# Modelo 720 & UK Pension Pots



## Williams2 (Sep 15, 2013)

Just out of interest how does the Agencia Tributaria regard British Expats UK Pension pots when it comes to the in excess
of 50,000 Euro's rule for the Modelo 720 declaration.

As Expats could have one or any number of British Pension Pots built up in former employee pension schemes ( over the years ) many of which will produce a forecast of your annual pension at age 60 to 65 but will rarely give you the Cash Equivalent Transfer Value of the Pension Pot unless you ask for it. Normally at a time when your looking at the merits of consolidating your pension as opposed to leaving it where it is.

As all Pension Providers are obliged to provide a CETV on request and one or more of the Pension Pots might well be
in excess of the 50,000 Euros - are these declarable on Modelo 720 even though they are held ( in your name ) by the Pension Trustees.

Finally say you take the CETV from the Pension Pot to place it in another Pension Pot, etc, etc. Would that be liable to Capital Gains Tax in Spain even though you never see the money yourself, as it's simply transferred from one
Pensions provider to another.


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## number9 (Dec 4, 2021)

after moving to Spain we have been asked to complete a modelo 720 1st quarter next year. Interested in how people represent DC or SIPP pensions on that form especially if the person is below 55 and can't access the funds. This should be a common question.


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## Barriej (Jul 23, 2012)

Williams2 said:


> Just out of interest how does the Agencia Tributaria regard British Expats UK Pension pots when it comes to the in excess
> of 50,000 Euro's rule for the Modelo 720 declaration.
> 
> As Expats could have one or any number of British Pension Pots built up in former employee pension schemes ( over the years ) many of which will produce a forecast of your annual pension at age 60 to 65 but will rarely give you the Cash Equivalent Transfer Value of the Pension Pot unless you ask for it. Normally at a time when your looking at the merits of consolidating your pension as opposed to leaving it where it is.
> ...



I can answer a couple of points.

First off any pension pot not being drawn on (and even drawn) just gets declared as to its value on the 31st Dec of the year (so my 720 will go in early 2022) so I get the amount in the pot as the figure.
Its not a surrender value because they are only interested in the amount in the pot(s) as of 31/12 (although I have that as I am with Transact who provide so much detail I can't use) 

The forecast means nothing again its what is in the pot at the time of reporting. As long as all your pension pots add up to more than €50,000 together they have to be reported.
Shares the same (if you have £10k) only, no reporting. Less than €50,000 in premium bonds the same.

I could cheat as my pension is in a stock/shares/property/cash wrapper and between them none of the individual parts add up to €50,000 but I will declare it anyway. Although its easier just to be honest, Im not a billionaire and a couple of hundred in taxes aint going to bother me.

As far as Ive been advised no tax is due until you start drawing your pension. We have only been here a year so don't have any info.
I am 59 and started taking a fixed sum on the 1st Jan 2021 and will pay tax on that less my and my wife's allowances in 2022. I have increased the drawdown for 2022 so will pay more tax in 2023.

Oh interest gained on savings and 'winnings' from premium bonds will have to be declared as well.
We also got a 'bonus' of €100 paid to our bank accounts and these also need to be declared.

I would seek professional advice when doing the first 720 and normal tax return and then see if its worth doing on your own or leaving it to someone else. I did our returns in the Uk including Vat for years but would not think twice about using professional help in a country with a different system and language.

Oh make sure you get the form from the Agencia Tributaria to allow you to get a UK zero tax code, that way when you come to take your pension its only taxable in the Uk. I will pay some tax to the Uk but will have to get it refunded later in the year.


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## number9 (Dec 4, 2021)

Barriej said:


> I can answer a couple of points.
> 
> First off any pension pot not being drawn on (and even drawn) just gets declared as to its value on the 31st Dec of the year (so my 720 will go in early 2022) so I get the amount in the pot as the figure.
> Its not a surrender value because they are only interested in the amount in the pot(s) as of 31/12 (although I have that as I am with Transact who provide so much detail I can't use)
> ...


thanks for that. Do you advise the high level headline value figure or do you break it down into funds/ shares/ cash held in the wrapper? We use an advisor but I wasn't really sure if they were on the ball. They tell me the SIPP needs to be classed as type 2 on the form and shown as "_Quoted Shares, Bonds, etc; Unquoted Shares, Other Assets of this type which have an economic value/redemption value_." does this sound right?

