# Modelo 720 - first fine imposed



## Lynn R (Feb 21, 2014)

One for all those who believed that the Modelo 720 was aimed at expats.

According to a full page advert from Blevins Franks in today's Sur in English, the first fine under Modelo 720 has now been imposed.

The taxpayer, a retired Spanish national, had held assets in Switzerland (shares and unit trusts) for 20 years. He never declared them on Spanish tax returns. He declared these assets voluntarily on Form 720 but submitted it 15 months late. As a consequence, an unrealised capital gain of €340,000 was imputed on his 2012 income tax return. This resulted in tax of €169,300 plus a late payment penalty and interest of €16,016. A further penalty of 150% of the tax due brought the total penalties and interest to €269,966. Therefore, the total sum of penalties was €439,266.

The taxpayer's Spanish assets, including one eighth of his home and two bank accounts have been frozen unil a final decision is reached

I still maintain that the only people who had anything to fear from the introduction of the Modelo 720 were those who had failed to declare the assets they held abroad on previous years' income tax returns, and this bears that out.

Of course, as the advert points out, the European Commission recently concluded that the Modelo 720 MAY infringe European fundamental rights, and is currently undertaking further investigations into the fines and penalties to establish if they are disproportionate.


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## Rabbitcat (Aug 31, 2014)

Scarey stuff Lynn.

Infact even though you worked my liability out to be zero I may actually just give them a few quid to keep on the safe side!!!

Very serious fines


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## Isobella (Oct 16, 2014)

Has this case been in the news and named or has it just been mentioned by Blevins Franks?
.


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## Lynn R (Feb 21, 2014)

Isobella said:


> Has this case been in the news and named or has it just been mentioned by Blevins Franks?
> .


I haven't seen any press reports about it other than this advert.


But - seek and ye shall find.

http://www.abc.es/economia/20150602/abci-hacienda-declaracion-bienes-exterior-201506021934.html


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## CapnBilly (Jun 7, 2011)

Lynn R said:


> I haven't seen any press reports about it other than this advert.
> 
> 
> But - seek and ye shall find.
> ...


It was reported in El Pais about a month ago. It seemed to me from reading the report that he didn't report in the correct year. If he had, then based on my understanding the fines would have been for a late return, and far lower. If that's the case then he was very badly advised.


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## gus-lopez (Jan 4, 2010)

& if he didn't see that coming & ensured there was nothing in them then he was even more stupid ? :wave:


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## el romeral (May 8, 2012)

Ridiculous fines from a country desperately trying to rake in money by fair means or foul. What do they do, think of a number, double it and add a couple of zeros on the end for good measure?


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## Lynn R (Feb 21, 2014)

el romeral said:


> Ridiculous fines from a country desperately trying to rake in money by fair means or foul. What do they do, think of a number, double it and add a couple of zeros on the end for good measure?


A country which has just cut the basic rate of income tax by 5.75% (from 24.75% to 19%) and some of the higher rates of tax by even more than that. Desperately trying to rake in money by fair means or foul? I don't think so - just trying to make sure that those who would cheat the system and their fellow taxpayers are punished, and if the fines and penalties weren't draconian, we all know that those so inclined would just carry on hiding their money away and laughing up their sleeves at the rest of us.


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## Lynn R (Feb 21, 2014)

If this person had declared the income from his shares and unit trusts held in Switzerland for the past 20 years, and had declared the existence of these assets on the Modelo 720 within the prescribed timescale instead of 15 months late, then he would not have incurred any of these fines or penalties. Yes or no?


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## Rabbitcat (Aug 31, 2014)

If he had been as poor as a mugged church mouse -like me -and got Lynn to check his tax liabilities he wouldn't ever have owed a penny. Pays to be dirt poor!!


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## skip o (Aug 1, 2011)

Spain seems to love having ridiculously high penalties that they only occasionally enforce, so most citizens just ignore the law altogether. 

The penalties in that new PP gag law are ridiculous.
The minimum penalties for making an error on the 720 are ridiculous.
Apparently there used to be a 1000+ euro fine for skateboarding in Barcelona, but you would never know it given the fact that skateboarders skate as fast as they want, wherever they want.

Spain is like the adult who is always screaming at their child who just ignores them.


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## Lynn R (Feb 21, 2014)

Rabbitcat said:


> If he had been as poor as a mugged church mouse -like me -and got Lynn to check his tax liabilities he wouldn't ever have owed a penny. Pays to be dirt poor!!


Kindly desist from any further advertising - I don't intend to be inundated with similar requests!

