactly where you keep all your money and other goodies (which of course is necessary so the Spanish government can properly tax it).
Who Is This Form For?
This form is for fiscal (i.e. tax) residents of Spain, due by March 31st in the year after a person becomes a resident, or anytime the data submitted in the form changes substantially.
When Is This Form Due?
This form is due to be submitted between January 1st and March 31st in the year after you officially become a tax resident. So if you were here in 2020 for more than 183 days in the calendar year, you would be looking to submit the Modelo 720 form between January 1st and March 31st in 2021. You also should re-submit the form in any year where the information substantially changes.
What Information Do I Need To Provide?
In short, you need to fill this form out and provide information if you have asset classes that have a value of €50,000 or more. Applicable asset classes are:
- Real Estate Holdings
- Investment Accounts
- Bank Accounts
What Happens If I Don’t Fill It In?
The Spanish tax authorities (called the ‘hacienda’ locally) take this form very seriously, and the penalties for not submitting it, or even being late, can be disproportionately large. Penalties on the order of €5,000 euros per misreported asset class are not unheard of, as are fines of €100 – €10,000 for late submissions. There was a famous case a few years ago where a taxi driver in Granada was fined over €400,000 for misreporting some of his assets.
These penalties are so vindictive and draconian than Spain has officially been reported to the EU Court Of Justice over them. Right now there is an ongoing legal case again Spain for not only requiring this form, but for the disproportionate nature of the penalties associated with it. I suspect for the time being fines may be delayed, but it’s in everyone’s best interest to fill this form out on time.
How Do I Fill This Form Out?
This form can only be submitted online via this website. That said, given the importance of this document it might be worthwhile for everyone to consider hiring a gestor or a local accountant to help with it, especially if anything goes wrong with the submission that you need help resolving.