Where taxpayers get caught out
New residents often file the income tax return but forget the modelo 720 for their home-country accounts, pension funds and property. Although penalties have been reduced, late or incomplete filings are still penalised and attract attention.
What must be declared
| Category | Includes | Threshold |
|---|---|---|
| Bank accounts | Current, savings and deposit accounts abroad | Over 50,000 euros (year-end or Q4 average) |
| Securities, funds, insurance | Shares, bonds, investment funds, life insurance, annuities | Over 50,000 euros |
| Real estate | Property and rights over property abroad | Over 50,000 euros (acquisition value) |
When to file again
After the first filing, you file again only if a category increases by more than 20,000 euros compared with the last return, or if you sell or cancel an asset declared before.
Penalties after 2022
In January 2022 the Court of Justice of the European Union held that the original penalty regime was disproportionate. Spain changed the law: undeclared assets no longer become automatically time-barred-proof income, and the special fixed penalties were removed. General penalties for late or incorrect information returns still apply.
Crypto and the modelo 721
Cryptocurrencies held with foreign custodians are reported on a separate form, the modelo 721. See crypto tax and the modelo 721.
Who does not file
Non-residents, and residents under the Beckham law, do not file the modelo 720. Residents also consider wealth tax on the same assets. We prepare the modelo 720 together with your income tax return.
An illustrative example
Based on situations we commonly see; not a specific client. A German couple who became resident in Mallorca held a German brokerage account, two bank accounts and a flat in Cologne. We filed the modelo 720 for each of them, with their 50% shares, by 31 March, and from then on only update it when a category grows by more than 20,000 euros.
How Castell.tax can help
We calculate wealth tax and the solidarity tax for residents and non-resident owners, prepare the modelo 720 and model the effect of ownership, debt and residence decisions before 31 December, when planning still works. See our wealth tax service or contact us for an assessment of your position in English or German.
This page is published by Castell.tax, the tax practice of Castell.law in Palma de Mallorca. It is general information; tax rules and rates change, so check your case with us before filing.
Not sure what you owe? Ask before the deadline
Send us your situation or the letter you received. A tax adviser will tell you what applies, what it could cost and what to file.
Frequently asked questions
Do non-residents file the modelo 720?
No, only Spanish tax residents.
Is there tax to pay with the modelo 720?
No, it is an information return; tax is paid through income and wealth tax.
What if I filed late?
Late filing is penalised, but far less than before 2022; filing voluntarily is advisable.
Do I declare my foreign pension fund?
Pension rights and insurance may have to be declared; we check each product.