Tax Form 720 Asset declaration

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Wicksey
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Tax Form 720 Asset declaration

Postby Wicksey » Thu Jan 24, 2013 12:31 pm

I have just read an article regarding the new assets declaration form due in at the end of March, that is called the 720 apparently. Does any of the experts here know anything about it yet? It seems that it is dealt with electronically like the 210 (hopefully less problematic!).

I read that the fines for incorrect decalaration for individuals is 1500€, not the tens of thousands I have seen in some articles, but I do wonder how they would know who owns what where :shh: :lol:

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Re: Tax Form 720 Asset declaration

Postby El Cid » Thu Jan 24, 2013 3:51 pm

There will be a completely new form in due course.

The fines are huge if they find that you haven't declared an asset. The minimum fine is €10000 and they will treat the "discovered" amount as a capital gain in the current tax year which means it will be taxed as income at up to 52%.

On top of that there is another fine of 150% of the tax due. To put that in real figures if they find you have an undisclosed account with €100k in it the tax and fines will amount to €140k. In other words they take all your money and ask for another €40.

They have also made arrangements for other countries to provide them with details of residents bank accounts if requested.

And no, I'm not making this up!

Sid

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Re: Tax Form 720 Asset declaration

Postby Wicksey » Thu Jan 24, 2013 5:02 pm

http://www.cdsolicitors.com/2013/01/23/ ... taxpayers/
This is the article I read today, if it makes any sense. It does mention a figure of 1500€ for 'individuals'.

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Re: Tax Form 720 Asset declaration

Postby El Cid » Thu Jan 24, 2013 5:33 pm

It confirms exactly what I said. You need to read it again.

The €1500 fine is where you submit a late declaration.

The €10000 is the basic fine where you are found not to have made a declaration. Actually, as I said, the €10000 is the least of your worries as you will also be fined at least €65k in tax on top of that as we must assume that the asset they found was at least €50 or you would not have needed to declare it.

Sid

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Re: Tax Form 720 Asset declaration

Postby gus-lopez » Thu Jan 24, 2013 7:27 pm

Whilst you are totally correct Sid, the law , as it is written, states that the fine per undeclared item is 5k , with a 10k minimum penalty. What the purpose of that is I have no idea but under EU rules it would appear to be illegal as it is not possible to have a minimum fine that is not able to be A) imposed or B) paid.
Does make you wonder what on earth the reasoning is behind the idea ? :eh:
I'm never likely to find out , unfortunately.
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Re: Tax Form 720 Asset declaration

Postby Miro » Thu Jan 24, 2013 8:37 pm

From the article Wicksey posted the link to: "This tax return shall include any kind of assets and rights provided that the individual value for each of them exceeds EUR 50,000".
Should this be interpreted as meaning if you have several bank accounts with the equivalent of €49,999 in each, you don't need to declare them?

The aforementioned article also says "The above mentioned Royal Decree does not allow misunderstandings. A single mistake may result in a heavy fine. The declaration of incomplete or imprecise information entails the same sanctions." Is this just scaremongering by a company with a vested interest? It seems there's a lot of similar companies out there issuing similar (but often slightly different) information, but does anybody really fully understand the legislation yet? I don't think I have anything to hide, but the way this thin gis being presented is making me nervous :shock:
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Re: Tax Form 720 Asset declaration

Postby El Cid » Thu Jan 24, 2013 9:24 pm

The 50k limit applies to the total value of the assets in that category. That means that if you have 10 accounts with 5k in each then each and every one will have to be declared.

The reports you may have read in the English press are predominately from people with a vested interest in getting you to go to them for advice on how to deal with this new law but, no I don't think it is scaremongering.

Almost all of them say the same thing and it is based on what is freely available about the new law.

Even the Spanish government have published a press release in English.

http://www.minhap.gob.es/Documentacion/Publico/GabineteMinistro/Notas%20Prensa/News%20in%20English/15-11-12%20bienes%20y%20derechos%20extranjero.pdf

The law is somewhat more detailed and I have read it carefully and nothing that has been said so far is incorrect.

When it becomes clearer as to how the declaration has to be made I will post something in the FAQ section. Beachcomber also has some useful contacts and we will be working together to provide accurate advice on just what has to be done to comply with this law.

With many new laws in Spain it is often easy to turn a blind eye to them but this one could have very serious financial consequences if ignored.

Sid

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Re: Tax Form 720 Asset declaration

Postby janieb » Fri Jan 25, 2013 11:54 am

Hi guys, it may sound like a daft question, but the article says "resident tax payers" I am resident but dont work or pay tax in Spain, I have a private pension which I pay tax on in england, so am I right in assuming that it doesn't apply to people like me? I still have a property in England that my son lives in, so I am a bit worried as are a lot of people I know that are in the same situation!

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Re: Tax Form 720 Asset declaration

Postby El Cid » Fri Jan 25, 2013 12:10 pm

janieb wrote:Hi guys, it may sound like a daft question, but the article says "resident tax payers" I am resident but dont work or pay tax in Spain, I have a private pension which I pay tax on in england, so am I right in assuming that it doesn't apply to people like me? I still have a property in England that my son lives in, so I am a bit worried as are a lot of people I know that are in the same situation!


