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Modelo 720 and 721

And other reports of assets and cryptos abroad, D-6 & ETE

Why? Why not? What penalties are there? When do I have to file it? How do I do it? How much will it cost me?

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WHY DO I HAVE TO FILE THE 720?

The Model 720 is an informative declaration that any tax resident in Spain who has assets or rights abroad is obliged to file.

The assets to be declared are divided into three blocks:

  • Accounts and open deposits in banking entities located abroad.
  • Investments and participations of any kind in any entity abroad.
  • Real estate and rights over them, located abroad.

The Modelo 720 for the year 2022 will not include yet a fourth block specifically for the cryptocurrencies, except in the Basque Country and Navarra.

MODELO 721 ANNUAL REPORT ON VIRTUAL CURRENCIES LOCATED ABROAD

Starting this year 2024, cryptocurrencies deposited abroad must be declared. This is how modelo 721 arises, after the approval of the Anti-Fraud Measures Law in 2021, the Treasury launched the modification of the Tax Law.

The previous model 720, does not take into account how cryptos must be declared abroad, which is why the Ministry of Finance has developed the models: 721, 172 and 173. The people who will have to use these new models are all those who are holders or investors of cryptocurrencies, as well as services that offer cryptocurrency exchange and custody of cryptographic keys.

Specifically, model 721 is aimed at individuals who own cryptos and have a portfolio with a value of at least €50,000. According to the Treasury, this model must reflect the user’s personal data, tax identification number, address, and telephone number. In addition to this, they add that they must fill out fields such as the company name in the case of being a company that provides services related to virtual currencies.

VIDEO
QUESTIONS AND ANSWERS
ABOUT MODELO 720

Find out the answers to the main questions about Modelo 720 in 2 and a half minutes.

HOW DO I KNOW IF I HAVE TO DO THE 720 / 721?

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If you have not submitted it before.

If you have assets located abroad that exceed € 50,000 and you are an individual or an entity with residence in Spain, you have the obligation to file. It is important that you do so.

If you have already submitted it.

The Model 720 must be resubmitted:

  • If any of the assets declared in the last 720 are written off.
  • If there is an increase in the joint limit established for each block of information greater than € 20,000 with respect to the one previously filed.

IS IT SO IMPORTANT TO SUBMIT THE 720?

The report must be submitted on time and without errors.
The 720 has a much stricter system of obligations and penalties than for the rest of the informational tax reports.

WHAT IS THE SUBMISSION DATE?

The 720 is filed from January 1 to March 31 of each year, with respect to assets as of December 31 of the previous year. It must be submitted electronically at the Spanish Tax Agency.

IF I DECIDE NOT TO FILE, ARE THERE ANY PENALTIES?

The sanctioning regime was modified in the 2021 financial year, eliminating the disproportionate sanctions that were applied, as well as its statute of limitation.

The sanctions for not submitting form 721 will be the same as for form 720. That is, fines of €300 for not submitting it if the Administration requires it, and €150 for submitting it incorrectly. Likewise, they can fine €20 for undeclared/required registration or €10 for doing it wrong. In addition to a 4-year statute of limitations, 5 for tax crimes and 10 for aggravated tax crimes.

Although, keep in mind that you can always count on a 50% reduction for payment in the voluntary period!

IS IT EASY FOR THE SPANISH TAX AGENCY TO DISCOVER ME IF I DO NOT FILE IT?

Yes, of course. The Tax Agency has the tools to detect whether you have the obligation to file the 720 and if you have not done it.

Most Western countries signed an agreement for the exchange of financial information (FATCA) and cooperation in tax matters in 2013. The Spanish Tax Agency has the authority to formulate requests for mutual assistance to other States or international organizations.

A few years ago, the Tax Agency began to provide tax information of EU citizens to their respective countries through Form 299 which is completed by Spanish Financial institutions and collected and processed by the Spanish Tax Authority.

The exchange of information has been automatic since 2017.