Does the pension value get rolled into wealth tax do you know, even if the person can't draw on the pension yet?


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## Barriej (Jul 23, 2012)

david.jonathan.wren said:


> thanks for that. Do you advise the high level headline value figure or do you break it down into funds/ shares/ cash held in the wrapper? We use an advisor but I wasn't really sure if they were on the ball. They tell me the SIPP needs to be classed as type 2 on the form and shown as "_Quoted Shares, Bonds, etc; Unquoted Shares, Other Assets of this type which have an economic value/redemption value_." does this sound right?
> 
> Does the pension value get rolled into wealth tax do you know, even if the person can't draw on the pension yet?


Nope was just asked by our advisor to get the amount in the pot as of 31st Dec. The Spanish tax office publish a UK£ to € price that it gets converted by (so today I got €1.165 to the £ when I transferred by pension over) so the fund will be bigger. (£100,000 = €116,500 today) lets say. 
Don't know about SIPP as I have a straight forward personal private pension. 

As to wealth tax I have no idea as all the money in mine was saved by me over the course of 30 years, no company, no government etc. And its at a rate I will never get to unless I win the million on the premium bonds.. And even than after Spain has taxed me on it there wont be enough left.. 
Think here its €700,000 before tax is due.


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## paulhe (Jan 2, 2018)

Barriej said:


> Nope was just asked by our advisor to get the amount in the pot as of 31st Dec. The Spanish tax office publish a UK£ to € price that it gets converted by (so today I got €1.165 to the £ when I transferred by pension over) so the fund will be bigger. (£100,000 = €116,500 today) lets say.
> Don't know about SIPP as I have a straight forward personal private pension.
> 
> As to wealth tax I have no idea as all the money in mine was saved by me over the course of 30 years, no company, no government etc. And its at a rate I will never get to unless I win the million on the premium bonds.. And even than after Spain has taxed me on it there wont be enough left..
> Think here its €700,000 before tax is due.


As an aside, I wonder if Spain is the only tax jurisdiction that taxes 'winnings' from lottery or other sources such as Premium Bonds? It is not an emolument and might therefore be unconstitutional. In Australia and UK there is no such tax payable. Not that it ever worries me as the most I have 'won' from ERNIE is 25 quid!

Paul


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## Barriej (Jul 23, 2012)

paulhe said:


> As an aside, I wonder if Spain is the only tax jurisdiction that taxes 'winnings' from lottery or other sources such as Premium Bonds? It is not an emolument and might therefore be unconstitutional. In Australia and UK there is no such tax payable. Not that it ever worries me as the most I have 'won' from ERNIE is 25 quid!
> 
> Paul


The thing with premium bonds, they are an unknown thing in most places, when you tell people you have personally 'lent' your country money, the looks you get are mental. They look at you even weirder when you tell that each £ could win 1 million a month. And like you I've had the odd £25...nothing greater....some of my bonds are dated from 1963 when you could buy £1 at a time.

At the end of the day like bank or building society interest its classified as unearned income and governments love to tax people. 
Its only the very rich who seem to complain about how unfair tax is and spend loads of money trying to not pay it.

I had conversations with a now dead fantasy author who was worth around 70 million and he got quite worked up when I suggested a 80% tax bracket for those with an income of 1 million or more. He couldn't see that even paying 80% would still leave him with around 8x the annual pay of an ordinary worker.


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## paulhe (Jan 2, 2018)

Barriej said:


> The thing with premium bonds, they are an unknown thing in most places, when you tell people you have personally 'lent' your country money, the looks you get are mental. They look at you even weirder when you tell that each £ could win 1 million a month. And like you I've had the odd £25...nothing greater....some of my bonds are dated from 1963 when you could buy £1 at a time.
> 
> At the end of the day like bank or building society interest its classified as unearned income and governments love to tax people.
> Its only the very rich who seem to complain about how unfair tax is and spend loads of money trying to not pay it.
> ...


Agreed, but building society interest is an emolument - earned income.


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## Turtles (Jan 9, 2011)

Either I'm wrong, or there is a gigantic fine waiting for me. There is *no* requirement to declare foreign pension funds on the Modelo 720 if you have not yet accessed them. I am also below 55 and have never declared my SIPP.


https://www.europeaccountants.com/blog/modelo-720-declaration-of-foreign-assets-technical-details/





Agencia Tributaria: Nueva sede electrónica de la Agencia Tributaria


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## number9 (Dec 4, 2021)

Turtles said:


> Either I'm wrong, or there is a gigantic fine waiting for me. There is *no* requirement to declare foreign pension funds on the Modelo 720 if you have not yet accessed them. I am also below 55 and have never declared my SIPP.
> 
> 
> https://www.europeaccountants.com/blog/modelo-720-declaration-of-foreign-assets-technical-details/
> ...


