Tax Form 720 Asset declaration

[Pondy]

Would it be possible for someone to post information where access to tax form 720 can be obtained so we can subscribe to this worthy cause.

[El Cid]

I suggest you read through this thread as it is all in there somewhere. Note that you will require a digital certificate to access the form online and this is covered in this thread in the FAQ section here:-

http://www.andalucia.com/forums/viewtop ... 42&t=27571

Have a read through the other FAQs as well, you may find something useful, especially the income tax thread.

I have deleted the other thread you just stared as it's all covered on this one.

Sid

[Lavanda]

Going back to the post about gestors a minute ... they are not, in law, responsible for errors in your returns/declarations etc. It's your responsibility to a) pick a good gestor, b) give him the right information and c) check what he has put on the forms before you sign. I think it's about time no one uses a gestor without them signing something to the effect that they take at least 50% responsibility and therefore 50% of any fine.

[El Cid]

I think it's about time no one uses a gestor without them signing something to the effect that they take at least 50% responsibility and therefore 50% of any fine.

Yes but if they did that their fees would quadruple and it wouldn't be worth using them!

There are some good ones out there to sort out "Spanish" problems and they are usually pretty good at that but when it comes to foreigners and how Spanish law applies to them they either don't know or don't care.

It's the one occasion when an English Gestor, if you can find a good one, needs to be used but you will pay a lot more than a Spanish Gestor will charge and even then they take no responsibility for their advice if it is wrong.

Sid

[Wicksey]

The 720 is shown as a report of assets rather than an income tax declaration on the tax office website, but the way people are writing about it it seems to be suspected that this will lead to more tax being paid by those with assets abroad. One newspaper advert says that if the form isn't submitted when it should be then you can be charged 150% of the 'tax due' as a penalty ... but what if there isn't any tax due on your assets? Interest on 50k€ in the UK won't be much these days and many people have property there but don't rent it out.

The form asks for the purchase price of a house abroad but if it was bought years ago it may be have been below the 50K limit at the time, but would be worth many times that now. Are they missing out as they are not asking for today's value and only the acquisition price?

When we lived in France a few years back I seem to remember having to give the tax office there a list of our UK bank accounts with the account numbers, so I don't think this idea is particularly new. People complain about the tax laws here but from what I have heard from German friends they are treated much harsher and have had to pay capital gains tax when they sold their (only) home there.

[alpujarran]

you can be charged 150% of the 'tax due' as a penalty ... but what if there isn't any tax due on your assets?

badly worded, but that idea comes from the taxman's reasoning that such assets have come from unearned income, hence:
a high tax rate
plus a penalty for late payment of tax
plus a fine

[El Cid]

The assumption is that on one day you say you have no money and they next day they prove that you have some money, then that increase in your money must be classed as income in which case you pay income tax on it.

Since you didn't declare that income they can tax you on it and fine you for not decalring it. The fine is 150% of the tax not declared.

Sid

[Parilla]

It is perfectly possible to have assets from which no income is derived (property which is not rented, cash in a non interest earning account, shares which receive no dividends), assets which have been aquired legally by declared funds on which tax has been paid to whichever country of residence at the time.

How is it logical to assume that declaration of those assets now, means they must have been aquired with black money, or must be regarded as income, and are therefore automatically subject to tax and penalties ?

Parilla

[alpujarran]

How is it logical to assume that declaration of those assets now, means they must have been aquired with black money, or must be regarded as income, and are therefore automatically subject to tax and penalties ?

If you declare them now, there's no problem. But if you don't - and they find out about them - then they might ask how you came by them. Of course, it will be more of a rhetorical question, because they will have already decided that it was by unearned and undeclared income.

[Parilla]

Absolutely right Alpujarran, but it's not the "now" that bothers me. It's any effect future changes to tax laws that may follow this collection of data will throw up. The fact is that expats can only vote in Regional elections, and have no voice in what happens in Madrid and therefore are taxed without representation (circumstances which were a major factor in the English Civil War and American Revolution !!!!!!!!!!!!!)

Spanish nationals are treating this legislation as they do all other laws and regulations, if they don't agree with it they will ignore it; it is mainly extranjeros who are concerned, a cultural thing I think as Northern Europeans have a different attitude to "authority".

