Modelo 720 and modelo 721: what you report, when, and what really happens if you do not file

The modelo 720 is not a tax: it is an information return

The modelo 720 is called, in the BOE, "Declaración informativa sobre bienes y derechos situados en el extranjero", the information return on assets and rights held abroad, and the first word explains almost all of it. It is information, not a tax assessment: there is no tax due, no payment box and nothing to pay for filing it.

Its legal basis is the eighteenth additional provision of Law 58/2003, the Ley General Tributaria (LGT), Spain's general tax act, which rests on articles 29 and 93 of that same law, the ones that set out reporting duties. The detail is not in the law of any particular tax but in the general regulation on tax management and inspection procedures, Royal Decree 1065/2007. The form itself was approved by Orden HAP/72/2013, of 30 January, a ministerial order.

That distinction decides nearly everything else:

• What it is. A photograph, taken on 31 December, of what you hold outside Spain, so that the Agencia Tributaria (the AEAT, Spain's tax agency) knows it exists and who owns it.
• What it is not. It is not a wealth tax and it regularises nothing by itself. Filing it does not make that money taxable, and failing to file no longer turns it automatically into income, which is exactly what used to happen until 2022.
• What it does not replace. The interest, dividends, rent and capital gains those assets produce go into your Spanish income tax return all the same, and the Impuesto sobre el Patrimonio, Spain's wealth tax, runs separately.

One date to help you place anything you read elsewhere: the first year that had to be reported was 2012, under the third final provision of Royal Decree 1558/2012, and that first modelo 720 was filed between 1 February and 30 April 2013, under the sole transitional provision of Orden HAP/72/2013.

Who has to file: residents, authorised signatories, beneficial owners and impatriates

The person obliged is, literally, "individuals and legal persons resident in Spanish territory, permanent establishments in that territory of non-resident persons or entities and the entities referred to in article 35.4 of Law 58/2003" (articles 42 bis.1, 42 ter.1 and 54 bis.1 of the regulation). Everything starts with tax residence: if you are not a Spanish tax resident, you do not file it. It is usually the first Spanish obligation to catch someone who moves here with their assets still abroad.

The duty does not stop at the formal owner: it reaches representatives, authorised signatories, beneficiaries and anyone with power of disposal, and the eighteenth additional provision of the Ley General Tributaria extends it to "those who qualify as beneficial owners" under article 4.2 of Law 10/2010, Spain's anti money laundering act. Being an authorised signatory on a relative's account can pull you in without a single euro being yours.

The exemptions by person are few, and they are written down (articles 42 bis.4, 42 ter.4, 54 bis.6 and 42 quater.5):

• Entities exempt under article 9.1 of the Ley del Impuesto sobre Sociedades, Spain's corporate income tax act.
• Legal persons and permanent establishments in Spain that have those assets recorded individually in their books.
• Individuals carrying on an economic activity who keep their accounts under the Código de Comercio, Spain's commercial code, with the same individual record.

And the question that comes up most: the impatriate regime, the one everybody calls the Ley Beckham. Article 93.1 of the Ley del IRPF, Spain's personal income tax act, says these people "acquire their tax residence in Spain" and keep their status as IRPF taxpayers; the only restriction it writes about their assets is that they are taxed "on a real obligation basis in the Impuesto sobre el Patrimonio". No rule published in the BOE exempts them from the 720, and those lists of exceptions do not mention them: what circulates is administrative practice, revisable, not law, so it is worth obtaining a binding ruling of your own.

Three blocks, 50,000 euros and an all or nothing rule

The 720 is not one single list: it is three independent blocks, each with its own article and its own 50,000 euro threshold, plus the virtual currency block, which is reported on a different form.

The threshold is measured block by block and jointly within each block: it is an all or nothing switch.

• 40,000 euros in accounts, 40,000 in shares of foreign companies and a flat worth 40,000: you file nothing. No block reaches 50,000 euros on its own, and blocks are never added together.
• 60,000 euros spread across three accounts: all three are reported, including the one holding 200 euros. Article 42 bis.4.e) is literal: "if either of those joint limits is exceeded, information must be supplied on all the accounts".

Accounts carry a trap that most pages skip: there is not one figure to look at, there are two. Article 42 bis.2.d) requires you to report "the balances of the accounts on 31 December and the average balance for the last quarter of the year", and it is enough for either of them to pass the threshold. An account emptied on 30 December can end the year with a low closing balance and a very high average one. That threshold, unlike other tax figures, is not updated year by year: it has been the same 50,000 euros since 2013.

