Modelo 720 and Wealth Tax: What to Declare and What You Owe
Two different questions that almost always come up together: do you need to tell Spain about foreign accounts and assets (Modelo 720), and do you owe tax on the capital itself (wealth tax). Modelo 720 penalties are no longer the extraordinary sums they were before 2022, following an EU Court ruling, but the reporting duty itself never went away. And the "0% wealth tax" break in Madrid and a handful of other regions stops working once your net worth crosses €3 million, because of a separate, national tax on large fortunes.
Contents
- Who this affects
- Modelo 720: declaring foreign assets
- Wealth tax (Patrimonio)
- Tax on large fortunes (Solidaridad)
Who this affects
Both questions surface at the same moment - as soon as someone becomes a Spanish tax resident while already holding capital outside the country: accounts, securities, property. Modelo 720 is the duty to tell Hacienda what you hold abroad. Wealth tax is a separate question - whether you owe tax on that capital, and how much. Do not conflate them: you can be required to file Modelo 720 and owe zero wealth tax, or the reverse - fall under the tax on large fortunes even with no foreign assets to report on Modelo 720 at all.
Non-residents are not affected by Modelo 720 at all - the foreign-asset return exists precisely because a resident is taxed on worldwide income and wealth, and Hacienda needs a way to see that wealth. Wealth tax can affect a non-resident too, but only on assets physically located in Spain.
Modelo 720: declaring foreign assets
The form is filed once a year, from 1 January to 31 March, covering assets held as of 31 December of the prior year. The duty arises once assets exceed €50,000 in at least one of three independent categories:
- Foreign bank accounts - balances, average balance for the last quarter.
- Foreign securities, ownership stakes, life insurance, annuities.
- Foreign real estate and rights over it.
The threshold is assessed separately per category: crossing €50,000 only on accounts means you only declare accounts - securities or property below the threshold are unaffected.
A closer look at the edge cases people actually get wrong - joint accounts and authorised signatories, self-custody crypto wallets, retirement accounts like a 401(k) or IRA - is in the separate guide Modelo 720 and Modelo 721: Getting the Foreign Asset Filing Right.
What penalties currently apply
Before 2022, the Modelo 720 regime included special sanctions: fixed fines starting at €5,000 per undeclared or inaccurate item, with a €10,000 minimum, and undisclosed assets were treated as unjustified capital gains with no statute of limitations. In its ruling of 27 January 2022 (case C-788/19), the EU Court found this regime disproportionate and contrary to the free movement of capital. Law 5/2022 brought the penalties into line: failing to file or filing an inaccurate Modelo 720 now falls under the general regime in articles 198-199 of Spain’s General Tax Law (Ley 58/2003) - penalties for late or inaccurate informational returns causing no financial harm to the treasury, assessed separately per category. The amounts are far smaller than before, but the filing duty and the risk of a penalty for ignoring it remain.
When you need to refile after the first time
Once you have filed at least once, you only need to refile in a later year if one of three things happens:
- The value of any of the three categories rose by more than €20,000 compared with the amount that triggered the duty in your last filed return.
- An asset was sold, transferred, or otherwise left your ownership.
- You lost owner or beneficiary status on a previously declared account or asset.
If none of these happened, no refiling is required - the earlier return remains valid without an annual reconfirmation.
Wealth tax (Patrimonio)
Impuesto sobre el Patrimonio is an annual tax on net asset value as of 31 December, administered by the autonomous communities, so the exact thresholds and rates in your region need checking separately. The general framework:
- Exempt minimum: €700,000 per person by default; individual regions can set their own.
- An additional €300,000 exemption on the value of your primary residence.
- Progressive rates, roughly 0.2% to 3.5% depending on the region and the amount above the minimum.
- A resident declares worldwide assets; a non-resident only Spanish ones.
- Form: Modelo 714, filed on the same schedule as the income tax return (April-June).
A detail often missed: you must file even if the tax due comes out at zero after deductions, once gross assets (before the exempt minimum) exceed €2,000,000.
