Tax Form 720 Asset declaration

Information and questions about the Law in Spain and Andalucia.
El Cid
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Re: Tax Form 720 Asset declaration

Postby El Cid » Tue Mar 17, 2015 10:48 am

That's an unusual situation. Strictly speaking, if it has not yet started to pay out, it doesn't need to be declared (just like a personal pension pot).

If it was paying out 4k now it would be valued at less than the 50k threshold so you would not need to declare it.

I would not declare it.

Sid

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Re: Tax Form 720 Asset declaration

Postby Beachcomber » Tue Mar 17, 2015 12:38 pm

Some information from the European Commission regarding the 720 in response to a communication from an asesor fiscal in Majorca:

http://s01.s3c.es/imag/doc/2015-01-30/Respuestas_CE_720.pdf

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Re: Tax Form 720 Asset declaration

Postby Gasman » Thu Mar 19, 2015 5:14 pm

Phew - well even in English, that took some ploughing through!! :crazy:
So basically it seems to read that as long as the Spanish tax authorities assure the EU authorities that everything they have done is legal and above board, then there is no questioning of it :P
Never mind - let's just keep filling in the forms, and hope that they do eventually find a tax-dodger or two, and perhaps they will leave the rest of us innocents with assets out of spain in peace? :twisted:

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Re: Tax Form 720 Asset declaration

Postby infoseeker » Fri Mar 20, 2015 1:50 pm

The EU have no problem with Spain abolishing the statute of limitations for the 720
The very wealthy will have a resourceful accountant so don't need to worry about their assets, salted away.
That leaves the middle group, who may now be in a quandary if , after several years they decide to register on the Spanish tax system, specially the 720. They may have been badly advised as to tax in Spain, or ignorant.
They may not have realised that what is tax free in UK, isn't in Spain, not a good excuse, but I bet it applies to many.
In their previous years in Spain, they may well have had pension pots inheritances, premium bond winnings etc, boosting their bank balances.
If they submit. 720, will the taxman look at their modest income, then at their large bank balance, and say, where did that come from.
If they apply the huge fines, disaster.
If they don't register on the Spanish tax system after years in Spain, diaster if the tax office finds out.
They are between a rock and a hard place, damned if they do and damned if they don't.
The tax office would have done better to leave it at four years, at least they would get some income, and the tax payer wouldn't have been living under the shadow of the tax man delving.
This is not to excuse intention to defraud- that's a different matter

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Re: Tax Form 720 Asset declaration

Postby Lavanda » Fri Mar 20, 2015 3:20 pm

In my experience the Tax Office in Spain (Cáceres) is very friendly and helpful. As has been posted by me elsewhere we have been through about four years of confusion with gestors, etc. until I took over the whole tax thing plus 720 with lots of help from Sid and members of this forum. I, successfully, got a load of fines cancelled and got a huge tax rebate of just over €10,000 because of various wrongly filled out forms etc. The Tax Office was lovely but the underlying thing they work to is that there is no INTENTION to evade tax. You can, actually, claim baffling ignorance and get quite a bit of sympathy from the Tax People who are also bafflingly ignorant. Don't worry.

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Re: Tax Form 720 Asset declaration

Postby infoseeker » Fri Mar 20, 2015 4:34 pm

Before I met the accountant I have now, I had 3 who gave me inaccurate and misleading advice.
I've been with this one 4 years now, and everything seems ok, but I do meet people who, after years of not paying their taxes here, have for whatever reason decided to start being legal, and it is disturbing what they are told eg that they can have an annual income of 22k before having to pay tax.This is an old one that crops up quite often, and these " experts " should know better
Most do not know that if they sell a house in the UK before moving here they might have to pay CGT on the profit in Spain
They are horrified that that a lump sum or inheritance in the UK might attract Cgt or income tax here.
It wouldn't have occurred to them to declare them, seeing them as an accumulation of many years contributions, that is theirs and theirs alone, with no connection to the Spanish taxman.
That's why the 720 could be a disaster for them, and I don't think an accountant could get them out of it!
You sound as if you sorted your taxes out well, but it must have been a hassle!
Amazing you got such a huge rebate- it's usually the opposite!

