Margaret Cole, a British retiree who has lived in Jávea since 2019, found out in June 2026, while talking to another resident at the bridge club, that she should have filed Modelo 720, the Spanish return on assets held abroad, for her accounts in England: around 140,000 € spread across three banks. She had never filed it. The first thing she found online were articles from 2015 about fines of 5,000 € per item of data and penalties of 150 %. She was right to be alarmed: that regime did exist. But it no longer applies, and what has replaced it is far more reasonable, provided you act before a letter arrives.
What was struck down and why
The original 720 regime had three particularly harsh components: fixed fines per item of data far higher than those for any other information return, a proportional penalty of 150 % of the tax due on the undeclared assets and, above all, a rule that allowed the value of those assets to be treated as an unjustified gain in the earliest tax year not yet time-barred, even if they had been bought twenty years earlier with money that had already been taxed.
The judgment of the Court of Justice of the European Union of 27 January 2022, case C-788/19, held that this set of consequences was disproportionate and contrary to the free movement of capital. The Court did not question the obligation to report; it questioned what happened if the obligation was not met.
Law 5/2022 abolished the specific penalty regime. The eighteenth additional provision of the Ley General Tributaria (the Spanish general tax act) now refers to the general rules, and article 39 of the Spanish income tax act, in its current wording, allows the taxpayer to prove that they owned the assets from a date before the limitation period so that they are not treated as an unjustified gain. You will find the full history in the guide on 720 penalties after the CJEU judgment.
What applies today to a late 720
The Agencia Tributaria, the Spanish tax agency, confirms in its frequently asked questions on the form that articles 198 and 199 of the Ley General Tributaria apply, and that the penalty is calculated separately for each of the three blocks (accounts; securities, funds and insurance; real estate).
| Situation | Article | Penalty |
|---|---|---|
| Not filing on time | 198.1 LGT | 20 € for each item of data or set of data relating to the same person or entity; minimum 300 €, maximum 20,000 € |
| Filing late without a prior formal request | 198.2 LGT | Half: 10 € per item or set, minimum 150 €, maximum 10,000 € |
| Filing with incomplete, inaccurate or false data | 199 LGT | Under that article's rules for returns containing monetary data |
What counts as an "item of data" and what counts as a "set of data" is not left to the inspector's judgement: the Regulations themselves define it in the last paragraph of each article governing the 720. For accounts, for example, the identification of the institution and that of each account are sets of data, and each date and each balance is an item of data.
Margaret's case, with numbers
Margaret has only one block affected, accounts, with three accounts at three institutions. Let us assume, purely to illustrate the mechanics, that the count under the Regulations gives 15 items and sets of data per year.
- If she files now, on her own initiative, the years she has missed: 15 × 10 € = 150 € per tax year. That matches the reduced minimum, so it would be 150 € per year and per block.
- If she waits for a formal request: 15 × 20 € = 300 €, which is also the ordinary minimum; 300 € per year and per block, and she also loses the reduction and the initiative.
- With many more items (imagine 60 accounts and securities in a single block, 150 items of data): 150 × 10 € = 1,500 € if she comes forward herself, 3,000 € if she waits.
The exact figures depend on the real count, but the message is always the same: filing on your own initiative halves the cost of the formal penalty, and with modest assets the result usually stays at the minimum amounts.
The article 27 surcharge does not apply to the 720
This is where a common confusion arises. The late-filing surcharge in article 27 of the Ley General Tributaria is calculated on the amount payable under a self-assessment return. The 720 is an information return: there is no tax due on it, so it does not give rise to a surcharge.
Where the surcharge does appear is in what usually comes next. Hardly anyone who forgets the 720 has declared the interest on those accounts correctly in their income tax return. Margaret, for example, had not included the interest on her English deposits in her IRPF (Spanish personal income tax) return for 2024. When she puts it right:
| Step | Amount |
|---|---|
| Additional IRPF due for 2024 on that interest (assumed) | 1,800 € |
| Voluntary filing period for the 2024 return | ended on 30 June 2025 |
| Supplementary return filed at the end of February 2026 | 7 full months late |
| Surcharge: 1 % + 1 % for each full month | 8 % → 144 € |
| 25 % reduction if the surcharge is paid on time | 108 € |
No late-payment interest (it is not added for delays under twelve months) and no penalty. If the correction comes after a formal request, what applies is no longer the surcharge but a penalty on the tax due, which is much more expensive. We explain the difference between the two in what the difference is between a surcharge and a penalty, and the calculation in the guide to calculating the article 27 surcharge.
Both halving the 720 penalty and getting a surcharge instead of a penalty in income tax require you to file before Hacienda, as the Spanish tax office is commonly known, takes any action aimed at correcting that situation and notifies it to the taxpayer. Once notified, those advantages disappear. We cannot promise how an enquiry will end, but we can say that the order of the steps weighs heavily on the cost.
If you are in Margaret's position, in the Modelo 720 form you can tell us which years and which assets are missing; with that we prepare the calendar of filings in the right order.
How many years have to be caught up
The 720 is annual, but years are not filed indiscriminately. The sensible approach is to review tax year by tax year from when the obligation began, with the four-year limitation period as the framework for the consequences in terms of penalties and tax. In income tax, income omitted in years that are not time-barred is corrected through supplementary returns, each with its own surcharge. How to put them in order is explained in correcting several years at once.
What did not change in 2022
The judgment reduced the consequences, not the obligation. The 720 is filed within the same period (from 1 January to 31 March of the following year), with the same 50,000 € thresholds per block and the same rule of filing again when a block grows by more than 20,000 €. What is more, the information that reaches Hacienda from other countries through automatic exchange makes non-compliance easier to detect than it was ten years ago.
For anyone who discovers they have gone years without filing, Salama Tax describes how we approach bringing the 720 up to date together with the income tax and wealth tax for the same tax years.