Regional rebates. Madrid, Andalucía, Murcia, Cantabria, La Rioja and Extremadura apply a 100% rebate on the regional share of the tax - in practice exempting capital up to the threshold of the national tax on large fortunes (see below). Galicia gives a flat 50% reduction. The Basque Country and Navarra run separate foral tax regimes outside the scope of the national tax on large fortunes.
Tax on large fortunes (Solidaridad)
The Impuesto de Solidaridad de las Grandes Fortunas (ISGF) is a national tax that kicks in where the regional rebate stops. It applies to the same net wealth as the regional wealth tax, but at a higher threshold and nationwide, regardless of which region you live in:
| Net worth | Rate |
|---|---|
| €3,000,000 - 5,000,000 | 1.7% |
| €5,000,000 - 10,000,000 | 2.1% |
| over €10,000,000 | 3.5% |
The same deductions apply as under the regional tax: a €700,000 general minimum and €300,000 for the primary residence. Form: Modelo 718, filed electronically from 1 to 31 July of the year following the tax year.
The mechanism preventing double payment is straightforward: whatever you actually paid under the regional wealth tax is deducted from the ISGF bill. This is exactly where Madrid’s rebate and similar regional breaks stop helping large fortunes: if you paid €0 regionally (thanks to a 100% rebate), there is nothing to deduct, and the full ISGF on wealth above €3,000,000 is due regardless of where in Spain you live. Regions with a rebate ease the burden on capital up to €3 million, but not above it.
Common mistakes
- Treating Modelo 720 as a tax itself - it is an informational return that does not by itself create anything to pay, but failing to file it is penalised separately.
- Refiling Modelo 720 every year “just in case” when none of the refiling triggers (€20,000 increase, sale, loss of ownership) has occurred - unnecessary; the opposite mistake, skipping a refiling when a trigger has occurred, is the costlier one.
- Assuming that because Madrid “has no wealth tax,” large fortunes there owe nothing - not true above €3,000,000, because of the ISGF.
- Overlooking that the exempt minimum and its regional share can differ from the general framework - check the exact figures for your current region of tax residency.
- Confusing the Modelo 720 deadline (January-March) with the wealth tax deadline (April-June) and the ISGF deadline (July).
Frequently asked questions
Who has to file Modelo 720?
Spanish tax residents holding foreign assets worth over €50,000 as of 31 December, in at least one of three categories: foreign bank accounts, foreign securities/shares/insurance policies, and foreign real estate. The threshold applies separately to each category, not to the combined total.
What is the current penalty for not filing Modelo 720?
Following the EU Court's 27 January 2022 ruling, the special penalty regime (fixed fines from €5,000 per item, with harsh minimums) was scrapped. The general regime under Spain's General Tax Law now applies - penalties for late or inaccurate informational returns with no financial harm to the treasury. These are far smaller than before, but not zero.
Do you need to file Modelo 720 every year?
No, not unless something material changed. You only need to refile if the value of any of the three categories rose by more than €20,000 versus your last filed return, or if an asset was sold, an account closed, or you otherwise lost ownership of a previously declared asset.
At what net worth does wealth tax start?
The general exempt minimum is €700,000 per person, plus a separate €300,000 exemption on your primary residence. But you must file a return once gross assets exceed €2,000,000, even if the tax due comes out at zero after deductions. Exact thresholds and rates are set regionally, so the outcome depends on where you are a tax resident.
Is it true that Madrid has no wealth tax?
At the regional level, yes - Madrid and a few other communities apply a 100% rebate. But that does not exempt you from the separate national tax on large fortunes (ISGF), which starts at €3,000,000 regardless of regional breaks: what you did not pay regionally because of the rebate is not deducted from it.
How do wealth tax and the tax on large fortunes interact?
They are two taxes on the same tax base. Below €3,000,000, only the regional wealth tax applies - and where there is a 100% rebate, nothing is due. Above €3,000,000, the national ISGF kicks in, and whatever you actually paid under the regional wealth tax is deducted from the ISGF bill, so the same capital is not taxed twice.