Spain’s Modelo 720 (Overseas Asset Declaration) – legal or not

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OVER THE past year I have come across many an expat, not just UK expats but Dutch, Belgium and German who have said to me, I am not doing the Modelo 720 as the EU has ruled it is illegal and also because the Spanish authorities will never find out if I don’t declare.

Sadly I have to tell them they are now wrong on both counts, firstly on 15 February 2017, the European Commission accepted that Spain has the right to require residents to declare overseas assets, what the Commission does disagree with is the severity of punishments for late or inaccurate submissions. The EU commission has given the Spanish authorities 2 months to rectify this, otherwise it will take the matter to the EU Court of Justice. The requirement to submit the Modelo 720 form, however, is not under challenge.

Secondly on the 31st May 2017, all EU countries plus the UK and its Crown Dependencies and Overseas Territories, will automatically share all financial information on all financial assets held in their countries by tax residents of another country, to the country they are registered as being resident in.

They will report the value of all bank accounts, insurance policies, shareholdings, investments, Trusts etc (no matter what the balance) as at 31st December 2016. Plus they will notify them of what withdrawals have been made during 2016 and also if an account has been closed during 2016.

From May 2018 over 100 countries worldwide will automatically be sharing all financial information on an annual basis. The goal is to allow tax authorities to obtain a clearer understanding of financial assets held abroad by their residents, for tax purposes, and is primarily aimed at preventing tax evasion.

There are ways to ease this reporting burden and to ensure you stay on the right side of the taxman, whilst minimising your tax liabilities, one such way is to use a tax compliant investment bond.

If you would like more information on this or any other financial advice please contact me by email [email protected] or call me on 658 892 330.

The above information was correct at the time of preparation and does not constitute investment advice and you should seek advice from a professional adviser before embarking on any financial planning activity.

Blacktower Financial Management Ltd is authorised and regulated in the UK by the Financial Conduct Authority and is registered with both the DGS and CNMV. Blacktower Financial Management (Int) Ltd is licensed in Gibraltar by the Financial Services Commission (FSC) and is registered with both the DGS and CNMV in Spain.

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