If you live in Spain for more than 183 days in one calendar year you are deemed to be tax resident.

If you are a tax resident you must submit tax declarations in Spain and you should have been paying Spanish tax on your UK pension. It is easy to get your UK pension paid tax free in the UK but just because you are paying UK tax on it doesn't mean that it isn't taxed in Spain.

So, it most certainly does apply to you and if they find out that you have not been declaring in Spain you can be severely fined and have to pay up to four years back tax.



Sid

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Re: Tax Form 720 Asset declaration

Postby gerryh » Fri Jan 25, 2013 12:22 pm

El Cid wrote:... and if they find out that you have not been declaring in Spain you can be severely fined and have to pay up to four years back tax.



Sid

That is very true.
Due to some duff advice from a Gestor I was in that situation and was fined but only had to pay one years back tax.
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Gerry
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Re: Tax Form 720 Asset declaration

Postby janieb » Fri Jan 25, 2013 12:49 pm

Thanks for that guys!! I will get on to it straight away! wasn't being tax evasive intentionally! I guess I was just misinformed!!

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Re: Tax Form 720 Asset declaration

Postby dhkir » Fri Jan 25, 2013 6:38 pm

Hi,
could anyone tell me, if you declare money in a savings account in England is the Spanish tax charged on the interest only?
If we bring savings over to a Spanish savings account we will be charged 21% on just the interest, but we are not sure if savings have the guarantee of an English bank.
if any one can help it will save my heart attack :

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Re: Tax Form 720 Asset declaration

Postby El Cid » Fri Jan 25, 2013 7:09 pm

dhkir wrote:Hi,
could anyone tell me, if you declare money in a savings account in England is the Spanish tax charged on the interest only?
If we bring savings over to a Spanish savings account we will be charged 21% on just the interest, but we are not sure if savings have the guarantee of an English bank.
if any one can help it will save my heart attack :


Yes, you only pay tax on the interest.

If you have a Spanish savings account then, if you are tax resident in Spain, the bank will deduct 21% tax from the interest. When you submit your tax declaration you give details of the interest and the bank's deductions and it all gets adjusted in line with your other income.

All bank and savings accounts in Spain come under the same guarantees as the UK as it it all the same within the EU.

Hopefully this info will help prevent a coronary incident!

Sid

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Re: Tax Form 720 Asset declaration

Postby gerryh » Fri Jan 25, 2013 7:33 pm

Although income tax is deducted by the bank from the interest if you don't earn sufficient to pay tax then you get it refunded when you make your tax declaration.
My wife's only income is her UK OAP which isn't sufficient to pay tax in here in Spain. So any tax deducted on her interest from her 50/50 share of our, modest, joint savings are refunded when she submits her tax return.
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Gerry
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Re: Tax Form 720 Asset declaration

Postby dhkir » Fri Jan 25, 2013 7:42 pm

Hi,
Cheers for the help, I have put the Valium back in the cuboard. I am a newbie to this site recomended to me by a neighbour. I will certanly be a regular in the future and keep the medication where it belongs.

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Re: Tax Form 720 Asset declaration

Postby alpujarran » Sat Jan 26, 2013 10:26 am

This seems a bit woolly at the moment - perhaps it will be a bit clearer when the forms become available. It does appear to be poor organisation to issue a decree saying you have to do something - under threat of extreme penalties - without actually providing the means to go about it.

Anyway, my only query on this is:

My pension income is declared on the normal Renta. So will the actual value of a pension-fund have to be declared on this 720? I have no problem whether the answer to this is yes or no, but - with these extreme fines being threatened - it's important to know.

It's the "any monetary accounts or deposits of any type or currency" that is open to pretty wide interpretation.

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Re: Tax Form 720 Asset declaration

Postby El Cid » Sat Jan 26, 2013 10:39 am

Personal pension funds and insurance policies (such as endowments) will have to be declared and so will annuities arising from personal pension funds.

It should be quite easy to get a valuation for a fund but valuing an annuity, particularly if it is a with profits or market linked annuity could be difficult.

I have such an annuity and I am awaiting information from the provider as to whether they can give me a valuation. If that is not possible I will just enter the value when it was purchased as it must be worth less than that by now.

Sid

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Re: Tax Form 720 Asset declaration

Postby gerryh » Sat Jan 26, 2013 10:52 am

El Cid wrote:Personal pension funds and insurance policies (such as endowments) will have to be declared ....

Sid

Just to clarify, company pension funds will not need to be declared on the form 720?
The income is already declared on my Renta return.
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Gerry
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Re: Tax Form 720 Asset declaration

Postby El Cid » Sat Jan 26, 2013 10:59 am

Normal company pensions do not have a capital value and you have no control over them so they do not get included.

Talking generally, the fact that you have an asset that you declare the income from on your normal income tax declaration does not mean that you do not need to declare the asset.

For example, you may have a savings account in Jersey and be declaring the interest on it in Spain but you still have to declare the existence of the asset.

To clarify the question of insurance policies, any policy that only pays out on death does not have to be declared.

Sid

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Re: Tax Form 720 Asset declaration

Postby alpujarran » Sat Jan 26, 2013 11:00 am

Gerry - as I understand it you declare the income on the normal Renta and the value (cash/transfer) of the fund on the 720.


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