On January 31, 2013, the Official State Gazette (BOE in its Spanish abbreviation) published Order HAP/72/2013, of January 30, which approved the model declaration of goods and rights held abroad (Form 720) and determines the place, form, deadline, and procedure for filing. The obligation to declare these goods was established among the new features introduced by Law 7/2012, of October 29, and implemented by Royal Decree 1558/2012, of November 15.

Breach of this obligation and filing the form late constitute serious infractions, which will be sanctioned rigorously. Furthermore, any goods or rights not declared in time will be taxed at marginal rates as unjustified capital gains for the Personal Income Tax or as undeclared income for the Corporate Income Tax, regardless of how long they have been held. The only exception will be if the taxpayer can prove that they are in fact declared income or income earned in tax periods in which the taxpayer was not subject to said taxes.

Individuals and legal entities resident in Spanish territory are required to declare, as are the permanent establishments of non-residents and the entities without legal status referred to in Article 35.4 of Law 58/2003, the General Tax Act, regarding goods held abroad indicated by the above regulations. The preamble of Order 72/2012 clarifies that all taxpayers subject to the Personal Income Tax or the Corporate Income Tax on all their income must file this declaration.

The first filing will be for Fiscal Year 2012 and must be filed between February 1 and April 30, 2013. In subsequent fiscal years, a new declaration must be filed when there are changes, as provided by the regulations.

Given the serious effects of failure to declare, we wish to underscore the importance of timely declaring goods and rights held abroad and making a complete, precise declaration.