The Spanish government has passed new legislation to prevent tax fraud whereby amongst other provisions any person, residing in Spain, who owns assets and rights located abroad on the 31st of December 2012 (bank accounts, values, real estate, insurance, etcetera) must present an informative tax declaration and give detailed information about these assets to the Spanish tax office. The Spanish residents have to fulfil this new obligation for the first time for the fiscal exercise 2012 in 2013. In case of non-fulfilment, the fines and consequences could be very serious.
What information has to be provided to the tax office?
The information to be provided to the tax officer refers to three different groups of assets and rights, located abroad, if the value of the assets belonging to each group exceeds jointly the amount of 50.000 euros.
1) Accounts in financial institutions, i.e. current accounts, saving accounts, fixed term deposits, etc. These must be identified completely, indicating also the opening and closing date, the balance on the 31st of December and the average balance of the last three-month period.
2) Values, rights, insurances and income owned or received abroad. Detailed information of such assets or rights has to be given, and especially the balance or value as of the 31st of December.
3) Real estate and rights on real estate. Information as to the: type, situation (country, city, street and number) and date and acquisition value has to be provided.
This information will include assets owned at any time of the year, even if they have been transferred before 31/12/2012.
Who has to present the tax declaration?
Any resident company or individual who owns assets abroad, or is the ultimate beneficiary even though they maybe registered in the name of someone else, i.e. a trustee has to present the declaration.
With regards to the first group of assets, i.e. accounts, etc, information will also have to be provided by any representatives, authorised persons or anyone who has power of attorney to operate and dispose of the money in the accounts.
No declaration has to be made with regards to assets which have been clearly identified in official accounts with detailed information of the Spanish resident owner (representative, beneficiary, etc), company or individual.
How can I lodge the assessment?
The assessment must be made solely online providing the tax payer has a digital certificate granted by the Revenue or does it through a representative who has such certificate.
When is the deadline to present the tax declaration?
The tax declaration hast to be presented exceptionally this year between the 1st of February and 30th of April 2013. In future years the declaration will have to be presented between 1st of January and 31st of March of each year.
Is this an annual tax declaration?
If the informative declaration has been presented one year, for the assets and rights of one group (because they exceed 50.000), the Spanish resident will ONLY have to present the declaration in the following years, if there has been an increase of more than 20.000 in relation to the declared value in the former declaration.
What are the consequences if the tax payer affected does not regularise now?
There will be serious sanctions and fines if the Spanish tax payer does not comply with this obligation, i.e. not presenting the declaration or presenting it incomplete, inexact or with false data, is a very serious infraction, which will be sanctioned with a fine of 5.000 Euros for each data or group of data omitted, with a minimum of 10.000 Euros. Moreover, if some assets or rights, located abroad, are not declared, and are later discovered by the Spanish Inland Revenue, they will be considered as capital gains in the last exercise where the statutory limitation period has not elapsed yet. Therefore the tax office can always enforce payment of tax for non declared assets with no statute of limitation.
Conclusion
It is very important that the persons, resident in Spain for tax purposes present the tax declaration about assets and rights, located abroad because, the consequences can be very serious and burdensome. Also the exchange of information and the assistance in matters of collection, mainly in the European Union, but also with the United States and other countries like Switzerland is working very efficiently and better each time and the Spanish tax office will have more capacity to investigate the ownership of assets in other countries.
The tax declaration in any case will provide information to the tax office as to the assets and income to be declared in the wealth and income tax declaration to be presented in June each year and will help to control the existence of fraud.
Please note the information provided in this article is of general knowledge only and is not to be construed or intended as substitute for professional legal advice.