Even though it has been over-hastily knocked together, this legislation can't be aimed at those guilty of tax evasion on income. There is now exchange of information on interest earned on external bank accounts from most juristictions, so the Taxman will already know that info and be able to tie it up with eveyone's Renta. Any undeclared income from property rentals etc can't really be worth the effort on a cost/benefit basis.

So, my thoughts are that we must be in for some draconian measures on Inheritance and Wealth taxes, or even some new and inovative levy nobody has thought of before. It's no good thinking "they" can't do this or can't do that - as the Cyprus debacle has proved, even though the proposed bank account tax doesn't seem to be going ahead, it could have happened and been a "done deal" overnight. Those who have saved money all their lives are now seen as an easy target for cash strapped administrations.

Parilla

[Miro]

So, my thoughts are that we must be in for some draconian measures on Inheritance and Wealth taxes, or even some new and inovative levy nobody has thought of before.

What I've been saying from the start, although some refuse to believe it's even a remote possibility.

[El Cid]

So, my thoughts are that we must be in for some draconian measures on Inheritance and Wealth taxes, or even some new and inovative levy nobody has thought of before.

What I've been saying from the start, although some refuse to believe it's even a remote possibility.

That is entirely possible - particularly with regard to wealth tax as that is the only existing tax related to the value of your assets.

Under the present regime a couple have up to a 2 million exemption but that could be changed at a stroke to a much lower figure similar to the one that previously existed.

Unfortunately that is the way it goes at the moment. Even the UK are talking about a wealth tax of sorts on property - the mansion tax.

There isn't a lot we can do about it as countries, even within the EU, have the right to tax pretty much as they like apart from things like VAT. Look at the 75% tax the French have just introduced on higher incomes.

I suppose you could continually move around to reduce your tax liabilities but as far as I am concerned, at this stage of my life, I will just put up with it. I can't be bothered to make the effort.

We would pay less tax in the UK but that would be a pretty silly reason to move back to the UK just to save a few bob.

Some people moved to Spain because it was cheaper to live there. I moved there because I wanted to live in Spain. I accept that it is no longer the cheap option but I am happy to pay a premium to live here.

Sid

[alpujarran]

Parilla: I'm not convinced that Spanish nationals are ignoring this legislation as much as that it is very unlikely to apply to them. I don't know many people who have lived all their life in the UK that have any assets or rights outside the UK.

Although this 720 declaration came out of general money-laundering / tax fraud legislation I agree that it is a bit weird. What it asks for is so similar to the US FATCA requirements that I can't believe it's not related. But it seems backward. FATCA agreements oblige an organisation in one country to withhold payments to another country's national (ie: at source) and to advise the other country of assets. But this is like a self assessment. Incidentally, all the stuff you are being asked about is reported internally about Spanish nationals (including pension contributions). Maybe once enough FATCA agreements are in place they won't need the 720 any more.

Having said that, I agree with Miro and others that it is likely that some of this evidence may be used against us at some future date - if the need to increase revenue arises and so wealth tax is adjusted accordingly. It's estimated that - for the developed world - around 30% of private wealth would need to be confiscated to deal with the bills the powers-that-be have run up on our behalf. That's all wealth: savings, property, investments, pension funds etc.

[Miro]

I'm not convinced that Spanish nationals are ignoring this legislation as much as that it is very unlikely to apply to them. I don't know many people who have lived all their life in the UK that have any assets or rights outside the UK.

Extremely good point. Thinking about this, I know quite a few reasonably wealthy Spaniards who own several properties - but none outside Spain. The only Spaniards likely to have any assets outside Spain are those living outside of Spain - so the 720 doesn't apply to them; or the über rich, who won't be worried or bother filing a 720 because their wealth will be nicely concealed through complex trusts and offshore companies registered in the Cayman Islands or somewhere with no exchange of information agreement with Spain anyway (or Fatcat agreements, whatever they are!) Which makes it look all the more like this is aimed, intentionally or otherwise, almost exclusively at foreign residents in Spain.