If the fines and penalties didn't add up to a lot more than the amount of tax people evade by not declaring, what would be the point of having them? The idea is that they act as a deterrent, and if they don't catch everybody at least there is the risk that they will catch an individual which might make some of these thieves, because that is what they are, think twice. Spain is far from being the only country now making serious efforts to catch up with tax evaders, hence the multinational agreements now in force to end banking secrecy and automatically exchange information. I hope we read many more of these stories in the future.

7,000 such cases are under active investigation arising from Modelo 720 issues, according to Hacienda, so there is every chance that we will.


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## Rabbitcat (Aug 31, 2014)

Point take 
Lynn has now retired.


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## Lynn R (Feb 21, 2014)

Rabbitcat said:


> Point take
> Lynn has now retired.


Lynn retired nearly 9 years ago. Work is a 4 letter word as far as I'm concerned.


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## mrypg9 (Apr 26, 2008)

It seems from this case that Modelo 720 has served its purpose....I said when it was introduced that it was for those wealthy tax dodgers drinking in the Last Chance Saloon, not British immigrants with fairly modest assets.
Let's hope thy catch a few more, those of any nationality, who suck the blood out of the rest of us by not declaring tax productive overseas assets.

Incidentally, I found these interesting figures:

Percentage of total tax revenue not collected:

Germany: 2-3%
Greece: 89.5%

Says it all.


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## gsounds (Mar 17, 2014)

My wealth manager put all my savings into a Spanish compliant bond. They're growing tax free, and the funds he's selected are making great gains. As they are reported automatically to hacienda they don't need to be put into modelo 720. Win win win!


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## Rabbitcat (Aug 31, 2014)

Having a " wealth manager" sounds cool


Could you ask him how should we invest our € 9.42 savings ?


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## mrypg9 (Apr 26, 2008)

gsounds said:


> My wealth manager put all my savings into a Spanish compliant bond. They're growing tax free, and the funds he's selected are making great gains. As they are reported automatically to hacienda they don't need to be put into modelo 720. Win win win!


Well, if your 'wealth' is invested in any kind of overseas assets and remains below the €50k threshold then there's no reporting requirement.
Income from assets is irrelevant to Modelo 720 which involves the reporting of assets not income derived from them which would and should be declared to hacienda anyay.


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## snikpoh (Nov 19, 2007)

mrypg9 said:


> Well, if your 'wealth' is invested in any kind of overseas assets and remains below the €50k threshold then there's no reporting requirement.
> Income from assets is irrelevant to Modelo 720 which involves the reporting of assets not income derived from them which would and should be declared to hacienda anyay.




If your assets are in a Spanish compliant wrapper (bond), then they do NOT need to be declared on the 720 as Hacienda already know about them. I have this from Hacienda themselves.

The investment company themselves report any income from the bond directly to Hacienda so that the individual doesn't have to.


However, I DID report them on 720 but that's simply because I'm "belts 'n' braces" when it comes to tax etc.


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## mrypg9 (Apr 26, 2008)

snikpoh said:


> If your assets are in a Spanish compliant wrapper (bond), then they do NOT need to be declared on the 720 as Hacienda already know about them. I have this from Hacienda themselves.
> 
> The investment company themselves report any income from the bond directly to Hacienda so that the individual doesn't have to.
> 
> ...


I know...we do the same with our 'wealth'. But surely you must still declare these assets?
As you do..


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## snikpoh (Nov 19, 2007)

You don't have to but I chose to. Normally you would just let the company sort it out with Hacienda - simples!


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## mrypg9 (Apr 26, 2008)

snikpoh said:


> You don't have to but I chose to. Normally you would just let the company sort it out with Hacienda - simples!


It took us several years to find a competent, trustworthy fund manager and accountant...


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## Overandout (Nov 10, 2012)

Lynn R said:


> If this person had declared the income from his shares and unit trusts held in Switzerland for the past 20 years, and had declared the existence of these assets on the Modelo 720 within the prescribed timescale instead of 15 months late, then he would not have incurred any of these fines or penalties. Yes or no?


My understanding is that the answer to your "yes/no" question is: It depends (at the risk of sounding like a lawyer, which I am not!)

The modelo 720, and accompanying law that allows its use, changed various concepts in tax reporting.

This individual has been caught out on only 2 of the possible infractions:

1) Late reporting of assests held overseas
2) Tax evasion on income generated from the investments

But even if you (or anyone else) declares the income from investments in your declaracion de la renta and presents the modelo 720 on time (meaning that you would not have committed the same infractions), you could still be investigated to see where the origin of the investment came from.

Lets imagine that, as a tax resident of Spain, you suddenly received a lump sum abroad, could be through the sale of an artwork, a prize in a competition, an inheritance or whatever. But you chose to keep the sum in an account abroad and did not delare the capital gain in your declaracion de la renta or other appropriate report for the tax year in which you obtained the sum.

