Tax Form 720 Asset declaration

[Mowser]

Q: What's the capital of Spain?

A: "S"

[El Cid]

I found this on another forum. I cannot speak for its origins or authenticity but it does seem to explain things a little more clearly.

I has been suggested that Hacienda has contacted all gestors and financial advisors asking them to send this letter to any clients who may be affected.

Date: 29 January 2013
To: Resident
Subject: ASSET DECLARATION
Name of Resident
Address, email etc.
25th January 2013

Dear Mr./Mrs. Resident

As you should know, in December 2012, a Law ( Royal Decree) has been passed stating that all RESIDENTS (individuals and companies) must now disclose the value as at 31.12.12 of all assets owned by them which are situated OUTSIDE OF SPAIN. The obligation also applies to any such assets SOLD DURING THE YEAR 2012.

The assets are split into 3 groups and it is only necessary to submit a declaration if the TOTAL in any one of the 3 asset groups is more than 50.000 Euros per PERSON.

In successive years, this declaration will only be necessary if the total within any of the groups increases by more than 20.000 Euros, or if the asset is sold.

The tax declaration will normally be due between 1st January and 31st March but in this first year, as the form has not yet been issued, the declaration should be submitted between 1st March and 30th April.

The assets are declared in 3 different groups as follows:

1) BANK and FINANCIAL ACCOUNTS even if they are non-interest bearing
Name and Address of bank or financial institution including Post Code
Account Number including IBAN and BIC
Balance as at 31.12.12 and average account balance over last quarter 2012
If the account was closed during 2012, the closing balance of the account and the date it was closed.

2) INVESTMENTS, ISAS , BONDS, TRUSTS, QROPS, ANNUITIES, LIFE INSURANCES. Please note, however, that Life Insurances with NO SURRENDER VALUE (i.e. only payable on your death) do NOT have to be declared. However, any life insurances etc. where you are named as BENEFICIARY will have to be declared.

Name and Address of investment company including Post Code
Date of Purchase
No. of shares and % of participation
Value at Purchase
Value at 31.12.12 and average balance over the last quarter 2012.
If the investment, policy, etc. was sold during the year 2012, we need the date and value of purchase and the date and value of the sale


3) PROPERTIES OWNED ABROAD including houses, land etc.

Address of property including Post Code stating whether Urban or Rustic
Date of Purchase
Value of Purchase
% of ownership
If the property was sold during the year 2012, we need the date and value of the purchase and the date and value of the sale

If, as mentioned earlier, the TOTAL value of your assets in any one of the above groups is more than 50.000 Euros, then we must declare ALL the assets in that group, even if individually they have a value of less than 50.000 Euros.

Once you have prepared the list of all the assets in the relevant groups with the required details, please bring this to our office so that we can submit the declaration for you. The Tax Office will then verify the information and, if they find it differs from the details they have on record, you will be notified and given 10 days to rectify or explain the difference. Please note, we need the above information for EACH RESIDENT PERSON separately.

Failure to make the above declaration will result in an immediate fine of 10.000 Euros + 5.000 Euros for each undeclared piece of information.

Please, therefore, ensure that you have ALL the details for each asset as listed above as the Tax Declaration cannot be submitted if any of the details are missing.

You may have to contact the financial institutions etc. to provide the information required but this should be made readily available to you.

Please note that (this gestor) will bear no responsibility for any information which is disclosed incorrectly or omitted by you.

If you require any further information, you may contact me direct on my email: Email address of Gestor... etc etc

[alpujarran]

I cannot believe that this letter's content actually originated from the Hacienda. It contains some very basic mistakes that give it away as being of ex-pat origin. Nevertheless I must admit it isn't too far off and obviously will generate great opportunities for gestors and financial advisors.

[Wicksey]

I wonder if this law applies to, and will be complied with by, Spanish parliamentarians and the like?

If people aren't prepared to declare their earnings and hide bank accounts and assets abroad etc, I can't see that they are suddenly going to confess to having millions stashed away on their 720 form!

Whilst I have nothing to hide, if it was as simple as just sending a list of our assets as at 31 Dec to the tax office I wouldn't be so worried, but it all looks so complicated. No wonder some people I know are perpetual 'non-residents' and pay their non-residents tax each year religiously despite living here full time. Does the Hacienda ever scrutinize the 210 to consider if the person lives here more than 183 days a year?

[alpujarran]

I found this on another forum. I cannot speak for its origins or authenticity ...

Sid,

the post you are referring to starts off "I write a weekly newsletter about Spain for foreign property owners called '."

Seems like a strange sentence until you look at the bottom of the post where it was last edited by a moderator. Reason: Commercial URL removed.

Looks like a failed sales-pitch to me.

It has been suggested that Hacienda has contacted all gestors and financial advisors asking them to send this letter to any clients who may be affected.

The post actually says: "I understand Gestors have been told by Hacienda to send out this sort of notice to any resident with whom they deal. And that includes people who may not have “official “ residence, but who live here more than 183 days in any calendar year. The Gestors are also supposed to inform Hacienda if they know there is any irregularity in the declaration - or if some “non-resident” is actually living here. That’s also supposed to be the case with asset/fund managers of which there are many operating here . . ."

