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New fiscal obligation for Spain residents with overseas assets
Residents in Spain (Spanish citizens, foreigners, individuals or companies) will soon be obliged to declare all overseas assets (including those who have chosen to pay as a nonresident). From 2013 all foreign assets (outside of Spain) must be reported (under MODELO 720).
Be aware! This new declaration is not only for the owners of foreign assets but also for those who are authorized signatories co-signatories or beneficiaries.
So, for example, even if you are only an authorized signatory on your father’s bank account, you are still required to report this account.
The reporting period is March – April 2013.
All kinds of assets will have to be reported:
- Real estate
- Bank accounts
- Shares and securities
- Life insurance policies, pensions or any kind of insurance…
- All incomes (for example if you are receiving payments on loans…)
You are only liable for this new fiscal obligation if your total assets held outside Spain are worth more than €50,000 in each category:
Real estate : €50,000 Bank accounts : €50,000 Shares, funds: €50,000
You will only need to report the assets again if their value has risen by over €20,000.
Failure to comply with this fiscal obligation “could” have costly consequences if your assets are discovered by the tax authorities. You should also be very careful if your assets are in the European community, USA or Switzerland as the financial institutions are currently in the process of agreements that will allow the sharing of financial information between countries.
In the case of Switzerland a new law is already under discussion which will require to Swiss banks to close any “anonymous” accounts. The law will probably be in place in 2014 and for the first time in Switzerland’s history, acts of financial fraud will be prosecuted.
The minimum penalty for failure to comply with this new declaration will be 10.000€ plus 5.000€ for each omitted account/income…
The most severe consequences of this new declaration are that the Administration are abolishing backdated revision of tax declarations having a maximum period of four years. Until now if you committed a fraud you could have been prosecuted within a period of four years. However from this declaration forward there will be no maximum period if you are found not to have declared your assets in the future. From the moment the Administration locate your undeclared foreign assets they will automatically add any undeclared assets (from any period) to your tax declaration for the previous four years. The resulting total asset value will determine what penalties and interest rates should be paid to the Administration. Be careful!! the penalty will be 150% of the amount you haven’t pay to the Authorities!
Good news though, this new declaration is just informative. That means, no payment is required so it’s really worth to declaring your foreign assets.
If you are planning to comply with this new tax obligation don’t forget to adjust your four previous tax declarations if they are incorrect! As a resident of Spain (although you may not be aware) you are automatically required to report all Spanish and overseas assets or incomes (via La Renta) as income and capital gains tax (via Patrimonio) is applicable worldwide!
If you do have more than 50.000€ in foreign asset’s you will need some guidance.