Previously, the statute of limitation in Spain meant that after 7 years, you were in the clear. You could have gotten away with it.

Now, however, the statute of limitation has been abolished and Hacienda can go as far back as they like to trace the origin of the money, and penalise you accordingly.

I do actually know people who have been advised NOT to report their foreign assets on the 720 by "financial advisors" because they did not declare the income at the time!!

Advice I would not follow and condone of course.


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## Lynn R (Feb 21, 2014)

Overandout said:


> But even if you (or anyone else) declares the income from investments in your declaracion de la renta and presents the modelo 720 on time (meaning that you would not have committed the same infractions), you could still be investigated to see where the origin of the investment came from.
> 
> Lets imagine that, as a tax resident of Spain, you suddenly received a lump sum abroad, could be through the sale of an artwork, a prize in a competition, an inheritance or whatever. But you chose to keep the sum in an account abroad and did not delare the capital gain in your declaracion de la renta or other appropriate report for the tax year in which you obtained the sum.


The principle remains the same, though, surely? Anyone who declares everything they are required to do, and pays the tax they are required to pay, has nothing to fear by way of fines or penalties.


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## baldilocks (Mar 7, 2010)

Rabbitcat said:


> Having a " wealth manager" sounds cool
> 
> 
> Could you ask him how should we invest our € 9.42 savings ?


D*mned plutocrat!


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## Isobella (Oct 16, 2014)

I know there is a wealth tax in Spain, what amount does it kick in?


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## Lynn R (Feb 21, 2014)

Isobella said:


> I know there is a wealth tax in Spain, what amount does it kick in?


https://www.blevinsfranks.com/News/...-expatriates?gclid=CLba0IP338YCFVTMtAodmn4BSQ


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## mrypg9 (Apr 26, 2008)

Rabbitcat;
Could you ask him how should we invest our € 9.42 savings ?[/QUOTE said:


> I have given this matter great thought on your behalf and have come up with the suggestion that you buy Rhodes.
> Or the Parthenon.
> Great tourist attractions and going cheap.
> I give this advice gratis, from sheer kindness, no fee required.


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## Lynn R (Feb 21, 2014)

mrypg9 said:


> I have given this matter great thought on your behalf and have come up with the suggestion that you buy Rhodes.
> Or the Parthenon.
> Great tourist attractions and going cheap.
> I give this advice gratis, from sheer kindness, no fee required.


Can you award yourself the title of "wealth manager" now?


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## Rabbitcat (Aug 31, 2014)

Thanks for that. But after I buy Rhodes what do I do with the remaining €5.31?


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## mrypg9 (Apr 26, 2008)

Rabbitcat said:


> Thanks for that. But after I buy Rhodes what do I do with the remaining €5.31?


Do as Lynn says and give it to me.
I promise you I have a scheme which will deliver great wealth from this small start.
You will shortly receive details of how your 5euros can be turned into millions, on receipt of your 5 euros as down payment and a further 100 euros for details of this once-in-a-lifetime amazing opportunity to become rich beyond your wildest dreams.

I am happy to be able to extend this great offer to Lynn, Baldy, PW, anyone who wants to be a multi-millionaire.
Just send me 100 euros....


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## mrypg9 (Apr 26, 2008)

lynn r said:


> can you award yourself the title of "wealth manager" now?


:d:d:d


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## Rabbitcat (Aug 31, 2014)

mrypg9 said:


> Do as Lynn says and give it to me.
> I promise you I have a scheme which will deliver great wealth from this small start.
> You will shortly receive details of how your 5euros can be turned into millions, on receipt of your 5 euros as down payment and a further 100 euros for details of this once-in-a-lifetime amazing opportunity to become rich beyond your wildest dreams.
> 
> ...



I am soooo in there!!

My €4.73 life savings is on its way


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## baldilocks (Mar 7, 2010)

mrypg9 said:


> Do as Lynn says and give it to me.
> I promise you I have a scheme which will deliver great wealth from this small start.
> You will shortly receive details of how your 5euros can be turned into millions, on receipt of your 5 euros as down payment and a further 100 euros for details of this once-in-a-lifetime amazing opportunity to become rich beyond your wildest dreams.
> 
> ...


Sorry, Mary, but how do you think we got *our* wealth?


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## mrypg9 (Apr 26, 2008)

baldilocks said:


> Sorry, Mary, but how do you think we got *our* wealth?


Sorry, Baldy, I forget your family name was Ponzi....


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## Rabbitcat (Aug 31, 2014)

I just can't wait!!
Thanks to my new wealth manager Mrypg, I am gonna be rich- rich I tells ya!!!