CAN I PERSONALLY SUBMIT THE RETURN?

It is an informative statement, but the fines are so heavy that you must think about the risk of being wrong.

We have seen previously that fines are much higher than in other sanctioning procedures, so submitting the 720 with professionals guarantees greater peace of mind.

WHAT ARE THE FEES FOR PREPARING A 720?

The most common rates are usually between € 180 and € 360.

At US Tax Consultants our fee is € 180 if the return is of normal complexity.

WHY CHOOSE US TAX CONSULTANTS TO PREPARE MY RETURNS?

Experience. We have been filing both Spanish and American taxes for more than 60 years. Our knowledge of the 720 comes from the many returns submitted since its inception in 2013.

Quality. The professionalism and experience of our professionals are a guarantee. Our quality controls prevent mistakes from being made. That said, it is important that the information you provide us is correct and up to date.

Tracking system for the client. U.S. Tax Consultants has designed an email customer information tracking system (TMS), specific to the 720. Thanks to this system, you will always know in which phase of the process your return is.

Payment by credit card. You can easily and safely pay by credit card.

OTHER INFORMATIVE FORMS FOR FISCAL RESIDENTS IN SPAIN

TO DECLARE ASSETS AND RIGHTS ABROAD

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​MODEL D6: Annual informative declaration (no taxes are paid) of holders of Spanish investments abroad in negotiable securities. Form D6 is filed between January 1st and 31st, taking in consideration concepts to be declared such as: subscription rights and other similar rights, shares with and without voting rights, shares in investment funds, long and short term public debt…

It is obliged to declare in the following cases:

  1. In the declarations of flows, which refer to investments, it is necessary to declare each investment in entities outside Spain that exceeds 10% of the capital of a company or of the voting rights.
  2. In the declarations of deposits, Form D6 must be filed for holding securities listed in entities outside Spain (Shares, ETFs, investment funds…).

FORM ETE: Informative declaration (does not pay taxes) of economic transactions and balances of financial assets and liabilities abroad by residents in Spain, as long as they have an amount higher than 1 million euros by the end of the year. Depending on the number of the transactions and the asset and liability balances, monthly, quarterly or annual declarations will be made. The following situations and movements will be declared:

  1. Own account transactions with non-residents, whatever their nature and regardless of how they are settled.
  2. Balances and variations of assets or liabilities abroad, regardless of the form in which they are materialized.

PENALTIES / FINES

although taxes are not paid with these two forms, failure to comply with the obligation to file them may result in significant penalties:

  • Model D6: 25% on the undeclared amount with a minimum of 3000€. If it is filed after the deadline the penalty is €300 for the first 6 months and after that date it is €600.
  • Form ETE:
    • Minor infraction: with a fine of up to 25% of the amount of the transaction with a minimum of €3,000:
      • Filing after the deadline.
      • Failure to declare transactions of less than 6 million €.
      • The inaccuracy of the data for amounts lower than the aforementioned amount of €6 million.
    • Serious infringement: with a fine of up to 50% of the undeclared operation with a minimum of 6,000 €:
      • Failure to declare transactions exceeding €6 million.
      • The inaccuracy of any information in the declaration with respect to transactions over €6 million.

HOW CAN YOU FILE THEM WITH U.S. Tax Consultants?

Access the Clients Area to upload all the needed information according to the list of required documents so that we can prepare your 720 and/or 721.

Download Modelo-720 Clients data 2024 and/or Modelo-721-Clients-data-2024 to help you with the list of asset to be declared.  

DOES THE 720 AFFECT THE REST OF MY TAXES?

Having the 720 declaration is of great help for the preparation of the Spanish IRPF Modelo 100 and in the case of U.S. Persons for the Form 1040 or the Streamline (tax amnesty)

U.S. Tax Consultants recommends that tax preparation should be centralized in a single manager as it reduces the risk of errors by having the same clients tax information for all Forms and Modelos.

That is why we offer a comprehensive tax filing service for both AEAT and IRS.

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