Lavanda
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Re: Tax Form 720 Asset declaration

Postby Lavanda » Fri Mar 20, 2015 8:39 pm

The rebate was because we were paying 'proper' tax on an annuity for four years before I discovered our (gestor-led) error. Hassle? I still have nightmares!

El Cid
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Re: Tax Form 720 Asset declaration

Postby El Cid » Fri Mar 20, 2015 9:14 pm

I know a number of people who have had that problem with annuities.

It's odd as many Spanish retirees have annuities so you would think that the "experts" would know how to handle them.

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Re: Tax Form 720 Asset declaration

Postby elusive » Fri Mar 20, 2015 9:26 pm

Our gestor told us that its only (a) annuities if only you paid into it and not your company and you didnt get any tax relief at the time. think it was that if i remember right? anyway we had to get a letter from the provider in the uk stating it was an annuitiy (its not lije we had a choice to have one or not). she said the eq life pension (or lack of it) wasnt. classed as an annuity are spanish annunitiy definitions different because she was going on about a pension been different to an annuity.

El Cid
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Re: Tax Form 720 Asset declaration

Postby El Cid » Fri Mar 20, 2015 10:00 pm

It only qualifies if you personally bought the annuity (usually from a personal pension pot).

Equitable life annuities are usually in that category as they are personal plans so they qualify.

I have found that the best option is to do your tax declaration yourself and don't involve these idiot gestors who frequently don't know what they are talking about.

You don't have to have any evidence from the annuity provider, you just enter the amounts in the relevant box on the computerised tax declaration. In 13 years I have never submitted any paperwork apart from the actual declaration.

Sid

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Re: Tax Form 720 Asset declaration

Postby rafiki » Fri Mar 20, 2015 10:05 pm

My accountant continues to maintain that the lower rate on annuities is for those purchased from ones own savings and still advises that annuities purchased from a pension pot are not eligible for the lower rate.
Brian

Armageddon was yesterday - today we have a *really* serious problem.

El Cid
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Re: Tax Form 720 Asset declaration

Postby El Cid » Fri Mar 20, 2015 11:15 pm

Get a new accountant. He clearly doesn't know what he is talking about. A personal pension fund is yours to use as you wish. A company plan may well be different.

Sid

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Re: Tax Form 720 Asset declaration

Postby Granite » Sat Mar 21, 2015 10:49 am

Lavanda wrote:In my experience the Tax Office in Spain (Cáceres) is very friendly and helpful. As has been posted by me elsewhere we have been through about four years of confusion with gestors, etc. until I took over the whole tax thing plus 720 with lots of help from Sid and members of this forum. I, successfully, got a load of fines cancelled and got a huge tax rebate of just over €10,000 because of various wrongly filled out forms etc. The Tax Office was lovely but the underlying thing they work to is that there is no INTENTION to evade tax. You can, actually, claim baffling ignorance and get quite a bit of sympathy from the Tax People who are also bafflingly ignorant. Don't worry.

I had similar experiences and help from Lavanda. Eventually and against the advice of local so called professionals we made voluntary returns covering 4 years. I note that there is currently an amnesty in place for declaring overseas pensions. My understanding is that if one has been previously fined/sanctioned over the last 4 years it is posible to recover the fines/sanctions that relate to the pension income. I have asked my Gestor to check this out and await a reply. Of course the hassel and cost may not be worth the effort depending on the level of the original penalties.

