Very often, people who own assets and rights both in their respective countries of origin and also in Spain, even if they are mere bank accounts, enquire if they are required to make some kind of declaration of assets, specifically, the one included in the Form 720.  The question arises especially when they have to move to Spain for work or professional purposes.

This informative obligation to which we refer is included in the Additional Provision 18 of the Spanish Act 58/2003, of December 17, General Tax Law (Disposición adicional decimoctava de la Ley 58/2003, of December 17, 2003, General Tributaria), and concerns the communication that parties liable for tax payments must make about, among others, the accounts located abroad held in banking entities; financial securities, assets, stocks or representative rights of capital stock (derechos representativos del capital social), shareholder’s equity or patrimony of all types of entities established abroad; real estate and rights over real estate owned by them located outside Spain; and even virtual currencies located abroad of which they are the holders or regarding which they are the beneficiary or authorized or in some other way have the power to dispose.

The manner in which this informative declaration has to be made was established by the Order HAP/72/2013 (Orden HAP/72/2013), of January 30, through Form 720. The mentioned Order, specifically in its section 2, stipulated that individuals and legal entities resident in Spanish territory, permanent establishments in such territory of non-resident individuals or entities and the entities referred to in section 35.4 of Act 58/2003, of December 17, General Tax Law (Ley 58/2003, de 17 de diciembre, General Tributaria), have the obligation to make the declaration of assets and rights located abroad through Form 720.

Recently, the Court of Justice of the European Union (CJEU), by judgment rendered on January 27, 2022 (case-C788/19) determined that the Spanish legislation did not comply with the European legislation, but said non-compliance only affected certain aspects of the declaration of assets abroad of Spanish taxpayers, such as the specific penalty regime established, but not the obligation itself.

Having stated the above and focusing specifically on natural persons, such individuals, regardless of their nationality, who reside in Spanish territory would be obliged to file the declaration of assets and rights located abroad by filling in Form 720, as it will be in such case when, in accordance with the provisions of the aforementioned Additional Provision 18 of the General Tax Law (Disposición Adicional 18ª de la Ley General Tributaria), they may be considered as taxpayers.

Thus and in order to determine the need to file Form 720, the relevant point, more than if income is obtained or not in Spain, is to know whether we can be classified as residents, having to refer to the definition established for this purpose in Article 9 of Act 35/2006, of November 28 (Ley 35/2006, de 28 de noviembre), on Personal Income Tax (Impuesto sobre la Renta de las Personas Físicas) and partial amendment of the laws on Corporate Tax (Impuesto sobre Sociedades), Non-Resident Income Tax (Impuesto sobre la Renta de no Residentes) and Wealth Tax (Impuesto sobre el Patrimonio).

The aforementioned section provides that a taxpayer is deemed to have his or her habitual residence in Spanish territory when he or she remains in Spain for more than 183 days during the calendar year, including sporadic absences during that period, unless the taxpayer proves his tax residence in another country. In addition, it will be presumed, unless there is evidence to the contrary, that a taxpayer has his habitual residence in Spanish territory when, in accordance with the regulations, his spouse from whom he or she is not legally separated and his dependent minor children habitually reside in Spain.

Consequently, only if during a tax year he/she has resided for more than 183 days in Spain, he/she will be considered resident for the purposes of the Personal Income Tax declaration (declaración de la Renta de las Personas Físicas) return and, if he/she has assets abroad, he/she will be obliged to report them through form 720 in the period between January 1 and March 31 of the tax year following the one to which the information of said form refers.

María Bartle Agustín Partner. Martínez Sanz Abogados. Valencia