Modelo 720: What Americans in Spain Actually Have to Declare

Victor Gersten, EA, CFP®, MS, MPAS™

Spain’s foreign asset report is narrower than most new arrivals fear. It is also stricter than most expect. And the 2022 EU court ruling changed less about the filing duty than you have probably been told.

This is the most common question I get from Americans who have just moved to Spain. It usually arrives in February, in a slightly panicked email.

The Modelo 720 has a reputation that runs well ahead of the facts. It earned part of that. The penalty regime before 2022 was severe by any reasonable standard.

But much of what circulates online is out of date, and some of it was never accurate. People read about a 150% penalty that no longer exists. Or they assume the European court abolished the whole thing, which it did not.

What follows is general information about how the obligation works in 2026. It is written for US citizens who are tax resident in Spain, and it is not advice on your own filing.

What Modelo 720 is

Modelo 720 is an informational return. Spain introduced it in 2012 as part of an anti-fraud package, so the Agencia Tributaria could see what residents own outside the country.

The important word is informational. You pay no tax on the Modelo 720 itself, and filing it creates no liability. You settle tax on worldwide income on the IRPF return, Modelo 100. Where it applies, you settle wealth tax on Modelo 714.

That distinction sets the right expectation. The form is a disclosure exercise, not a bill. All the risk sits in failing to disclose. You can find the filing portal on the Agencia Tributaria’s Modelo 720 procedure page.

Who has to file

The obligation follows Spanish tax residency. Not citizenship, not your visa type, and not where you get paid.

Under Article 9 of Ley 35/2006, you are generally tax resident if you spend more than 183 days of the calendar year in Spain. You are also resident if the main base of your economic activities or interests sits in Spain. There is a further presumption where your spouse and minor children live there.

Two groups get caught by surprise. For example, the first moved mid-year and crossed the 183-day line without tracking it. Arriving in late June is closer to the line than most people realize. Meanwhile, the second assumed that keeping a US address, bank and employer kept them outside the Spanish system. It does not.

The duty is also not limited to legal ownership. In fact, account holders, beneficial owners, representatives and people with authority to dispose of an account are all in scope. So an authorized signatory on a parent’s US account can have a reporting obligation on a balance that is not theirs in any economic sense.

One exception. Taxpayers properly inside Spain’s impatriate regime, the Beckham regime, are generally outside the Modelo 720 obligation while it applies, because Spain taxes them broadly on the non-resident basis. Confirm that against your own acceptance rather than assuming it.

Three categories, and a threshold for each

Here is the point most readers get wrong, in both directions. There are three separate categories. Each carries its own €50,000 threshold. The threshold is per category, not a total across your foreign assets.

Here is a hypothetical illustration with round numbers. A reader with €45,000 across US bank accounts and €45,000 in a US brokerage account holds €90,000 abroad. On those figures, there is no filing obligation in either category.

Meanwhile a reader with €60,000 in a single brokerage account and nothing else abroad does have an obligation in category 2. Your own position depends on your balances and the exchange rates that apply.

You do not re-file every year

This mechanic saves people the most work, and it is the one most often described incorrectly.

Once you have declared a category, you do not re-file it out of habit. Per the Agencia Tributaria’s own FAQ, you have to declare a category again only in two cases. Either its total value increases by more than €20,000 over the last figure you declared. Or you dispose of or cancel an asset you previously reported.

There is also a companion form, Modelo 721, for virtual currencies held with custodians outside Spain. It uses the same January to March window. Sources widely report its threshold at €50,000, mirroring Modelo 720, though I would confirm that against the current instructions.

Do US retirement accounts count?

First, let me start with the easy half. So ordinary US taxable brokerage accounts are reportable under category 2. There is no serious dispute about that. A Schwab, Fidelity or Vanguard taxable account over the threshold goes on the form.

The retirement account question is not settled in Spain. I would rather say so than give you a confident answer that does not exist.

The Agencia Tributaria’s FAQ on reporting says there is no obligation to report pension contributions or accrued rights while no distribution event has occurred. The same answer carries an exception. If the plan’s terms give the holder a redemption right similar to a life insurance policy, you have to report the surrender value. Once a distribution event occurs, the resulting right becomes reportable.

Why the guidance does not settle the US case

The difficulty is that this language was written with European pension products in mind. The binding consultations from the Dirección General de Tributos analyse foreign pensions one product at a time, looking at structural features. They do not announce a rule for a whole country’s system. V0497-18 addressed a Luxembourg pension. V5037-16 an Australian one. V1681-13 a Canadian RRSP. There is no clear ruling on the American IRA or 401(k).

So the honest answer turns on your specific plan.

A traditional or Roth IRA generally lets the holder take the money at any time. That is subject to US tax and a possible penalty, but not to anyone’s permission. It looks a lot like a redemption right, which is why many practitioners take the conservative view and report it.

In contrast, a 401(k) still held with a former employer can look different. The plan document may restrict access, and that is exactly the feature the Spanish consultations focus on.

Overall, my recommendation is simple. With a meaningful IRA or 401(k) balance, get an opinion from Spanish tax counsel on your own plan documents. Do not rely on a general rule you read anywhere, including here.