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Re: Tax Form 720 Asset declaration

Postby starrfl0wer » Fri Apr 03, 2015 6:44 pm

Hi Sid,

I read through all the posts and the information is very helpful. Unfortunately, I found out about the 720 two years too late and haven't submitted the form yet. What do you suggest I do at this point? My assets are only a few savings accounts and one Rollover IRA (retirement fund). I went to a gestor and they told me if I declare now for 2012, I will be fined for submitting the form late, minimum of 1.500 euros. And they weren't sure if I would be fined 1.500 for each bank account I haven't declared or just once for just the category. I feel like I would be opening a can of worms for declaring at this point, of course if I don't the fines would be much higher. I am just upset that I actually want to declare in good faith, and would be fined for this, and thus I feel the government is almost encouraging me to not declare. What are your thoughts and do you know anything about the actual fine amounts?

Thanks for your help!

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Re: Tax Form 720 Asset declaration

Postby Lavanda » Fri Apr 03, 2015 8:28 pm

Hello, You don't say where in Spain you live. I think I would start from there. Some places will respond sympathetically if you just throw yourself on their mercy and tell them what happened, why you didn't declare and why you didn't know you had to declare. Tell them you want to declare now and sort out the confusion. If you live in Spain you can't just shelve the problem indefinitely. Good luck.

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Re: Tax Form 720 Asset declaration

Postby starrfl0wer » Sat Apr 04, 2015 10:05 am

Oh sorry. I live in Granollers, which is right outside of Barcelona. I had my husband call Hacienda and ask, and they told him there would be a fine, but they wouldn't say how much.

I was actually told by another gestor to just try to put my accounts in another person's name, like my parents. I wouldn't prefer this solution though....

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Re: Tax Form 720 Asset declaration

Postby El Cid » Sat Apr 04, 2015 10:32 am

It's a tricky one. The fine is €1500 for a late declaration. The fine for non declaration is €5000 for each asset in each asset class with a minimum of €10000. There is also the potential to pay an additional fine which could be more than the value of the asset.

That clearly sounds pretty scary, but it only becomes a case of non declaration if they find out about it. If you file a late return that is entirely different to non declaration so it would seem that the worst you will face is a €1500 fine.

As has been mentioned earlier, at the moment there is an amnesty on undeclared tax going back 4 years, but that only applies to income tax. It does suggest that Hacienda might be prepared to be reasonable about a late asset declaration, but, as Lavanda said, it just depends on the local tax office.

I am sure you are only one of many in this situation so I would ask a gestor what he thinks is likely to happen.

Sid

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Re: Tax Form 720 Asset declaration

Postby starrfl0wer » Sat Apr 04, 2015 2:23 pm

Well, 1.500 is a lot better than 10.000 but it still is a lot of money to pay for just not declaring my assets (as opposed to tax evasion). To be honest, my gestor hadn't dealt with it before and when he called the local tax office, he told me they didn't really know either. Probably in my small town they haven't dealt with the 720 much?

Are we talking two asset classes in my case, (savings account and a retirement account) and therefore the fine would be 3.000? Or is it just one overall fine of 1.500?

I wouldn't mind going to the local tax office to ask, but once I do that, I can't really go back from that and find a more lenient tax office, no?

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Re: Tax Form 720 Asset declaration

Postby infoseeker » Sat Apr 04, 2015 3:19 pm

There has been so much publicity about the 720, that it beggars belief that people still haven't heard of it.
Any properly qualified accountant who doesn't know about it shouldn't be in business
I would sack your gestor, and get someone who knows what they're doing
Generally the tax office doesn't take ignorance as an excuse
Visit the blevins Franks website for good information which explains about the assets decoration better than most , in addition to the good advice given by El cod and co on this forum

El Cid
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Re: Tax Form 720 Asset declaration

Postby El Cid » Sat Apr 04, 2015 4:16 pm

starrfl0wer wrote: Or is it just one overall fine of 1.500?


It is for not submitting the declaration - how many assets were on the form is irrelevant.

The gestor who submitted your income tax return (hopefully you didn't ignore that as well) should have told you about the possible need to submit an asset declaration.

Sid


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