Annual Informative Declaration on Assets and Rights Located Abroad (Form 720). The deadline is March 31, 2025.

Once again, we remind you that taxpayers subject to Personal Income Tax (IRPF) or Corporate Tax (Impuesto sobre Sociedades) who own assets and rights located abroad as of December 31, 2024, may be required to file the declaration of assets and rights located abroad (Form 720) by March 31, 2025.

This form must be submitted electronically (online), as paper submission is not allowed. Those who, for technical reasons, are unable to submit Form 720 online within the established deadline may submit it within the four calendar days following the deadline.

For those who have previously filed Form 720, submission is only mandatory if any of the combined balances of the three categories of assets that require reporting (bank accounts, securities, or real estate) have increased by more than €20,000 compared to the balances that determined the obligation to file last year’s declaration. In any case, filing is mandatory for previously declared assets for which the taxpayer has lost the condition that originally required them to declare.

Taxpayers must report assets and rights they hold abroad, including bank accounts, real estate, securities, rights, insurance, and income deposited, managed, or obtained outside Spain. Reporting is not required if the total value of each type of asset or right does not exceed €50,000.

What types of assets and rights must be declared?

• Real estate and rights over real estate located abroad: Details must include identification, location (country, city, street, number), acquisition date, and acquisition value (depending on whether full ownership, usufruct, bare ownership, or other rights apply).
• Bank accounts held in foreign financial institutions: The name of the bank, its address, account identification, opening or closing dates, balance as of December 31, average balance for the last quarter, and the date the taxpayer ceased being an account holder, representative, authorized person, beneficiary, or person with disposal powers must be reported.
• Securities, rights, insurance, and income deposited, managed, or obtained abroad:
  • Securities: The corporate name of the entity or third-party assignee, its address, balance as of December 31, number and class of shares, and their value must be reported.
  • Rights: Includes rights representing the transfer of own capital to third parties.
  • Insurance: The name of the insurance company, its address, and the surrender value of the policy as of December 31 must be provided.
  • Temporary or life annuities: The corporate name of the insurance company, its address, and the capitalization value as of December 31 must be reported.

Regarding the assets and rights that must be declared, here are some important considerations:

• Jointly owned bank accounts must be declared if the balance as of December 31 exceeds €50,000.
• Jointly owned real estate must be declared if the acquisition value exceeds €50,000 as of December 31.

Attention:

If you submitted Form 720 last year because you held bank deposits, securities (stocks, investment funds, insurance, etc.), or real estate abroad valued at over €50,000, you must file the form again if:

1. The value of your assets has increased by more than €20,000.
2. You have ceased to be the owner or authorized person of any previously declared assets.

Who is required to file?

Individuals and legal entities residing in Spain, permanent establishments in Spain of non-resident individuals or entities, and tax-transparent entities (such as communities of property, civil societies, and unclaimed inheritances) are required to submit this annual informative declaration if they are owners or authorized signatories of foreign accounts with a combined balance exceeding €50,000.

Additionally, holders of securities, stocks, investment funds, life insurance policies, real estate, or any other assets located or deposited abroad, with a total combined value exceeding €50,000, must declare them. Besides legal owners, “real owners” (i.e., those who own or control more than 25% of these assets through legal or non-legal entities) must also file, unless an applicable exemption applies.

A large number of individuals, particularly foreign residents in Spain, may be required to file, as having even a small percentage (as little as 1%) of a foreign bank account with a balance over €50,000—or even just being an authorized signatory—could trigger the obligation. The same applies to partial ownership of a property with a value exceeding that threshold.

Penalty regime

Law 5/2022, of March 9, effective from March 11, 2022, amended several tax laws (IRPF, Corporate Tax, and the General Tax Law) to eliminate aspects of the reporting obligation for foreign assets and rights that had been deemed contrary to European Union law by the Court of Justice of the European Union (CJEU) in its ruling of January 27, 2022 (Case C-788/19). The ruling concluded that the specific penalty regime for failure to comply with the foreign asset reporting obligation (Form 720) constituted a disproportionate restriction on the free movement of capital.

Instead of introducing a new, separate penalty regime, the Spanish legislature simply removed the provisions deemed incompatible with the free movement of capital, effectively making only a formal change.

Specifically:

• Fixed monetary penalties for late, incomplete, inaccurate, or false reporting have been eliminated.
• Provisions that classified undeclared foreign assets as unjustified capital gains or undeclared income, imputable to the earliest non-prescribed tax period, have been eliminated.
• The 150% proportional fine on the tax due from undeclared foreign assets or income has been eliminated.

Since no specific penalty regime was introduced as a replacement, failures to comply with the reporting obligation are now subject to the general penalty regime for late or incorrect submission of tax declarations that do not cause financial harm to the Spanish Treasury.

Important notes:

Previously, eliminated penalties included:

• A fixed monetary fine of €5,000 per undeclared or incorrect piece of information, with a minimum of €10,000.
• A fine of €100 per piece of information, with a minimum of €1,500, for late submission without prior notice from the tax authorities.

Additionally, past regulations imposed a severe consequence for failing to report or reporting late: the Spanish Tax Agency could classify undeclared foreign assets as unjustified capital gains, subject to the highest marginal tax rate under IRPF or Corporate Tax, plus an additional 150% fine. This applied even if the assets or rights originated from prescribed tax periods.

For any questions or clarifications, please feel free to contact us.

Grupo JDA