If we apply Dilbert's 'what's more likely' principle to this, the main options I come up with are:

1: The hacienda has actually told all gestors and financial advisors to send out this sort of notice to any resident with whom they deal and this is a really good guy for letting people in on this.

or

2: This guy is trying to sell you something - using false impressions to draw you in.

'what's more likely' ?

[El Cid]

I think you are missing the point.

I posted it because it explains in a bit more detail what data has to be submitted and certainly these is a lack of that information at the moment.

If there is a hidden agenda then I'm not interested - the information looks OK.

The URL was removed from the original because it linked to his blog and that is not allowed on that forum. Don't read too much into that.

There is now some more information on the AEAT site with regard to the online submission of the form and Beachcomber and I are trying it out. There will be a FAQ about it published in due course. Until then it's probably best to avoid speculation.

Sid

[CapnBilly]

Well, it transpires that if you have €50,000 in an account or a property, in joint names, then you have to report the whole balance, and show your percentage. This is very different from what was expected.

It also says that in respect of valuing annuities etc, they should be valued according to the rules established in Law 19/1991 of June 6, which I think relates to wealth tax

I think this one sums it all up - its a google translation, but its pretty clear.

In the event that the Model 720 is present on any of the reporting requirements on assets and rights located abroad, could we check whether they match income declared? What if income corresponding to undeclared could regulate?

Yes, you could check the property and rights declared corresponds to income subject to having been declared, and if it is found that stem from unreported income could be regularized in accordance with current regulations.

[El Cid]

What post or document are you referring to?

Sid

[CapnBilly]

What post or document are you referring to?

Sid

From the FAQ on the Hacienda website. Just spent half an hour trawling through them

This is the link http://www.agenciatributaria.es/AEAT.in ... _720.shtml

[El Cid]

That link leads to a page of options. Can you be more specific?

Sid

[alpujarran]

try this

edit: or this for penalties

[alpujarran]

CapnBillys translation is quite scary isn't it? The Spanish is very tortuous and I can't really improve on it - but the gist seems to be that if your assets and entitlements don't match your income then you may have problems

[El Cid]

try this

edit: or this for penalties

The links don't work. They just take you to a coverall page.

Sid

[CapnBilly]

'twas ever thus.

You only need to worry if you've not been reporting properly.

If I was in charge of the project I'd be writing some algorithms to identify income returns that looked out of kilter with assets, and compile a list to investigate, in order of best return.

It seems to me that there are potentially significant impacts, not least to do with UK inheritances, which traditionally haven't been reported. It's the detail you have to give which provides a lot of information on how long you've had assets etc.

[CapnBilly]

Sid

Alpujarran's links take me straight to the page with the question and answer.

The link I gave you should take you to the page with the model, and FAQ, this then links to a series of headings such as

Un solo modelo para tres obligaciones de información diferentes
Obligación de declarar
Frecuencia en la presentación de la declaración
Valoración de los bienes y derechos
Sanciones y efectos

Try this

http://www.agenciatributaria.es/AEAT.in ... _720.shtml

If that doesn't work then

it's the main page, http://www.aeat.es, and on the right hand side select
Modelos y formularios then
Todas las declaraciones then
Resto de modelos then
Select 720

[El Cid]

The original link seems to be working now but previously was taking me to an entirely different page.

I found that link a few days ago and Beachcomber and I have been experimenting with the electronic submission but so far without much success!

Sid

[alpujarran]

If I was in charge of the project I'd be writing some algorithms to identify income returns that looked out of kilter with assets, and compile a list to investigate, in order of best return.

The scary thing is that some young nerd may well be deciding what is a reasonable return on an asset. What about those poor souls with Lloyds TSB shares, for example?

A QROPS can pay out between zero and about 5% depending on how much the holder wants to draw.

The income return on a £1 premium bond is anywhere from zero to £1 million a month.

Who decides what exactly "out of kilter" is?

[Netty]

Can anyone advise what the official rate of exchange is for tax purposes for UK pounds to euros for 2012?

Cheers

[El Cid]

The average for last year was 1.233

Sid

[Trooperman]

El Cid wrote:

I has been suggested that Hacienda has contacted all gestors and financial advisors asking them to send this letter to any clients who may be affected.

I've just received this from the accountant who does my tax return:

On 31st January, Order HAP/72/2013 of 30 January was published. This approves Form 720, and contains the information statement regarding assets and rights located outside Spain. The filing deadline for assets relating to 2012 is 30th April 2013, with the period commencing on 1 February. In the following years the deadline will be 31st March, with the filing period commencing on 1st January. This information is not yet available in the webpage of the Agencia Tributaria, but will be in the coming days.

The filing can only be done online, requiring a digital certificate, or by our office in your name.

There is no requirement to report accounts held in financial institutions outside Spain when neither the final balance nor the average balance exceed €50,000, adding together all accounts. In the case of properties located outside Spain, securities, rights, insurances and deposited income managed or obtained abroad, the limit is similar. This is calculated individually for the total sum of all securities, insurances, incomes or properties. For example, if the total value of all properties exceeds €50,000, all of them must be declared. However, if the total sum of the securities does not reach €50,000, then these securities must not be declared even though the properties whose value exceeds €50,000 must be declared.

We have attached the Ministerial Order and the decree which in its second article establishes the limits of the declaration.

In subsequent years it will only be necessary to file again if any of the combined balances have increased by more than €20,000 from those in the previous filing.

All the best,