The deadline, and when you have to file again

The window runs from 1 January to 31 March of the year following the one being reported, and it is set out in article 7 of Orden HAP/72/2013 and in articles 42 bis.5, 42 ter.5 and 54 bis.7 of the regulation. There is no extension and it does not depend on when you file your income tax return, so it deserves a fixed slot in your tax calendar.

Filing is online only, and it has a single safety valve, a technical one: article 6.2 of Orden HAP/72/2013 grants three extra calendar days "in those cases where, for technical reasons, it was not possible to file over the Internet". That rule belongs to the 720 alone; the order governing the 721 has no equivalent, so with crypto it is unwise to leave it to the last day on the sede electrónica, the tax agency's online office.

Once you have filed one year, it does not repeat automatically. You only have to file again when the joint value of a block "has increased by more than 20,000 euros over the figures that gave rise to the last return filed". Three points on that:

• The comparison is against the last return you filed, not against last year. If you filed for 2021 and have not filed since, the comparison is against 2021. This is the costliest mistake in this section.
• It is measured block by block. One block can rise by 30,000 euros while another falls by 30,000: the first one triggers the duty and the second does not cancel it out.
• Losing an asset always triggers it. Closing the account, selling the flat or ceasing to be an authorised signatory has to be reported even if there is no increase: "filing the return shall be compulsory in any event". And you report the balance or the value on the date you lost that status (articles 42 bis.3 and 54 bis.5); for property, also "the transfer value of the property or right and the date of the transfer".

How each block is valued, and on what date

The reference date is always 31 December, with the two exceptions already seen: the average balance of the last quarter for accounts, and the value on the date an asset leaves you.

• Accounts. Balance on 31 December and average balance of the last quarter, plus the identification of the bank and of the account. If it has an IBAN, check you have copied it correctly with the NIF, NIE and IBAN validator.
• Securities, insurance and annuities. The valuations "must be supplied calculated in accordance with the rules laid down in Law 19/1991, of 6 June, on wealth tax" (article 42 ter.6). The number your broker's app displays is not necessarily that one.
• Life insurance. Surrender value on 31 December; if the policyholder cannot fully surrender the policy on that date, the mathematical provision is reported instead. Term policies covering only death or disability stay outside (article 42 ter.3.a).
• Real estate. Acquisition value (article 54 bis.2.d). Timeshare, rights of use in turns, usufruct and bare ownership are valued on 31 December under wealth tax rules (articles 54 bis.3 and 54 bis.4).

The property rule surprises people. The block threshold is compared against "the values referred to in paragraphs 2.d), 3 and 4" (article 54 bis.6.d), and 2.d) is the acquisition value: an apartment bought twenty years ago for 45,000 euros is still measured at those 45,000 even if it is worth three times as much today. Read the other way round, the same criterion drags someone who has just bought at today's prices into the 720 from their very first year.

The modelo 721: crypto goes its own way

Crypto has never been reported on the 720: article 3 of Orden HAP/72/2013 lists its contents in five letters and none of them is virtual currency. The letter d) that the eighteenth additional provision of the Ley General Tributaria devotes to it dates from 2021, but the implementing rule did not arrive until article 42 quater of Royal Decree 1065/2007 (added by Royal Decree 249/2023), and the form created was a different one: the 721.

It was approved by Orden HFP/886/2023, of 26 July, and applied for the first time to the 2023 tax year, filed between 1 January and 31 March 2024. Its window is the same as the 720's and its threshold is also 50,000 euros, but independent: someone holding 40,000 euros in accounts abroad and 40,000 euros in crypto abroad files neither of the two.

"Held abroad" does not mean an exchange with a foreign name. Article 42 quater.2 says they are treated as held abroad when whoever custodies them is not obliged to file the Spanish information return of the thirteenth additional provision, paragraph 6, of the Ley del IRPF. A provider resident in Spain, or with a permanent establishment here, leaves those coins outside the 721. This is what catches out digital nomads most often.

• It only reaches what a third party custodies. Article 42 quater.1 speaks of coins "held in custody by persons or entities providing services to safeguard private cryptographic keys on behalf of third parties": whoever keeps their own keys has no such custodian. But that is the literal reading of the article, not a published criterion, so check it with a professional.
• Valuation has a rule of its own. You take "the quotation on 31 December offered by the main trading platforms or price tracking websites" or, failing that, a reasonable estimate in euros, stating the value used (article 42 quater.3.c).

Forms 172 and 173 are not yours to file: they are filed by the service providers themselves (Orden HFP/887/2023), and their window is January.

