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Enhanced controls on overseas assets held by Spanish residents

Spanish residents must declare overseas assets worth more than €50,000 or face severe penalties.

Since 2012, residents with capital or property outside Spain worth more than €50,000 have been obliged to declare them to the Spanish tax authorities. The measure was introduced as part of the government’s efforts to tackle tax evasion, with severe penalties for late reporting or failing to report assets, which in some instances can be more than the value of the assets concerned.

A number of Spanish residents with assets abroad and caught out by the Panama Papers scandal are claiming that they paid their taxes in Spain.

The rules

The controls apply to individuals and legal entities resident in Spain, as well as to non-resident individuals and legal entities with permanent establishment in Spain, that belong to one of the following groups: holder, representative, authorised, beneficiary, individual or entity with powers of disposal or real beneficial owner.

The owner, beneficiary or authorised signatory of the following three categories of foreign assets must declare them if the total of any category exceeds €50,000:

  1. 1)  Cash held in overseas bank accounts

  2. 2)  Securities, stocks, bonds, financial rights to common shares and financial shares, and life insurance policies

  3. 3)  Real estate and rights over real estate

A ‘Modelo 720’ form must be completed and filed electronically between 1 January and 31 March of the year following the financial year to which the obligation refers. Penalties for failing to comply are as follows:

  • Failure to file form 720 or filing it incorrectly incurs a minimum fine of €1,500 for each category of assets
  • Voluntary, late submission incur a minimum fine of €1,500 for each categoryAn additional penalty of 150% of the unpaid income tax may also levied
  • An additional penalty of 150% of the unpaid income tax may also levied

EU investigation

Since 2015, more than 16,000 sanctions have been made on taxpayers who have not complied with these rules. The EU is currently investigating whether the controls infringe EU law. While we await the outcome, all locals and foreigners with assets abroad should be careful to ensure that they comply with the rules. If in any doubt, seek expert advice.

For more information, contact:

Ricardo Merlo
Audalia Laes Nexia, Spain
T: +34 91 443 0000
E: r.merlo@audalialaesnexia.com
www.audalialaesnexia.com 

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