My advisors are saying that as the SIPP has a value/current valuation derived from the underlying funds/ cash/ shares then it must be reported even if its not yet accessible.

They say that if it doesn't have a value (I'm taking this as different to a CETV or transfer value) and it's not accessible then it doesn't need to be declared.


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## Barriej (Jul 23, 2012)

Turtles said:


> Either I'm wrong, or there is a gigantic fine waiting for me. There is *no* requirement to declare foreign pension funds on the Modelo 720 if you have not yet accessed them. I am also below 55 and have never declared my SIPP.
> 
> 
> https://www.europeaccountants.com/blog/modelo-720-declaration-of-foreign-assets-technical-details/
> ...


That page you linked to was in 2016.
The updated Feb 2021 says this.

*DECLARATION OF FOREIGN ASSETS – MODELO 720
DUE BY 31ST MARCH*
Tax residents are also obliged to report any foreign assets within the categories of deposits, investments and life assurance and property where the total amount is at least 50,000 euros. Although submission of this form is for informative purposes only, and not tax collection, Hacienda can charge extortionate fines if you fail to submit, file late, or declare incorrect information.



https://www.europeaccountants.com/blog/spanish-residents-what-is-the-modelo-720/



Our tax advisor (who is Spanish) said it doesn't hurt to report ALL of your assets, even if they are not accessible yet. As if you wait until you start taking the pension they may (and will be said) be questions.
He has never had anyone fined but he said that those cases he's has had required the client to provide shed loads of paperwork showing where the money had been.

Not worth it in my view, you have to declare property values even if you never plan to ever sell it. A pension pot is really no different.
In the page I linked to it even asks for life insurance policies.

And as an aside I have to list the half of my fathers house because its in trust to me and my sister. If it was just left to me in his will, nothing would need to be done until I inherit...


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## Turtles (Jan 9, 2011)

It's certainly true that you can declare assets just in case, and I will admit that I paid more attention to the rules when M720 was a new thing that we all needed to learn about. More recently I've just been updating what I had previously declared, and I am still some years away from taking any pension. However, the AEAT link is clear that a pension does not need to be declared, if it a) has not been activated and b) qualifies as a pension under the Spanish definition. Products that include life assurance for example, may count as a pension abroad, but not in Spain, and would therefore need to be declared. 
I would really like this awful, confusing and illegal piece of bureaucracy to disappear. I think it really came into being to catch out Spanish politicians with hidden stashes in Andorra, not the rest of us who are just trying not to get into trouble for having perfectly standard financial arrangements.


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## kaipa (Aug 3, 2013)

I think people are worrying unnecessarily. As you say no one is going to start fining people because their asset might have grown. Technically yes it might be possible for a historic investigation but the reality is that would be in cases where there was suspicion of deliberate deception and with large sums probably linked with other financial irregularities. My experience of tax investigations is that normally people dont face huge fines etc unless they are evidently involved in serious activities which are considered criminal. If an asset increased in value but no income was taken from it I really dont think it would warrant an investigation. Tax will be paid when the assest is realized and most likely transferred to Spain. Everyone tries to manage their affairs to minimize their tax exposure and the tax man is not out to get everyone who hasn't dotted the Is and crossed the Ts


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## kaipa (Aug 3, 2013)

Barriej said:


> That page you linked to was in 2016.
> The updated Feb 2021 says this.
> 
> *DECLARATION OF FOREIGN ASSETS – MODELO 720
> ...


Spain has been told by the ECJ that the size of fines are unjustifiable and will not be upheld. The whole thing has pretty much been swept under the carpet. The M720 was introduced as a measure to attack serious criminal money laundering not jail OAPs!!. You should still do it as it simply allows the tax man to know you have assests and that any movement of them might mean tax issues. It is nothing more than that. All this stuff about thousand euro fines because you spelt your name wrong or a date was wrong is the stuff of myth. Usually it starts with " A friend of mine...."


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## MataMata (Nov 30, 2008)

If in doubt, declare!


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