What changed in 2022: the European judgment and the end of the 150%

Everything you read about the 720 has to be dated, and this is why, in four published links of the same chain:

1. 27 January 2022. Judgment of the Court of Justice of the European Union, First Chamber, case C-788/19, European Commission against Kingdom of Spain. It declares Spain in breach of article 63 of the Treaty on the Functioning of the European Union and article 40 of the Agreement on the European Economic Area for taxing undeclared amounts as unjustified capital gains "with no possibility, in practice, of relying on limitation", for the 150% penalty, and for fixed fines "the total amount of which is not capped".
2. 9 March 2022. Law 5/2022, published in the BOE on 10 March and in force from 11 March.
3. What it erased. Its fourth final provision rewrote the eighteenth additional provision of the Ley General Tributaria in full, which today contains only the four letters of the reporting duty and the paragraph on beneficial owners, with no penalty section at all. And its sole repealing provision, paragraph 2, expressly repealed the first and second additional provisions of Law 7/2012, the first of which housed the 150% penalty.
4. What else fell. The fifth final provision left article 39 of the Ley del IRPF without its paragraph 2, and article one, paragraph Three, deleted paragraph 6 of article 121 of the Ley del Impuesto sobre Sociedades: the two provisions that turned whatever went unreported into income of the oldest tax period not yet time barred.

Why articles 198 and 199 apply today: the previous wording said its own penalties "shall be incompatible with those laid down in articles 198 and 199 of this Law". With that incompatibility gone, the general regime of tax penalties applies again without obstacle.

Two further warnings. Article 121.5 of the Ley del Impuesto sobre Sociedades is still in force and still allocates presumed income "to the oldest tax period among those not time barred, unless the taxpayer proves that it corresponds to another one or several": what died is the automatic link with the 720, not the general presumption for companies. And if you were penalised before 11 March 2022 under an act that is not yet final, article 10.2 orders the more favourable penalty rule to be applied retroactively.

Filing late: a fine yes, a surcharge no

The bad news: filing the 720 or the 721 late is an infringement even when you do it on your own initiative, because article 179.3 of the Ley General Tributaria clears you of the earlier returns "without prejudice to any infringements that may be committed as a result of the late filing". The good news: today there is a ceiling that did not exist before 2022.

• The late filing surcharge does not apply to the 720. Article 27.2 says it is calculated "on the amount payable", and an information return has none. Where it does appear, at 1% plus another 1% for each full month and 15% after twelve months, is on the supplementary income tax or corporate tax return covering the income those assets produced, and that is what the surcharge calculator is for.
• Getting there first is worth half. Moving from article 198.1 to 198.2 halves both the fine and its ceiling, but "prior requerimiento", the formal request from the tax agency, is defined broadly in article 27.1: any administrative action formally notified to you and aimed at regularising or checking your position.
• The 40% reduction does apply. Article 188.3 grants it for "any infringement" if you pay within the deadline and do not appeal; the 30% and 65% ones do not: article 188.1 only reaches articles 191 to 197.

This guide will not give you a total amount: it depends on how many items and sets of items the return contains, units that articles 42 bis.6, 42 ter.7 and 54 bis.8 define for the purposes of the eighteenth additional provision, but whose transfer to articles 198 and 199 is a matter of interpretation. Keep the ceiling in mind, and the steps in what to do when you miss a deadline.

How it fits with income tax, corporate tax and the wealth tax

The 720 reports; the taxes run on their own tracks. There are three separate circuits:

• Income tax. The interest, the dividends, the rent from that flat and the gains on selling it go into your annual income tax return like any other income, because a resident is taxed on worldwide income. Filing the 720 does not declare them, and not filing it does not erase them either.
• The Impuesto sobre el Patrimonio. Spain's wealth tax runs separately, under the same Law 19/1991 rules the 720 borrows for securities. Its exempt minimums and rates depend on the autonomous community, so they have to be checked for your own case. Anyone under the impatriate regime is taxed "on a real obligation basis in the Impuesto sobre el Patrimonio" (article 93.1 of the Ley del IRPF).
• Corporate tax. A resident company holding assets abroad files the 720 unless it has them recorded individually in its books, and it pays corporate tax through the modelo 200, with article 121.5 still on the table.

If you are not a Spanish tax resident, none of this applies to you: you file neither the 720 nor the 721, and Spain taxes only your Spanish source income, through the modelo 210. The border is residence, not nationality and not the country of your bank. One warning about scope: the figures in this guide are those of territorio común, the common territory regime, because the Basque Country and Navarre have tax rules of their own.

The practical summary: look at each block separately, check the average balance of the last quarter on your accounts, compare against the last return you actually filed, and note every asset you have disposed of. kontora records your transactions, works out what you need to set aside and warns you of every deadline, 31 March included, but it does not submit anything on your behalf.

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