If you’re an expat living in Spain — or planning to move — Modelo 720 remains one of the most important (and misunderstood) tax reporting obligations you’ll face.

Although the form itself has existed for more than a decade, recent legal rulings, penalty reforms, and increased international data sharing mean that outdated advice can quickly get expats into trouble. We continue to see confusion, particularly around residency status, foreign assets, and what actually triggers a filing requirement.

This updated guide explains what Modelo 720 is, who must file it, how penalties now work, and what global expats need to know in 2026 — without the scare tactics.

Modelo 720 is an informative tax declaration (not a tax return) that Spanish tax residents must submit to report certain assets held outside Spain.

Its purpose is to give the Spanish tax authorities (Hacienda) visibility over foreign wealth and prevent offshore tax evasion. Even though no tax is paid directly when filing Modelo 720, failing to declare correctly can still trigger significant fines.

If you are tax resident in Spain and hold qualifying overseas assets above the reporting thresholds, filing Modelo 720 is mandatory.

You must file Modelo 720 if all of the following apply:

• You are considered a Spanish tax resident, and
• You hold foreign assets exceeding €50,000 in any one of the reportable categories

If you are not a Spanish tax resident, you do not need to file Modelo 720.

Residency is based on tax law, not visas or lifestyle preferences — and this is where many expats get caught out.

Foreign assets fall into three main categories:

1. Foreign bank accounts

• Current accounts
• Savings accounts
• Deposit accounts

2. Foreign investments

• Shares and funds
• Bonds
• Life insurance policies
• Investment wrappers

3. Foreign immovable property

• Overseas property
• Rights over property (e.g. usufruct)

Each category is assessed separately using the €50,000 threshold.

You must file Modelo 720 when:

• Your assets in any one category exceed €50,000, or

• You are filing for the first time as a Spanish tax resident

After your initial filing, you only need to re‑file if:

• The value in any category increases by more than €20,000, or

• You sell an asset, close an account, or acquire a new reportable asset

If nothing has changed beyond those limits, no annual re‑filing is required.

• Deadline: 31 March each year

• Reporting period: Assets held as at 31 December of the previous year

Modelo 720 is submitted electronically to the Spanish tax authorities. In practice, most expats use a tax adviser or gestor to ensure accuracy.

When Modelo 720 was first introduced, penalties were notoriously severe. However, a 2022 European Court of Justice ruling forced Spain to overhaul the system, bringing penalties back in line with EU law.

While the risk is now far more proportionate, penalties still apply — especially for repeated or deliberate non‑compliance.

Under the current regime:

• €20 per incorrect or missing data point
• Minimum penalty: €300
• Maximum penalty: €20,000

Penalties may be reduced by 50% if you submit late before receiving an official notice.

Important additional points

• Penalties may be higher for assets outside the EU/EEA
• A four‑year statute of limitations now applies

This represents a dramatic reduction from the historic penalties, which could exceed €25,000 per asset.

If you are:

• Living full‑time in Spain, or

• Spending enough time there to trigger tax residency

…then Modelo 720 becomes part of your annual compliance obligations.

It does not replace your Spanish income tax return, but it gives Hacienda a clear snapshot of your global wealth, which must align with what you declare elsewhere.

Spanish tax residency is generally triggered if any one of the following applies:

• You spend more than 183 days in Spain in a calendar year

• Your centre of economic interests is in Spain

• Your spouse and dependent children live in Spain (rebuttable presumption)

• Immigration rules (including Schengen limits) and tax residency rules are not the same thing — a common source of confusion for expats.

Proposed or publicised changes to travel limits do not automatically change tax residency law, but increased enforcement and data sharing mean day‑count tracking is more important than ever.

Spain participates fully in the Common Reporting Standard (CRS), a global information‑sharing framework developed by the OECD. You can view the official CRS overview and participating jurisdictions directly on the OECD website.

This means banks and financial institutions in participating countries automatically share financial account information with Spanish tax authorities.

In practical terms:

• Overseas accounts are increasingly visible
• Undeclared assets are easier to detect
• Modelo 720 discrepancies raise red flags

The era of flying under the radar is effectively over.

Yes — compliance does not mean overpaying tax.

With proper structuring, expats can:

• Reduce taxable investment income

• Manage capital gains efficiently

• Optimise pension withdrawals

• Mitigate Spanish inheritance tax exposure

ISAs lose their tax‑free status once you become Spanish tax resident. They:

• Must be reported on Modelo 720

• Are taxable annually in Spain

Many expats choose to restructure into Spanish‑compliant investment solutions, which offer:

• Tax deferral

• Simplified reporting

• Greater alignment with Spanish tax rules

You can read more about compliant investing and wealth structuring for expats in Spain in our guide.

Choosing the right adviser is critical when dealing with international assets, multiple tax jurisdictions, and Spanish reporting obligations. Working with a firm that specialises in expat wealth management — like the team at Galileo Wealth — ensures your tax planning, investments, and reporting remain aligned.

Modelo 720 is simple on paper — but dangerous when misunderstood.

An experienced international adviser can help you:

• Confirm your residency status

• Ensure accurate Modelo 720 reporting

• Align investments with Spanish tax law

• Avoid unnecessary penalties

We regularly support expats with compliance, restructuring, and long‑term planning so they can enjoy life in Spain without tax surprises.

If you’d like help navigating Modelo 720 or optimising your financial position as an expat in Spain, speak to a qualified international adviser before filing. You can learn more about our approach to cross‑border financial planning or explore our dedicated support for expats living in Spain on our website.