Modelo 720 (Foreign Asset Declaration)

What Is Modelo 720?

Modelo 720 is an informative declaration — it does not directly generate a tax payment — but it is one of the most significant compliance obligations for individuals who become Spanish tax residents after having accumulated assets abroad. It was introduced in 2012 as part of Spain’s anti-fraud measures, requiring residents to declare foreign assets to the AEAT.

The form covers three categories of foreign assets:

1. Bank accounts held in financial institutions outside Spain
2. Securities, rights, insurance, and income held or deposited abroad (shares, bonds, investment funds, life insurance policies)
3. Real estate and rights over real estate located outside Spain

The EUR 50,000 Threshold

The declaration is required when the aggregate value in any one of the three categories exceeds EUR 50,000 as at 31 December of the year being declared (or at the moment of extinction, if assets are disposed of during the year).

Critically, each category is assessed independently. A person with EUR 40,000 in a foreign bank account and EUR 40,000 in foreign shares need not file (neither category alone exceeds EUR 50,000), but a person with EUR 55,000 in a foreign bank account must declare all accounts in that category — even those below EUR 50,000 individually.

When Must You File Again?

Once you have filed for a category, you only need to file again in subsequent years if:

• The value in that category has increased by more than EUR 20,000 compared to the last declaration, OR
• You have disposed of, transferred, or closed an asset previously declared.

This “update threshold” mechanism means many residents file once on arrival and then only update when significant changes occur.

Filing Deadline

Modelo 720 is filed annually between 1 January and 31 March for assets held as at 31 December of the previous year. It is filed exclusively electronically through the AEAT’s Sede Electrónica.

The 2022 Reform: Penalties After the ECJ Ruling

The original Modelo 720 penalty regime was notoriously severe: undeclared foreign assets could be treated as unjustified capital gains (taxed at the marginal income tax rate) plus a 150% penalty surcharge — effectively confiscatory. The European Court of Justice ruled in 2022 (C-788/19) that this disproportionate penalty regime violated EU free movement of capital.

Spain reformed the penalties in 2022. While Modelo 720 itself remains mandatory, the confiscatory 150% surcharge for EU/EEA assets no longer applies. Standard late-filing penalties now apply instead (EUR 100–200 per omitted data item, with a EUR 20,000 cap for late voluntary filing). The AEAT can still investigate the source of undeclared assets and levy tax and penalties under general fraud provisions.

Practical Implications for Expats Moving to Spain

For foreign nationals relocating to Spain under the Beckham Law regime, Modelo 720 obligations are significantly reduced: assets of non-resident origin are generally not subject to declaration during the special regime period. However, this must be carefully analysed case by case.

For regular IRPF residents, the first Modelo 720 filing after establishing residence is a critical compliance step and an opportunity to review the tax treatment of all foreign assets (particularly foreign pensions, trusts, and investment structures that Spain may tax differently from the home country).

How BMC Can Help

We guide clients through their first Modelo 720 filing with a comprehensive foreign asset review, advise on the interaction between Modelo 720 and ongoing income tax obligations on foreign-source income, and assist with voluntary disclosures where past declarations were incomplete.