2014 tax form 720: are you obliged?
23 Mar. 2015
The deadline to submit the declaration on foreign assets held by tax residents in 2014 is next March 30. Contrary to what many people believes, it is rather easy to incur in the obligation to report again so please check the following. You are obliged to submit the declaration for 2014 if:
- The value of any of the three groups (accounts, shares and real estate) has increased in more than 20.000 Euros compared to the last declaration. Example: you hold two accounts abroad and the balance at the end of 2012 added up to 60.000 Euros so you submitted the declaration that year; the balance at the end of 2013 was 75.000 Euros so you did not declare for 2013; the balance at the end of 2014 was 85.000 Euros, just 10.000 Euros more than 2013 but 25.000 Euros more compared to the last declaration (2012): then you are obliged to submit the declaration for 2014.
- You have lost connection with any asset previously declared. Example: if you cancelled an account before end of 2014 that was declared in 2012 (or you have resigned as authorized person), or you have sold shares or investment funds, you have to report about the sale/cancellation date and value independently whether the global value of the group has increased in more than 20.000 Euros or not. If you hold a portfolio purchasing and selling several times in a year, you are obliged to declare only the new assets held at the end of the year and not the sales/cancellations, again independently if it they increased more than 20.000 Euros or not.
More examples (always referring to foreign assets):
- In 2014 you sold shares previously declared in 2012, and the proceeds from the sale was placed in one of the accounts, so the balance of said account at the end of 2014 has increased in more than 20.000 Euros: you are obliged to report on the shares that you are no longer owning and also about all the accounts you have abroad.
- You have sold small shares at a price of 500 Euros that you declared in 2012: you are obliged to report about the sale.
- Your bank has made a hundred transactions in a year, buying and selling shares, bonds, etc.,: you have to declare the new assets in the portfolio that are held at the end of the year.
- You acquired shares in March 2014 using funds from your account, and sold them in July returning the funds to your account (and the balance of the account has not increased significantly): you do not have to report.
Our recommendation: if you hold assets abroad, you should consider the declaration on foreign assets (Form 720) as part of your yearly tax obligations together with Income Tax and Wealth Tax, as the probability of being obliged to declare every year is high.