This is also where having the tax side and the planning side in one conversation earns its keep. As an EA and a CFP® professional, I can look at whether an account is reportable in Spain and, in the same sitting, at what reporting or distributing it does to your US return, your IRPF, and your withdrawal sequence. Split across two firms, that question gets answered twice and reconciled by nobody.

What the 2022 EU court ruling changed

On 27 January 2022 the Court of Justice of the European Union decided Case C-788/19, European Commission v Spain. It is an important decision, and the most misunderstood item in this subject.

The Court struck down the consequence regime, in two parts.

First, it condemned treating undeclared foreign assets as an unjustified capital gain, taxable in the earliest open year, with no statute of limitations. Second, it condemned the fixed and proportional penalties, including the 150% penalty. Those vastly exceeded what Spain imposed for equivalent domestic non-disclosure. The Court held the regime was disproportionate and contrary to the free movement of capital.

What the Court did not do is abolish the form. The obligation to report foreign assets survived intact. The judgment accepts that a member state may require this information. What offended EU law was never the reporting duty. It was the punishment Spain attached to it.

I raise this because I regularly meet people who read a 2022 headline, concluded the Modelo 720 was gone, and quietly stopped filing. That is a worse position than having filed late.

What the penalties are now

Spain responded quickly. Ley 5/2022, de 9 de marzo took effect on 11 March 2022. It repealed both the imprescriptible capital gain imputation and the special penalty regime the Court had condemned.

The general rules of the Ley General Tributaria now govern penalties. Specifically, Article 198 covers failing to file on time. Article 199 covers filing something inaccurate or incomplete.

Those are the ordinary penalties Spain applies to information returns across the board. They are proportionate by design, and dramatically smaller than what the old regime produced. There is also a standard reduction where you file voluntarily, before receiving any notice.

I am deliberately not printing a table of euro amounts. The figures circulating online vary. Several describe the repealed regime. Our own check could not confirm the commonly quoted numbers against the current text on boe.es. The amount depends on which article applies and on the facts of the filing.

A missed filing is a very common situation for people who relocate internationally. There are well established procedures to correct it properly.

The deadline, and two valuation traps

The window runs from 1 January to 31 March, for the prior calendar year. You file electronically, with a digital certificate, Cl@ve, or through a representative.

Two valuation points are worth marking on the calendar rather than discovering in March.

You generally report balances as of 31 December. For accounts you also report the average balance of the fourth quarter, which means keeping statements you might not think to save.

You report values in euros. So year-end exchange rates decide whether you cross the threshold at all.

Common first-filing mistakes

• Treating the €50,000 as an aggregate. It applies per category. Adding bank accounts to brokerage to a rental property, then panicking at the total, is the most frequent error I see.
• Re-filing every year on autopilot. If nothing triggered a new filing, do not file. The triggers are a €20,000 increase in that category, or the disposal of a reported asset.
• Assuming FBAR and Form 8938 cover Spain. These are three separate regimes. Three rulebooks, three sets of thresholds, three definitions of what counts. Filing with FinCEN and the IRS does nothing for the Agencia Tributaria.
• Valuing at the wrong date. Use 31 December balances, plus the fourth quarter average for accounts, in euros.
• Forgetting joint accounts. You generally report the full balance, with your ownership percentage stated. A joint account with a parent does not become half an account.

Working with a cross-border adviser

What we do here is unglamorous and specific. We inventory every foreign account, holding and property, then sort them into the three categories and apply the thresholds separately. We also check whether any of last year’s declared categories crossed the €20,000 trigger. And we identify the items where the treatment is contested rather than settled, which in practice means your retirement accounts.

From there the work is coordination. Your IRA is a Spanish reporting question, a US tax question and a retirement income question at once. Those three answers have to agree.

Because I hold both the CFP® certification and an Enrolled Agent license, I decide the tax return and the financial plan in one conversation. We are fee-only and work as fiduciaries, so the recommendation is not attached to a product.

Everything above is general information. None of it is advice on your situation. Your facts, your visa status, your plan documents and your filing history all change the answer.

To talk it through before the next window opens, book an introductory conversation at cbwealthadvisors.com or email info@cbwealthadvisors.com.

Sources

• Court of Justice of the European Union, Case C-788/19, judgment of 27 January 2022
• BOE, Ley 5/2022, de 9 de marzo
• Agencia Tributaria, Modelo 720 procedure (GI34)
• Agencia Tributaria, FAQ on filing frequency

Spanish reporting is one of five areas worth settling before you move. The rest are in Five Financial Mistakes Americans Make Before Moving to Spain.

Related reading: Your First Year as an American in Spain · US Federal Tax Issues for Americans Living Abroad

Disclosures

This article is general educational information published by Cross Border Wealth Advisors, a company of Gersten Financial Planning Inc., an investment adviser registered with the State of California (CRD 309890). It is not investment, tax, legal or immigration advice.

Rules and figures change. The ones here are stated as of the date above. Any calculation shown is a hypothetical illustration, not a projection and not any client’s experience. Cross Border Wealth Advisors is fee-only and receives no commissions. Registration does not imply a certain level of skill or training.

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