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This article forms part of the CostaLuz Lawyers blog and is published for general informational and educational purposes only. It was prepared with the assistance of artificial intelligence tools and, before publication, was substantively reviewed and editorially approved by Maria de Castro, a Spanish-qualified lawyer registered with the Cádiz Bar Association under number 2745, founder of CostaLuz Lawyers and the person responsible for the editorial review of the published content.
This article does not constitute legal, tax, immigration, employment, estate-planning or investment advice and does not replace an individual assessment and the professional work of the appropriate CostaLuz Lawyers specialist. No action or omission should be based solely on this information.
If you are a tax resident in Spain and hold assets, bank accounts, investments, or cryptocurrencies abroad, you may be required to file an informative declaration before March 31, 2025. But who exactly needs to submit it, and what happens if you don’t? Let’s break it down.
Model 720: Declaration of Assets and Rights Abroad
Who Needs to File Model 720?
This model applies to Spanish tax residents who have:
• Bank accounts in foreign financial institutions
• Securities, rights, insurance policies, or income held or managed abroad
• Real estate or rights over properties located outside Spain
Additionally, individuals who have disposal power over such assets (e.g., representatives, authorized persons, or beneficiaries) must also file.
Who Is Exempt?
Spanish legal entities are not required to file if their foreign accounts are individually recorded in their accounting.
Filing Thresholds for Model 720
• First-time declaration: Required if the total value of assets in any of the three categories exceeds €50,000.
• Subsequent years: Required only if:
o The value has increased by more than €20,000 compared to the last declaration.
o A previously declared asset has been sold, transferred, or closed (e.g., closing a foreign bank account).
EU Court Ruling on Model 720
In case C-788/19 (January 27, 2022), the European Court of Justice (ECJ) ruled that parts of the Model 720 regulation were incompatible with EU law.
• The indefinite statute of limitations for undeclared foreign assets was removed.
• The excessive penalties were ruled disproportionate.
• The Spanish tax authorities have since adjusted penalties to comply with general tax regulations.
Model 721: Declaration of Virtual Currencies Held Abroad
Since January 1, 2024, residents in Spain who hold cryptocurrencies abroad must declare them through Model 721, as established by Law 11/2021, Royal Decree 249/2023, and Order HFP/886/2023.
What Qualifies as a Virtual Currency?
A virtual currency is defined as a digital representation of value that:
• Is not issued or guaranteed by a central bank or public authority
• Is not necessarily linked to a legally recognized currency
• Is accepted as a means of exchange and can be transferred, stored, or traded electronically
Who Must File Model 721?
• Individuals and legal entities residing in Spain
• Permanent establishments in Spain of foreign entities
• Undivided estates, joint ownerships, and other entities without legal personality that constitute an economic unit or separate taxable estate
Filing Thresholds for Model 721
• First-time declaration: Required if the total value of virtual currencies abroad exceeds €50,000.
• Subsequent years: Required only if:
o The balance increases by more than €20,000 compared to the last declaration.
Avoid Penalties – Stay Compliant!
Failure to submit these declarations can lead to significant fines. Although some penalties have been revised following the ECJ ruling, compliance remains essential.
Need guidance on your tax obligations? Contact us for expert advice on Model 720, Model 721, and how to stay compliant with Spanish tax regulations.
Disclaimer: This information is provided for general guidance purposes only and does not constitute personalised tax or legal advice. Each case must be assessed individually according to the client’s specific circumstances. It is essential to consult a qualified specialist before taking any action or making any decision.
Legal Notice: The content on this page is provided for general informational and educational purposes only. It does not constitute legal advice and should not be relied upon as such. No action should be taken based solely on this content without first seeking independent professional legal counsel. Each case requires individual assessment based on its specific circumstances. CostaLuz Lawyers accepts no liability for actions taken or not taken based on this content.
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