Through the anti-fraud law, Ley 7/2012, on 29th October, the Spanish Government has introduced the new obligation for Spanish tax residents to report assets located outside Spain.
WHO IS REQUIRED TO REPORT ?:
Both individuals and legal entities living in Spain more than 183 days in the previous calendar year.
Is obliged to report assets, not only the owner but a beneficiary, an authorized signatory, or any one with the authority to dispose of the asset.
This includes assets held in a trust.
TERM AND PROCEDURE:
From February 1st 2012 on, anyone who is tax resident in Spain is liable to submit yearly the new 720 official tax form.
The reporting must be done each year, from 1st January to 31st March.
ASSETS OUTSIDE SPAIN CATEGORIES & INFORMATION TO BE REPORTED:
ACCOUNTS HELD WITH FINANCIAL INSTITUTIONS (all types of bank accounts and deposits, including credit accounts, in all currencies, regardless of whether you have the right to withdraw the funds or not).
POLICIES, ANNUITY INCOME, INCOMES GENERATED FROM LOANS, RIGHTS OR OTHER ASSETS TO FOREING ENTITIES.
INMOVABLE PROPERTY AND RIGHTS OVER SUCH PROPERTY
– Assets in a particular category if the value of the total assets in that category amounts to over € 50.000,00.
PENALTIES AND FINES:
Any unreported asset, even accidental, may be treated as an “unjustified increase in wealth” and taxed as general income at the scale rates ( could be up to 52% ).
In addition to the above, the failure in reporting the asset would be fined with penalties of up 150 % of the tax payable plus late payment interest for the last four years.
Besides this, you would have to be fined for non-compliance, which is € 5.000,00 for each reportable asset, with a minimum fine of € 10.000,00.
The entitlement of the Tax Agency to look back over past years to assess the unpaid tax on the unreported asset, never expires.
If the tax defrauded exceeds € 120.000,00 it would be considered a criminal offence.
As Spanish tax experts, we are fully qualified to advise you at this matter.