Overseas Asset Declaration – How To

MLVelascoLaw 7/2012, approved by Spanish parliament on October 29, 2012 introduced new measures for fighting fiscal fraud. One of them is the obligation for fiscal residents in Spain, to declare overseas assets of a value of over 50.000€.

This declaration is for the owner of the foreign assets as well as for beneficiaries and authorized signatories.

If you are fiscal resident in Spain (Spanish national or foreigner), you will have to declare the following assets located abroad:

1)    Bank accounts

2)    Financial instruments like shares, bonds, securities and life insurances (including income generated by the lending of capitals, rights or any other assets to foreign entities).

3)    Immovable property like real estate and any rights associated with it

If the sum of the values of any of these 4 groups is more than 50.000€ you will have to declare it to the Spanish tax authorities. There is no need to declare any group with a value less than 50.000€.

For bank accounts you will have to declare:

  • The value as of the 31st of December
  • The average balance of the previous 3 months (the last quarter of the year)
  • All holders
  • All representatives
  • All beneficiaries and usufructuaries
  • All people with any type of access to the funds

For real estate, the declaration will include:

  • Date of purchase
  • Purchase value
  • Property qualification and all its relative details
  • All the persons having rights on the property

The reporting will have to done every year before the end of the first quarter (March 31) for the previous year.

In the subsequent years you will have to report the assets again only if the value has increased of more than 20.000€

The non-declaration of the assets doesn’t have a statute of limitations (in Spain it is typically 4 years) and could incur heavy fines including a fine of 5.000€ per set of missing data with a minimal fine of 10.000€ and late payment interests.

If the tax administration finds your undeclared assets, they will be added to your tax declaration for the previous 4 years. From these amounts Hacienda will calculate the fines that will be up to 150% the amounts that have not been paid to the authorities.

Declaration procedure

The declaration will have to be done through form 720. The presentation will have to be done online through the website of the Spanish Agencia Tributaria. In order to present it you will have either to ask for a personal security certificate or present the form through a lawyer with his own security certificate.

For assets valued in another currency than the Euro, the European central bank official exchange rate will be used.

  • For accounts the exchange rate as of the 31st of December
  • In case of cancellations of account the exchange rate at the moment of cancellation
  • For real estate and other assets the exchange rate as of the 31st of December will be used

For real estate or any other asset, the total value of the property counts regardless of the amount of owners or the percentage of ownership.

International cooperation

There are already regulations in place across the European Union, forcing governments to exchange tax and assets information of residents and non-residents to the other EU countries.

The same types of agreement are in the process of being signed with the USA and Switzerland. For Switzerland the agreement will most likely be put in place in 2014.

The objective of these new laws is aimed at making more and more difficult to hide assets internationally. In practice the threat and magnitude of penalties is too high to justify the risk of concealing the assets.

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