Last Updated on 27th October 2026
Expats who become tax residents in Spain naturally need to adjust to a different tax system. However, for many foreign nationals, the changes to their reporting obligations and how these extend beyond their Spanish income can come as a surprise.
One of those requirements is the Modelo 720 declaration. This applies to specific types of overseas assets held by Spanish tax residents. Although filing the declaration doesn’t necessarily create a tax liability, it is an important compliance obligation and overlooking it could lead to unnecessary issues.
Understanding when Modelo 720 applies, how Spanish tax residency is determined and when overseas assets need to be reported can help expats avoid unanticipated problems, while ensuring their wider financial planning remains in line with their requirements.
What Is the Spanish Modelo 720 Declaration?
Modelo 720 is an asset declaration requirement that applies to Spanish tax residents. It is not a tax return, but a submission that expats may, depending on their tax residency, be expected to submit annually.
They may be required to declare overseas assets where the combined value within any of the three reporting categories exceeds €50,000:
- Overseas bank accounts, including current and savings accounts
- Investments, such as shares, ETFs, investment funds and insurance bonds
- Foreign property assets, including houses, apartments and land
Importantly, the €50,000 threshold applies separately to each category, rather than to individual assets held overseas, or to an expat’s total wealth.
Spanish domestic tax residence is generally determined by whether an individual spends more than 183 days in Spain during the calendar year or has their main base or centre of economic activities or interests in Spain. A rebuttable presumption may also apply where a non-separated spouse and dependent minor children habitually reside in Spain. Where an individual is considered resident in Spain and another treaty country, the relevant double tax treaty may apply separate tiebreaker tests.
Expats who have connections to more than one country may find that determining their tax residency requires a careful review of their overall circumstances.
When and Why Does Modelo 720 Need to Be Submitted?
Modelo 720 doesn’t necessarily need to be filed every year depending on the assets declared in the previous year. Expats who have already submitted the declaration may, though, need to repeat the process if:
- The value of their assets in any new category exceeds €50,000
- Previously declared assets have increased in value by €20,000 or more
- Assets have since been sold or otherwise disposed of
Declarations need to be submitted annually between January 1 and March 31, covering the assets held overseas as of December 31 the year before.
This matters because expats living in Spain may have a wide combination of assets and products. They could include UK bank accounts, certain investments, overseas property and jointly owned assets. Foreign pension rights are not generally reportable unless a covered contingency has arisen or the arrangement falls within a reportable insurance category.
Reviewing all of those products before a person becomes a Spanish tax resident can be useful. While filing a declaration isn’t the same as submitting a tax return, it’s often a prompt for expats to recognise that reviewing the structures of their overseas assets, where their income arises, and how their investments will be treated for tax purposes in Spain may be important.
Common Areas Expats May Need to Review
Expats who are unsure whether their assets will exceed the Modelo 720 threshold can see this as an opportunity to reassess their portfolios and savings.
Depending on their circumstances, they might wish to:
- Evaluate their existing UK investment portfolios, and confirm whether these remain consistent with their priorities and income expectations
- Decide to review overseas property ownership, currency exposure, retirement and succession plans
- Reassess their Spanish and overseas tax reporting obligations
Expats may be able to use this process to look at whether existing arrangements remain suitable once they become Spanish tax residents.
For example, tax-efficient UK investment products may not be treated in the same way in Spain. Likewise, retirement plans, property ownership and succession arrangements might all need to be reviewed to help expats make informed decisions about which overseas assets to retain, and whether changes may be appropriate.
What Happens if Spanish Expats Don’t Submit the Modelo 720?
Non-submission penalties have changed considerably following decisions passed by the European Court of Justice. This judgement means that previously steep penalties, including retrospective fines based on 150% of asset values, are no longer in place.
However, failure to comply or submitting inaccurate information can still lead to penalties, additional enquiries from the tax authorities, and unnecessary complications.
According to the Spanish Tax Agency’s Form 720 guidance, the former special penalty regime has been replaced by the general Spanish tax penalty rules. The amount will depend on whether the issue involves late or non-filing, or incomplete or inaccurate information, and penalties may be assessed separately for each reporting category.
Penalties for non-filing or imprecise Modelo 720 reports now:
- Follow the general Spanish tax rules
- Lead to enquiries from the Spanish tax authorities, given that reporting remains mandatory
As with any obligatory tax filing task, it remains far better for foreign nationals living in Spain to understand the rules, assess whether their existing arrangements remain appropriate, and ensure they are fully compliant.
Although Modelo 720 is often viewed primarily as a compliance obligation, it can also provide an opportunity to review wider financial arrangements.
Expats who have accumulated assets across several countries over many years may discover that changes to tax residency affect more than their reporting obligations, influencing investment planning, retirement income, succession arrangements and long-term wealth management.
Why Early Financial Planning Matters for Expats Moving to Spain
Modelo 720 is only one of the tax assessment exercises and filing requirements that occur on becoming a Spanish tax resident. For many foreign nationals, relocating also changes how their investment portfolios, retirement planning, succession arrangements and cross-border assets are taxed, reported and generate income or returns.
The most effective approach is often to consider overseas assets as part of a wider financial review rather than focusing solely on the declaration itself.
Looking at investment portfolios, retirement planning, tax residency, succession plans and potential future relocations as a bigger picture can help ensure financial decisions remain aligned with long-term priorities.
If you’re planning a move to Spain or have recently become a Spanish tax resident, contact Chase Buchanan’s advisers in Spain to help you understand how overseas assets fit into your financial planning. In some circumstances, specialist Spanish tax advice may be necessary, and our experienced team can clarify when additional professional guidance may be appropriate.
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*Information correct as at September 2026
