Spain


Expats in Spain Need to Declare Overseas Assets by End of March

by Ray Clancy on March 4, 2015

Expats living in Spain need to submit their annual declaration of overseas assets by the end of March and exchange rates could have a big impact this year.

Anyone who is resident in Spain needs to submit the Modelo 720 form but it can be complicated depending on assets owned. Expats with investments in Sterling, for example, need to take exchange rate into account, which may mean declaring assets people did not expect to.

aspain-thumbnailIf you have previously submitted a form you only need to declare assets if they have grown a certain amount, or if you have sold them, according to the latest advice from international tax and wealth management firm Blevins Franks.

It points out that there are three reporting categories, based on bank accounts, investments and immovable property, and you have to report all assets in a particular category if the value of your total assets in that category amounts to over €50,000 but this only applies to assets located outside Spain.

In most cases, assets are valued using the wealth tax rules as at 31 December each year. For assets held within financial institutions, for example bank accounts, you also need to declare the average balance over the last three months of the year.

The firm also points out that you need to report the value of the assets in Euros, so any investments held in Sterling, US Dollars, Swiss Francs etc, need to be converted. The rate to be used is that as at 31 December of the relevant year. On 31 December 2014 the £/€ exchange rate was 1.28.

Blevins Franks believes that exchange rates may play an even bigger part this year as the Euro has weakened. At the end of January we saw an exchange rate of 1.34, making £250,000 worth €335,000. This is already €15,000 more than the value at the end of last year.

‘While we cannot speculate now what the exchange rate will be at the end of the year, this shows what a difference exchange rate movements can make. It is something you need to be aware of and plan for if necessary,’ said a spokesman.

The introduction of the obligation to report all overseas assets in Spain has been a huge change for expats. Many are paying more tax as a result, particularly those who declared assets for the first time, or incorrectly declared them previously.

These assets will now be assessed for wealth tax, and any income they produce for income tax, and you have to declare them accordingly. Combined with higher taxes, some expats have considered leaving Spain, the firm says.

‘However Spain actually remains a tax efficient country for British retired expats if you take specialist advice. Form 720 need not necessarily be such a concern either. You should review your assets now to make sure they are in the best structures going forward,’ the spokesman added.

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