How much money can I have abroad?
The Court of Justice of the European Union has overturned the rule that obliges you to declare your wealth abroad to the Treasury, because it considers it to be “disproportionate.” The Spanish government will now have to amend the law. But in the meantime, what exactly does Royal Decree 1065/2007 require? At 11Onze we summarise the regulations.
In fact, according to Royal Decree 1065/2007, at present, assets abroad that do not exceed 50,000 euros do not have to be declared. This is specified in article 42 bis, point 4, when it announces that “there is no obligation to report any account when the balances […] do not exceed, together, 50,000 euros.” Even so, in the event of exceeding this amount, all accounts must be reported to the Tax Agency through Form 720.
This model 720 was introduced in 2012 when the then finance minister of the Popular Party, Cristóbal Montoro, decided to pursue foreign assets in order to increase the Spanish state’s revenue during the worst years of the financial crisis. Montoro defended the measure as a “necessary tax regulation.”
It is precisely this Model 720 that the Court of Justice of the European Union (CJEU) considers “illegal,” because it imposes a system of penalties that is too high. The European Court’s ruling is devastating. It argues that Spain is pursuing the free movement of capital recognised by the European Union with a “disproportionate restriction.”
For this reason, the current PSOE finance minister, María Jesús Montero, who until now has ignored the legal process while awaiting the CJEU’s decision, has stated that Spain will reform the law. If it fails to do so, Spain could be fined by Brussels. The ruling, which is not explicit in these terms, also opens the door to claims from all those who have been forced to pay the penalties set out in the regulation.
But what exactly does Royal Decree 1065/2007 say? Here are the three most frequently asked questions. At the same time, especially now that the regulation has been appealed, we recommend resolving any doubts with the advice of a legal expert.
- What information is required to be submitted to the tax authorities? At present, the name of the financial or credit institution and its address must be provided. The complete identification of the accounts must also be submitted, with the date of opening and cancellation or the details of the granting and revocation of a credit authorisation. In addition, the account balances as at 31 December and the average balance for the last quarter of the year must be submitted, as required by Article 4 of Law 10/2010 on the prevention of money laundering and terrorist financing.
- When does Form 720 have to be filed? According to Article 42 bis, point 5, the form must be filed between 1 January and 31 March of the year following the year to which the information to be provided refers. This information must be submitted each year if, as stated in the regulations, “any of the joint balances […] has experienced an increase of more than 20,000 euros with respect to those determined in the submission of the last return.”
- Can I be penalised if I don’t do it? Yes, and in a “disproportionate” way, according to the CJEU. For this reason, you should ask your legal advisor for help, who will analyse whether you may incur a penalty, according to Law 58/2003, of 17 December.
In order to manage your assets properly and clarify any doubts, we always recommend that you seek specialist legal advice. In any case, whether or not you exceed 50,000 euros, you must continue to file your tax return in the country where you are resident for tax purposes.
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