Chiara Bernasconi is Swiss, from Ticino, and retired to Granada in 2023. At a bank in Lugano she keeps an account with 85,000 €. She also owns a flat in Lugano that she bought in 2010, and 15 % of the family public limited company her father founded, a joinery business with a workshop and employees. When her nephew mentioned the 720 to her, she replied with apparent logic: "The Swiss bank already reports my account to Hacienda. They told me so when I signed a tax residence form. Why should I report it again?" Chiara is right about one thing and wrong about everything else.
What the CRS is and what travels through it
The Common Reporting Standard (CRS) is an OECD system under which financial institutions in participating jurisdictions identify the tax residence of their clients and report the details of non-residents' accounts to their own tax administration. That administration sends them, once a year, to the administration of the client's country of residence. Within the European Union an equivalent mechanism operates through administrative cooperation between states.
The form Chiara signed in Lugano was exactly that: the tax residence self-certification the bank needs to know which country to send her details to.
What travels through the CRS is, in general, data on financial accounts in the broad sense: identification of the holder, account number, institution, balance or value at year end, and the income paid or credited (interest, dividends and, for custody accounts, the gross proceeds of sales). Not everything travels.
What arrives and what does not, in Chiara's case
| Asset | Does it usually arrive through the CRS? | Does it go on the 720? |
|---|---|---|
| Account at the Lugano bank | Yes: balance and interest | Yes, accounts block |
| Flat in Lugano | No: it is not a financial account | Yes, real estate block, if it exceeds the threshold |
| 15 % of the family company | No, if the shares are not deposited with a financial institution | Yes, securities block, if it exceeds the threshold |
| Assets in a country that does not exchange information with Spain | No | Yes |
| Cryptocurrencies in a wallet of your own | No | No (nor on the 721) |
Half of what Chiara owns does not pass through any bank. And that is precisely what the 720 requires you to declare: real estate and holdings in unlisted companies, which automatic exchange does not capture. The 720 is not a copy of the CRS; it covers assets the CRS does not see.
The 720 is your obligation, not the bank's
Even if all Chiara's assets were held in financial accounts, the 720 would still be compulsory. The eighteenth additional provision of the Ley General Tributaria (the Spanish general tax act) imposes it on taxpayers, and the Regulations (Royal Decree 1065/2007) develop it with their own persons obliged, thresholds and deadlines. None of those rules exempts the taxpayer because another administration has sent information.
There is only one similar exemption, and it is very narrow: the Regulations release you from declaring accounts opened at foreign branches of institutions domiciled in Spain, when the Spanish institution already has to report on them. It does not apply to a Swiss bank.
The 720 as evidence in your favour
There is one more reason to file the 720 that almost nobody considers: it protects you.
Article 39 of the Spanish income tax act treats as an unjustified capital gain any assets whose ownership does not match the income or wealth declared, and includes it in the period in which they are discovered, unless the taxpayer proves they owned them from a date before the limitation period. A 720 filed on time is a document with a certain date, held by the tax authorities themselves, which shows since when you have owned each asset and at what value.
An example with round figures:
- Chiara arrives in 2023 with the Lugano account, which already held 85,000 €;
- if she files the 720 for 2023, there is a record that in 2023 that 85,000 € already existed;
- if in 2029 Hacienda, as the Spanish tax office is commonly known, reviews her accounts and asks about that money, the 720 for 2023 shows that it did not appear in 2029;
- without that 720, Chiara would have to reconstruct the history with six-year-old statements from a foreign bank, and convince the inspectors.
CRS data serves Hacienda. The 720 serves you as well.
When information from automatic exchange does not match what the taxpayer has declared (an account that is missing from the 720, interest that is not in the income tax return), the Agencia Tributaria, the Spanish tax agency, usually sends a letter first. What kind of letter it is and what to do with it is explained in I have received a letter from Hacienda about assets abroad.
If you are not sure which part of your assets abroad Hacienda already knows about and which part it does not, you can set out your assets and where they are held in the Modelo 720 form; the first thing we do is separate what depends on your return from what already arrives by other routes.
Consistency between sources
Another practical effect of the CRS: the Agency receives balances that it then compares with your 720, your IRPF (Spanish personal income tax) return and, where relevant, your Impuesto sobre el Patrimonio (Spanish wealth tax) return. If the Lugano bank reports 85,000 € at year end and your 720 says 58,000 €, the discrepancy raises questions even if you have an explanation (a different exchange rate, an account on which you are an authorised signatory rather than the holder, an average balance that the bank does not report). The advisable course is to use on the 720 the same balance certificates the institution issues and to keep the exchange rate calculation.
| Source of information | Who sends it | What it contains |
|---|---|---|
| CRS or EU exchange | Foreign financial institution, through its tax administration | Balances and income of financial accounts |
| Modelo 720 | You | Accounts, securities, insurance and real estate above the thresholds |
| Returns by Spanish institutions | Resident banks and custodians | What they hold in Spain or in their branches abroad |
What the CRS does not do for you
Nor does it declare your income. The interest on the Lugano account reaches Hacienda through the exchange, but Chiara has to include it in her income tax return. And as for any tax withheld by Switzerland, the possible credit for double taxation depends on the treaty and on the withholding certificates; whether Switzerland refunds anything is a question for her Swiss adviser. The guide on the credit for international double taxation explains the Spanish side.
At Salama Tax we prepare the 720 by cross-checking it against what may already be arriving through automatic exchange, so that both versions match; that page describes how we work.