Time to revise your fiscal strategy if you are Spanish resident with assets outside Spain.

New Asset Reporting Law puts you under scrutiny if you are you resident in Spain, and you do own any assets outside Spain worth over €50,000, since you are subject to the Tax Authority new rules on tax reporting, designed to to strengthen action to prevent and combat fraud. 
Being Spanish resident, or if you live in Spain more than 183 days in Spain (even if you have not obtained residence permit) you will be taxed for your worldwide income. This is not new at all. 
But, the bad news is that now you will need to declare them before 30th April 2013 under a new reporting requirement. Failure to do so, or doing it unproperly, would have very costly consequences.

Reporting obligation

Reporting must be done on a new official form by the end of the first trimester each year, although the deadline has been extended for reporting assets held as at 31st December 2012, so that your first deadline is 30th April 2013. For future years, the deadline will be 31st March for the previous 31st December.

Assets to be declared

If you own any of the following assets outside Spain, valued at €50,000 or more, you need to declare them. You can find here a non - exhaustive list of assets that should be stated:

• Accounts held with financial institutions 
• All types of immovable property (real estate) and rights over such property 
• Shares and securities 
• Life insurance policies 
• Temporary or lifetime income generated from the lending of money, rights or other assets (including property) to foreign entities. 

You need to declare these assets if you are the owner, the beneficiary, or an authorised signatory. This includes assets held by a trust or fiduciary.
If the value of your total assets in each class is less than €50,000, you are not obliged to report.

Once you have reported the assets the first time, you do not need to report them again each year if the value of all your reportable assets increased by less than €20,000. Where their value has risen by €20,000 or more, you will need to report them again by the next annual deadline.

Information to be reported

The value to be reported for accounts with financial institutions, shares, securities, life

insurance policies and other assets is that at 31st December.

In the case of accounts with financial institutions, you also need to report the average balance over the last three months of the year. This category includes all types of bank accounts and deposits, including credit accounts, in all currencies, regardless of whether you have the right to withdraw the funds or not.
For immovable property, the value is the cost of acquisition. You also need to provide information on the type of property, its location, and date of acquisition.

Consequences of not reporting

If you fail to report any assets as required by the new law, the costs will be very high once discovered. The undeclared income arising from the asset will be deemed to arise in the last tax year which is not statute barred – four years in most cases. This effectively abolishes the statute of limitations.

You would have to pay all of the following: 

• Income tax at the income tax scale rates where the top rate is over 50% (so up to 52%, or 54% in Andalucía and 56% in Cataluña; even if the income would normally be taxed under the savings income regime). 
• Late payment interest for the last four years. 
• Penalties, which can be as high as 150% of the total tax due on the asset. 
• A fine of €5,000 per each piece of unreported data, with a minimum of €10,000. 

If the tax defrauded exceeds €120,000, it would be even considered a criminal offence. 

When you submit your declaration form by 30th April, you need to be sure you have filled it in correctly and included all the overseas assets that you should have, with the right values. Any mistakes or omissions, even accidental, could prove very costly.

So, clearly it is the time to revise your fiscal strategy if you are Spanish resident or you are planning to be.


Javier Herrera Llamas