Case study: Property abroad
not included in Form 720


  • This is the case of a British couple who decided to spend their retirement years in Barcelona.
  • They became tax residents in Spain in February 2015.
  • The couple filed their tax returns as of 2015, which included income from work and returns on investments.
  • They owned an apartment in London, which they had purchased through a mortgage over the years they lived in the UK.
  • The property was never declared in Form 720, due to them not being aware of the obligation to do so.
  • The couple also failed to report their earnings from rental of this property.

Issues raised
by the client

  1. Are we obliged to declare Form 720?
  2. What if the joint value does not exceed 99,000 euros, are we still obliged to declare? Or are we exempt due to not reaching the individual limit of 50,000 euros?
  3. How is a property valued in Form 720? At its purchase price? At its property register value?
  4. And what exchange rate must we apply to the property value in Form 720? The rate on the purchase date? Or at 31 December each year?
  5. Can we deduct the amount financed through a mortgage or other purchase expenses from the value of the property?
  6. And, if we are obliged to submit Form 720, what penalties can we expect from the Treasury?
  7. Bearing in mind that we moved to Spain in early 2015, what year should we submit Form 720?
  8. Can we be fined if we don’t submit it? And, if we are obliged to submit Form 720, what penalties can we expect from the Treasury?

Answers to
the issues raised

  1. This client is obliged to submit Form 720. In fact, both spouses are obliged to on the grounds of owning a property with a value exceeding 50,000 euros.
  2. The obligation arises from the purchase value of the property, which happens to be 99,000 euros. In this specific case and given that the total value exceeds 50,000 euros, all owners are required to submit the form, regardless of their degree of ownership of the property.
  3. In the case of Form 720, real estate is valued at its purchase price.
  4. The reported purchase value, when in a currency other than the euro, must be converted at the exchange rate of 31 December of the year in which we are reporting the asset for the first time. We will not be obliged to resubmit in following year due to the amount initially declared varying as a result of the exchange rate.
  5. The declared value of the property does not change according to the financing (mortgage), as the purchase price should only be increased by the expenses and taxes associated to the purchase and never by the financed amount.
  6. Voluntary submission after the form’s deadline comes with a fine of 100 euros per data or series of data not reported, yet with a minimum fine of 1,500 euros. To which we must add the possibility of said ownership abroad being taxed as capital gains not justified in the Income Tax (IRPF) return, which will in turn materialise in much higher fines.
  7. If this submission is at the behest of the Tax Agency rather than being voluntary, the amounts suddenly increase to 5,000 euros per data or series of data not reported, with a minimum penalty of 10,000 euros. Where appropriate, adding the possible capital gains that is also to be declared in the income tax return.
  8. The couple we’re talking about should have submitted Form 720 in the first year of becoming Spanish tax residents, i.e. in 2015.

Anything else?

The mere fact of owning a property abroad implies that the couple have an income-generating asset that should be reported in their tax return.

The value of the property must also be taken into account for the tax base of their Wealth Tax in order for considering the obligation to declare.

Applicable legislation and related articles

The preparation and presentation of Form 720 is regulated in the following legislation:

Order HAP/72/2013, of 30 January, approving Form 720, information return on assets and rights abroad, as referred to in Additional Provision 18 of Law 58/2003, of 17 December, on General Taxation, and determining the place, form, term and procedure for their presentation (Official State Gazette of 31 January 2013).

  • Form 720
  • Form 720 after the deadline

  • Form 720 penalties