[gus-lopez]

The only Spaniards likely to have any assets outside Spain are those living outside of Spain - so the 720 doesn't apply to them;

Why not ? They are required to submit a declaration every year wherever they live.
That crossed my mind when on a spanish forum the other day where many were discussing house buying & houses they had bought & were renting out , etc; did wonder whether they were also telling the spanish taxman ?

[Miro]

Why not ? They are required to submit a declaration every year wherever they live.

I understood the 720 was a declaration to be made by residents of Spain. Not Spanish citizens living in Chile or wherever. And are you saying that Spaniards have to submit an income tax return in Spain every year, even if they live permanently elsewhere? I didn't know that.

[phil16c]

Hello, I've trawled this board and the web in general looking for answers and perhaps I've just read too much to take it all in so thought I'd just ask. Please forgive me if the answer is staring me in the face.
I am a housewife, non-working and under pension age who stays over here in Spain as much as possible, my husband works in the UK, we still have our main house there, pay UK tax etc.
Here I pay my local taxes and the impuesta de renta (?) etc. I have never paid an income tax as I don't have any and I'm rather thrown by this 720 form, mainly as I've never had to deal with this kind of form and also I don't want to have to count my days here to be under the 183 which would class me as a tax resident. This would only apply to me as my husband would not exceed this period.

I understand the 50k for each category and my questions are -
are joint bank account totals halved?
joint main home value halved? property value based on what we paid or current value?
Are ISAs counted in?

My worry is that I don't know what info I need re property, ISAs etc, bank account info is clear enough. Is there any access to the form before starting to see what's needed as most of this info is in the UK and has to be collected.

The other big question is what happens after you declare? Does it mean these assets are seen as income and I WILL be taxed on them? How much does anyone know?
It's a big consideration as I don't want to burden my husband with more tax.
Many thanks for any help

[El Cid]

I understand the 50k for each category and my questions are -
are joint bank account totals halved?
joint main home value halved? property value based on what we paid or current value?
Are ISAs counted in?

The first thing you need to do is to establish whether you are tax resident in Spain.

You will have to work out how many days you spent in Spain last year. If it is less than 183 then you are not resident so you can forget the whole thing.

If you exceeded the 183 days then you MAY be resident but in your case it is much more complicated because your husband works in the UK and I assume, spends more time there than you do. There are other factors that come into play such as what connections you still have with the UK and whether the rest of you family is there.

It could go either way and under some circumstances your could be considered tax resident in Spain and your husband also because the centre of his family interests (you) are in Spain.

Leaving that aside, to answer your questions, joint assets are not halved and normally both parties would have to declare but that would depend on whether your husband was tax resident, either way you would have to declare the whole amount.

Property is valued as the cost at the time of acquisition. ISAs are included.

There is a lot more detailed information on this thread if you can find the time to read through it all.

As for tax as a result of declaring your assets, the only tax that is likely to rear its head is only tax that should have been paid in the first place but not previously declared. What happens with that information in the future remains to be seen.

From what you have said you are clearly not registered as tax resident as you haven't been paying income tax and making an annual tax declaration. I really do think you have to look at the time you spend here carefully to establish that before you go much further.

Sid

[Miro]

Probably a minor point, but I thought ISAs were only available to UK residents. On that basis, how can they be included?
In phil16c's case, it sounds very much like she is not a tax resident in Spain - at least, notregistered as such. The only questionable part is "I pay my local taxes and the impuesta de renta (?) etc. I have never paid an income tax" - I presume by impuesta de renta in this case she therefore must mean the non-resident tax on her property, via a 210 form? Regardless of whether she spends more than 183 days a year here, (and at the risk that Hacienda should find out how long she spends here and try to apply that rule) surely the sensible and simplest option would be to carry on as she is, and remain a non-tax resident?

[El Cid]

Probably a minor point, but I thought ISAs were only available to UK residents. On that basis, how can they be included?

Of course they have to be included - it is clearly an asset. Anyway, their UK tax status is irrelevant as they are taxable in Spain if held by a Spanish resident.

They can only be "bought" by UK residents but if you held one and then became non UK tax resident you are allowed to keep it but not add to it.

Sid