Last Few Days to Declare Assets Abroad and Risk Facing Huge Fines for Not Doing So

• Fiscal residents in Spain have until 30 April to make their declaration of assets abroad
• Those obliged to make the declaration but fail to do so face hefty fines of at least 10,000 euro
• The aim of the new law is to combat tax evasion

Tuesday 30 April is the last chance that all fiscal residents living in Spain have to make their declaration of assets abroad to the Tax Authority. Although this is only an informative measure, Hacienda is insistent that those who do not present the declaration, or the “Modelo 720” form as it is also known, will face sanctions of at least 10,000 euro.

The new legislation, which was presented in a somewhat rushed manner barely giving people time to organise themselves, was supposedly passed with the sole intention of tackling tax fraud carried out by Spanish nationals.

However, approximately 1.3 million foreign residents have also been caught up in the whole procedure, causing panic and outrage in many instances. Many of them are of the opinion that the 720 model is a way for the Government to obtain much-needed cash to aid the ailing economy by going after the foreigners, who they see as an easy target. Even though the tax authority has assured the media that this is not the case, for many expatriates this is the last straw and they are finally packing up and returning to their native countries.

The aim of the Tax Authority is to create an archive of all those residents in Spain that have in their possession bank accounts, shares, stocks, bonds and property assets worth over 50,000 euro located outside of Spain. Once this has been created, tax inspectors will cross-reference this information with other sources that may enable them to identify possible defrauders.

In fact, the Tax Authority has also revealed that one of its first actions will be to cross-reference details contained within the declaration of assets abroad with Falciani’s list (https://onthepulse.es/content/spain-orders-conditional-release-falciani-%E2%80%93-man-list-tax-evaders).

Possibly more worrying for many are the huge sanctions that are set to be applied for not complying with the new measure. There are a number of fines, which range from 1,500 euro (minimum) for presenting the declaration after the cut-off date (30 April) to 10,000 euro for failing to make the declaration at all, with an extra 5,000 euro for each asset that has been omitted.

For obvious reasons, many foreign residents have made the declaration despite not being happy about it, yet there are also those that simply refuse to do so and prefer to risk the consequences. But then what about the foreigners that were visiting their native country for a long period of time and do not know about the new legislation? The Government has not even issued a campaign geared towards informing foreign residents in their own language. It is possible that there are thousands of expatriates who have no idea about this new law. It has been left to local foreign media or companies that have foreign clients to warn them of the new law – with no extra resources to do so. For those living in rural areas where the foreign population is minimal, it is quite possible that they will be punished unjustly for simply not being well informed.

For those that are aware of the Asset Declaration Law, many of them are pensioners and simply cannot grasp the idea behind it, whilst others are maybe even unsure of all the assets that are in their name, especially when relating to financial values such as bonds or shares, or if their partner who took care of all money matters passed away.

Representatives at the Tax Authority agree that this new measure is generally a positive step and will help to combat fiscal fraud, particularly after Spain has signed a number of bilateral agreements to share tax-related information with other countries.

However, due to the rushed nature of the new legislation, experts (who were not consulted) have spotted a mountain of problems, grey areas and mistakes that as well as causing confusion, could detract away from the original intentions.

Tax inspectors have lamented that thousands of foreign residents are being made to declare assets that were obtained several decades ago. “The objective of this law was not to generate money from foreigners,” said one inspector.

This may be so, but the Government still refuses to make any allowances for the thousands of foreign residents in Spain, not even by extending the declaration period which finishes in four days, a petition made by many embassies, consulates and expatriate groups.

Although the aim is to spot tax fraud and recover money this way, the law has failed to include any mention of works of art, jewellery, luxury cars or any other singular assets that could be worth over 50,000 euro – many of which those wanting to funnel money out of the country invest in. To highlight this point, a retired British couple living on the island of Mallorca are obliged to declare a property that they jointly purchased 30 years ago; however, on the other hand, a Spaniard who owns a 500,000 euro yacht which he has moored in the harbour of Palma with the flag of Bermuda (tax haven) does not need to reveal his luxury asset. It is easy to see why so many foreigners are disgruntled at minimum.

Source: www.20minutos.es