Well I will be buying a nice Penthouse in upmarket Javea, a beach front pad in Denia and a country villa near Frigiliana with my earnings on my investment.

I will of course not be communicating anymore with any of you lesser plebs cos once I am rich I will move in different circles- may even start up my own Spain expat website for us rich owners.


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## mrypg9 (Apr 26, 2008)

Rabbitcat said:


> I just can't wait!!
> Thanks to my new wealth manager Mrypg, I am gonna be rich- rich I tells ya!!!
> 
> Well I will be buying a nice Penthouse in upmarket Javea, a beach front pad in Denia and a country villa near Frigiliana with my earnings on my investment.
> ...


Err...I'm having a bit of a cash flow problem at the moment....just a temporary glitch...but I'd appreciate you sendingmthat €100 ...like NOW.
And when I have revealed my carefully- thought- out plan for beingrich beyondyour dreams...you will not regret it.

By the wáy, to the person who saw me outside Burger King in that old SEAT.....my Bentley is having minor repairs and my garage had run out of good courtesy cars. I was at Burger King as I forgot to reserve my usual table at the Marbella Club.


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## Lynn R (Feb 21, 2014)

Rabbitcat said:


> I just can't wait!!
> Thanks to my new wealth manager Mrypg, I am gonna be rich- rich I tells ya!!!
> 
> Well I will be buying a nice Penthouse in upmarket Javea, a beach front pad in Denia and a country villa near Frigiliana with my earnings on my investment.
> ...


Well, that's just typical - ingrate!

Can we prosecute you now for calling us plebs? Maybe we can get rich ourselves that way, then we won't speak to you anymore either. Yah boo sucks to you.


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## Rabbitcat (Aug 31, 2014)

Now now Lynn. You said there were houses 200m from you for sale........new neighbour!!!!


Meanwhile I have made a chart of all the things I intend to buy. I have created it on sticky back plastic. Have any of you poor people any suggestions as to where I should stick it?


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## Lynn R (Feb 21, 2014)

Rabbitcat said:


> Now now Lynn. You said there were houses 200m from you for sale........new neighbour!!!!


No, no, you misunderstood. They have all been sold now to other British people, but I' quite sure they wouldn't appeal to somebody as rich as Croesus like wot Mary is going to make you.


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## baldilocks (Mar 7, 2010)

Rabbitcat said:


> Now now Lynn. You said there were houses 200m from you for sale........new neighbour!!!!
> 
> 
> Meanwhile I have made a chart of all the things I intend to buy. I have created it on sticky back plastic. Have any of you poor people any suggestions as to where I should stick it?


Two houses next to me are for sale but, I doubt you'd want to live here.


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## Rabbitcat (Aug 31, 2014)

Your town looks amazing sir
Alas I reckon I would need serious Euro to buy a good spot there


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## mrypg9 (Apr 26, 2008)

To all my investors....due to unforeseen circumstances I am going to have to disappear - I mean relocate- for a while. Very quickly.
Does anyone know if you need a visa for Honduras?
I will forward details of my new Idiots' Guide to Wealth Management', available online, e- mail at [email protected]
Yours for a modest fee of €100. 
Must go, got. traces to cover.....I mean bags to pack..


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## baldilocks (Mar 7, 2010)

Rabbitcat said:


> Your town looks amazing sir
> Alas I reckon I would need serious Euro to buy a good spot there


Nope, it is a realistic place, not in fairytale land.


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## gsounds (Mar 17, 2014)

Rabbitcat said:


> Having a " wealth manager" sounds cool
> 
> 
> Could you ask him how should we invest our € 9.42 savings ?


Ah yes, in hindsight it does make me sound a bit flash!

He says you should invest your €9.42 in a fish and chip supper on Friday. That's professional advice at its best!

So to clarify, yes my savings were above the 50k allowance which is why we put them into an offshore bond. Weighed it all up in terms of advantages/disadvantages and very happy with the decision.

No need to declare for mod 720 as others have mentioned because it's spanish compliant so already reports to hacienda, but does allow for tax free growth.

And final response, yup it takes a bit of effort to find a good Wealth Manager/financial advisor, whatever you wanna call them. Very happy with the guy we're using and no, they're not from the firm being regularly advertised on here!! ;-)


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## mrypg9 (Apr 26, 2008)

gsounds said:


> Ah yes, in hindsight it does make me sound a bit flash!
> 
> He says you should invest your €9.42 in a fish and chip supper on Friday. That's professional advice at its best!
> QUOTE]
> ...


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## baldilocks (Mar 7, 2010)

mrypg9 said:


> gsounds said:
> 
> 
> > Ah yes, in hindsight it does make me sound a bit flash!
> ...


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