The Spanish Tax Authorities have once again received a blow from the EU Commission
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All Spanish tax residents owning assets overseas in excess of 50,000€ must complete the 720 form. According to the tax authorities this form is a declaration of assets is linked to your Income Tax return. This means that all the overseas assets will be also declared in your income tax return and tax will have to paid over these assets. The penalties for late filing or errors can be as high as 150%.
El Economista published some weeks ago that the European Commission had declared this to be an abusive and disproportionate policy. The newspaper mentioned the case of a retired taxi driver who voluntarily disclosed his foreign assets late. The assets were shares and dividends held overseas for a total value of 340,000€. The Spanish authorities were seeking payment of 185,000€ (interest included) and a fine for 254.000€ (150% of the Income tax due).
The European Commission has highlighted that there is no other EU Member State requesting such a high level of detailed information. The Commission has also mentioned that the policy is discriminatory as the penalties are far more severe than those persons holding only Spanish assets.
It will be interesting to know how the Spanish tax authorities will address this issue that has caused more than one headache for tax advisors and clients with overseas funds.
Álvaro Aznar Azcárate
Solicitor and Spanish Abogado