Modelo 720 requires each tax resident to report on an annual basis assets in various categories including investments, deposits and real estate where the combined value in each category exceeds 50,000 Euros. Interestingly the law extends to Companies and Trusts if the tax resident is either a beneficiary or a signatory. Despite the law giving the authorities power to impose massive penalties for non disclosure it is reckoned that for the first annual declaration required at the end of April 2013 less than 5% of those required to make the declaration did so.

Not only have the tax authorities threatened to target specific nationalities moving forward particularly UK Expats they have significantly increased the number of tax investigators they employ and taken other measures to ensure that there can be no way of avoiding disclosing assets and paying the proper amount of tax due.

Spain has signed an agreement with the UK and other major European countries to share and exchange information on a regular basis. Of course this is only part of a worldwide onslaught on undisclosed assets with the US FATCA regime in full swing and the UK government signing a number of disclosure agreements with the Channel Islands. IOM and various offshore jurisdictions such as BVI and Cayman islands. Alongside this the EU has put tax evasion at the top of its agenda and a revision of the EU Savings Directive to include automatic exchange of information and to include Companies and Trusts has moved a step closer.

Tax planning and tax mitigation strategies are a core part of the investment services offered by our partner P2P Finance: they can help to find efficient and effective solutions through low cost US platforms such as Charles Schwab, where there will be no complications whatsoever with the IRS as the client will receive the 1099 with all information included, and furthermore, the client will have no withholding on interest and dividends as Schwab has their Social Security number and reports directly to the IRS as well. Far too often we meet clients who have buried their head in the sand and refused to believe that the tax authorities will be hounding them because they are under the radar or don’t have sufficient assets to warrant an investigation or just simply refuse to believe it will happen to them.

There are perfectly legitimate solutions that will work and stand the test of time without the need to simply hold all of your assets inside a Spanish bank with all the risk that particular strategy entails. Whilst we cannot do anything about the past we can make sure that moving forward you hold your investments in the most tax efficient way possible without having to have sleepless nights worrying about a knock on the door or a Cyprus banking style haircut on your savings.

Do not hesitate to contact us for more information: info@ustaxconsultants.es