Kenji Mori is Japanese, works for a multinational pharmaceutical company and has lived in Valencia since 2019. Every January his broker sends him a report with a single figure: the market value of his portfolio on 31 December. For 2025 it was 1,180,000 €. Kenji intended to use that number in Modelo 714. The problem is that his portfolio mixes six different types of asset, and the law values each one differently. With the correct rules the figure changes, in his case downwards, and some items do not even count.
Each asset has its own article
| Asset | Rule | Article |
|---|---|---|
| Listed shares (except investment funds) | Average trading value for the fourth quarter | 15.Uno |
| Listed bonds and fixed income | Average trading value for the fourth quarter | 13 |
| Unlisted fixed income | Nominal value, with redemption or repayment premiums | 14 |
| Investment funds and other collective investment undertakings | Net asset value on 31 December | 16.Dos |
| Unlisted shares and holdings | Book value if there is a favourable audit; if not, the highest of three values | 16.Uno |
| Life insurance | Surrender value on 31 December | 17.Uno |
| Pension plans and similar arrangements | Exempt | 4.Cinco |
| Accounts and deposits | Balance on 31 December or average balance for the fourth quarter, whichever is higher | 12 |
Kenji's portfolio, line by line
For the example we use an exchange rate of 0.90 € to the dollar. In reality, each conversion must be made at the appropriate rate and documented.
1. Shares in a US listed company. He holds 2,000. On 31 December they were trading at 150 USD, but the average for the fourth quarter was 140 USD. The average is used: 2,000 × 140 × 0.90 = 252,000 €. The broker's report said 270,000 €.
2. Equity ETF domiciled in Ireland. Although it is listed on a stock exchange, an ETF is a collective investment undertaking. Article 15 expressly excludes collective investment undertakings from the quarterly average rule, and 16.Dos values them at their net asset value on the accrual date. Kenji has 5,000 units with a net asset value of 80 €: 400,000 €.
3. Spanish investment fund. Net asset value on 31 December: 150,000 €. Here the report and the legal rule coincide.
4. Listed corporate bonds. Nominal value of 100,000 €, with an average price for the fourth quarter of 98 %: 98,000 €.
5. A 1 % holding in an unlisted Spanish start-up. We look at it separately, because it is the most complicated rule.
6. His company's occupational pension plan in Spain. 120,000 € in vested rights. They are exempt: they are not added to the tax base.
The rule for unlisted shares, with the start-up's figures
Article 16.Uno distinguishes two cases. If the last approved balance sheet has been audited with a favourable report, its book value is taken. If not, the highest of these three: nominal value, book value according to the last approved balance sheet, and the result of capitalising at 20 % the average profits of the three financial years closed before the accrual date, counting as profits dividends and transfers to reserves, except those for balance sheet regularisation or revaluation.
Kenji's start-up is not audited:
- Nominal value of his 1 %: 3,000 €.
- Book value: accounting net worth of 1,200,000 €; his 1 % is 12,000 €.
- Capitalisation of profits: the company has made losses in all three years, so this rule gives zero.
- The highest: 12,000 €.
Kenji bought that holding in a funding round for 60,000 €. For the purposes of the tax it is worth 12,000 €. It is one of the few situations in which the law values an asset below the price paid. The guide on the market value of unlisted shares and the answer on what my share is worth if it is not listed cover the finer points, including the entities obliged to issue valuation certificates to their shareholders (art. 16.Cuatro).
The result for Kenji
| Item | Broker's report | Value for the purposes of the tax |
|---|---|---|
| US shares | 270,000 € | 252,000 € |
| Irish ETF | 400,000 € | 400,000 € |
| Spanish fund | 150,000 € | 150,000 € |
| Bonds | 99,000 € | 98,000 € |
| Start-up | 60,000 € (cost) | 12,000 € |
| Pension plan | 120,000 € | 0 € (exempt) |
| Cash with the broker | 81,000 € | 81,000 € |
| Total | 1,180,000 € | 993,000 € |
The cash is valued as an account; we assume that its average balance for the fourth quarter did not exceed the balance on 31 December. Between the broker's figure and the one that goes into the base there are 187,000 €, and almost two thirds of that is explained by the exempt pension plan. And beware of the second gateway of the obligation to file: to check whether assets exceed 2,000,000 €, the Agencia Tributaria also adds exempt assets, so the pension plan does count there. We explain it in from what amount you have to file.
The exemption in article 4.Cinco refers to instruments defined in Spanish legislation (pension plans, insured pension plans, company pension plans, group insurance covering pension commitments, long-term care insurance) and to pan-European personal pension products. A US 401(k), a Japanese retirement plan or a Swiss second-pillar fund do not simply fit. Each one has to be analysed for what it is, and its classification in its own country must be confirmed by the client's adviser there. We deal with it in is a foreign pension plan declared.
Other securities found in expatriates' portfolios
Share options. Article 23 refers to the transfer tax rules for valuing contractual options. In practice, unexercised stock options raise doubts as to whether they are a right with economic content on 31 December; they have to be analysed plan by plan.
Unit-linked insurance. Although they invest in funds, they are life insurance and are valued at their surrender value (art. 17). If the policyholder cannot surrender the policy on that date, the mathematical reserve is used.
New shares from a capital increase. If they are not yet listed but the company is, they are valued at the last trading price of the old shares within the subscription period (art. 15.Dos). Shares not yet fully paid up are valued as if fully paid, and the amount outstanding is declared as a debt (art. 15.Tres).
Broker accounts. Uninvested cash is a deposit and follows the rule of the balance on 31 December or the average balance for the fourth quarter, whichever is higher.
Why the Modelo 720 figure will not do
Kenji files Modelo 720, the return declaring assets held abroad, for his foreign portfolio. Modelo 720 uses values on 31 December and, for listed securities, its own criterion. It cannot be used for Modelo 714 without redoing the items. The relationship between the two returns is in how Modelo 720 relates to wealth tax, and the guide on equity and Modelo 720 covers employee shares.
If you would like us to review your portfolio with these rules, the wealth tax form asks for the broker's tax report, the net asset value certificates and the balance sheets of unlisted companies. There is no way to guarantee that the authorities will share every valuation, especially for unlisted shares, but there is a way to leave every figure justified.
The valuation rules for all your wealth and each region's allowances are brought together on the Salama Tax page on the wealth tax.