Form 720 must only be filed if assets decrease or wealth increases by 20,000 euros

The filing of Form 720, the informative declaration regarding assets and rights located abroad, generates recurring doubts regarding its mandatory nature in successive tax years. A recent binding ruling from the Dirección General de Tributos (DGT) has delimited the specific scenarios in which residents in Spain must comply with this reporting obligation.

What the DGT has ruled

The advisory body establishes that the obligation to file the informative declaration in consecutive years is triggered under two specific scenarios:

• Increase in value: When the total value of assets and rights abroad exceeds the value declared in the last tax year by more than 20,000 euros.
• Loss of ownership: When ownership of assets or rights is lost at any time during the tax year.

The DGT clarifies that, if an increase exceeding this 20,000 euro threshold does not occur, but assets have been extinguished during the year, the reporting obligation is limited exclusively to those assets whose ownership has been lost. In this case, it is not necessary to re-declare assets that remain under the same ownership and about which information was previously provided.

What this means for you

If you are a natural person resident in Spain with assets abroad, this criterion reduces the reporting burden in situations of wealth stability. If your assets abroad have not experienced growth exceeding 20,000 euros compared to the previous year and you have not sold or lost ownership of any asset, you would not be obliged to file Form 720.

However, the loss of a single asset or right, no matter how small, triggers the obligation to report that extinction, even if the total value of your assets has not increased.

What you should do

It is fundamental to perform precise monitoring of the value of assets abroad at the close of each tax year. To determine if an obligation exists, you must compare the current total value with the value declared in the previous year. If in doubt whether a wealth movement or a market fluctuation triggers the reporting obligation, it is necessary to assess the particular situation to avoid possible sanctions for omission or error in the informative declaration.