What is Modelo 720 form and how to file it?

If you have assets or rights abroad, you may be required to file Modelo 720 form with the Spanish Tax authority. This informational declaration is crucial for those with bank accounts, real estate, or investments outside of Spain.

In this article, we explain what Modelo 720 form is, who must file it, the penalties for noncompliance, and how to do it easily.

What is Modelo 720 form and what is it used for?

Modelo 720 form is a mandatory information return for Spanish tax residents who own assets or rights abroad valued at more than €50,000. Its purpose is to allow the Treasury greater control over the assets of taxpayers abroad.

📅 Filing deadline: must be filed between January 1st and March 31st of the year following the tax year being declared.

Who is required to file Modelo 720 form?

Individuals or legal entities residing in Spain who hold abroad the following are required to file Form 720:

• Bank accounts with a combined balance exceeding €50,000.
• Securities, shares, funds, insurance policies, or annuities with a value exceeding €50,000.
• Real estate and rights thereto if their value exceeds €50,000.

💡 Important: If you have already filed Form 720 in previous years, you will only need to file it again if the value of any of these assets has increased by more than €20,000 or if you have sold any of the previously declared assets.

What happens if I don’t file it? Penalties and fines

Failure to file Modelo 720 form or filing it incorrectly can result in significant penalties from the Treasury.

Until recently, the fines were very high and were even considered disproportionate by the European Court of Justice. However, in 2022, the Court of Justice of the European Union (CJEU) ruled that some of these penalties were excessive and forced Spain to modify them. Now, they are the same as for any other information form.

Currently, penalties for errors or omissions in the income tax return can vary depending on the severity of the case.

Penalties apply for omitted data, errors in the declared information, or failure to file the corresponding form.

Conclusion: Although the penalties are no longer as excessive as before, it is important to comply with the obligation to avoid problems with the Treasury.

How to easily file Modelo 720 form?

The process of filing Form 720 can be complex, as it requires gathering detailed information about assets held abroad. However, TaxDown can help you file your return easily and securely.

Steps for filing with TaxDown:

1. Answer a few questions about your assets abroad.
2. Taxdown’s team will review the information to ensure everything is correct.
3. File your tax declaration with complete confidence.

📌 Avoid mistakes and save time with the help of tax experts.

Conclusion

Modelo 720 form is a mandatory return for Spanish residents with assets abroad exceeding €50,000. All inbestMe ETF portfolios are held by Interactive Brokers in Ireland or the United States, so those with a balance exceeding €50,000 must file this form.

Although the penalties have been reduced, it is still important to comply with this obligation to avoid problems with the Treasury. If you have questions about your return or need help filing it, TaxDown makes the process easier for you.