On April 2, 2018 the term of form 720 of declaration of assets abroad will end. Through this form, the Tax Agency requires that residents in Spain declare assets that are not located in Spanish territory.
Believe that the Tax Agency will find it impossible to know the goods we have abroad is a significant risk
- Failure to submit, incomplete, inaccurate or false information will lead to a great sanction. This will be € 5,000 for each data or set of data not declared or declared inaccurate, incomplete or false with a minimum of € 10,000.
- If the term ends without presentation and we present it extemporaneously without prior request from the administration. The penalty would be € 100 for each piece of data or data set with a minimum of € 1,500.
- To income tax purposes, the asset will be considered unjustified Equity Gain, which will be included in the General Tax Base in the oldest non-prescribed period (interest included). In addition to the progressive payment (how much more value of the higher good Type applied, up to around 45% depending on the residence), it would entail a very serious tax penalty of 150% of the total paid.
- Luckily, the Directorate General of Taxes has estimated that the last sanction (of 150% of the amount to be paid) is not applicable if it is done voluntarily.. If this were done, the corresponding settlement and 20% of the spontaneous declaration surcharge would have to be paid.
- The unjustified Capital Gain and the sanction that could accompany it would not be applicable if it is proven that in the period in which the property was acquired the person was not a tax resident and if the operation is prescribed. The prescription, as a rule, is 4 years from the action.
For example: we have a property abroad with a value of € 60,000. If we have not declared it and the Tax Agency discovers it, they would impose the first sanction of € 10,000. Later, in the IRPF we would have the unjustified Capital Gain of € 60,000 at the general rate that, depending on the Autonomous Community, would be liquidated at approximately € 18,000. And now the sanction of 150% would come, a total of € 27,000. If we add everything we would have an amount of € 55,000, almost as much as the value of the good.
However, if the form is submitted after the deadline without prior requirement, the first penalty will be of € 1,500. After, the settlement that would be the same as the previous paragraph of € 18,000. And the change would come in the tax surcharge that would be “only” 20%, an amount of € 3,600. A total of € 23,100, a much lower amount, but not at all negligible.
Even so, it can be thought that the Tax Agency will not be able to check our assets abroad. The resources of the Tax Agency are not infinite, but if an income is received in Spain derived from these goods, it is very likely that the Tax Agency will be waiting for us with its corresponding liquidation and sanction.
The goods abroad that must be declared are the following:
- Accounts and deposits in banking entities abroad.
- Values representative of participation in any type of entity. As for example stocks and shares or loans to entities.
- Real estate, and rights over them, located abroad.
Nonetheless, there will be no obligation to declare in all cases, the Tax Agency has fixed a lower minimum amount to which this statement would not have to be made. This limit is set at € 50,000 for each set of goods, so if they exceed this amount, they would have to be declared using the form 720.
From Lex Dixit Tax and Legal we advise you in the best way possible for the correct filling in of this form and the tax consequences that may entail.