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Reporting obligation on assets located abroad for Spanish tax residents: latest comments

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5 Jun. 2013

Deadline to report foreign assets is next 30th of April; the Government has expressed no intention to extend the period, despite of the difficulty to gather certain information for this first year or the severe consequences in case of failure.

This obligation applies to taxpayers qualifying as Spanish tax resident, meaning those who are already registered with the Tax Authorities as well as those who could be deemed to be tax resident in Spain.

Late submission: although it would be possible to voluntarily submit the declaration after the deadline, this might not avoid the qualification of the assets declared as unjustified Capital Gain and the application of subsequent penalties, according to current interpretation of the Law.

Unreported assets to be discovered – exemption: if the taxpayer can prove that the assets were acquired with income reported in Spain, or before becoming Spanish tax resident, the unreported assets that may be discovered in the future by the Tax Authorities will not qualify as unjustified Capital Gain, therefore the special penalty of 150% will not apply. Penalties of 5.000 € per each unreported data or group of data discovered, with a minimum of 10.000 €, will still apply.

Trusts: the settlor must report as real owner and beneficiaries must also report, unless the Trust is discretionary. Always referring to tax residents.

Pension Plans: there is no obligation to report on Pension Plans, unless it is already generating incomes for the taxpayer. Foreign legislation allows certain Pension Plans to surrender at any time which qualifies as insurance, according to domestic legislation; therefore those have to be reported.

Offshore – tax amnesty: taxpayers that have applied for last year tax amnesty and have declared real ownership of the assets held by Offshore companies must report now those assets as real owner as well as the Offshore itself, as legal owner, even knowing that it will be dismantled by the end of 2013, as compulsory.

No obligation to report on yachts, airplanes, cars, jewels, art, etc., neither on loan and credits.

Fiscal crime: the administrative penalty established by these new regulations do not automatically exclude the possibility of incurring in criminal liabilities when the tax debt that could raise from unjustified Capital Gain Tax exceeds the limits established by the Criminal Code for tax fraud.

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