Ana María Restrepo, who is Colombian, moved to Valencia in 2022 with her husband, who had been offered the job of running a subsidiary. Her personal assets on 31 December 2025 included an account in Bogotá with 180,000 €, a portfolio of US shares with a broker holding them in custody in Ireland worth 950,000 €, a flat in Medellín bought in 2012 for 140,000 € and her home in Valencia. Her adviser in Colombia prepared her Modelo 720, the Spanish return on assets held abroad, and got everything right. Nobody mentioned the Impuesto sobre el Patrimonio (Spanish wealth tax) to her. Two years later the Agencia Tributaria, the Spanish tax agency, asked her for an explanation: from the figures in her own 720, it knew perfectly well what she held abroad.
Two obligations that look at the same thing for different purposes
The 720 is an information return: there is no tax payable on it. It lets the authorities know what assets each resident holds abroad, with which institution and at what value. Wealth tax is a tax: it is levied on the net wealth of individuals on 31 December.
Both refer to the same assets, but one does not replace the other:
| Aspect | Modelo 720 | Wealth tax |
|---|---|---|
| Nature | Information | Tax |
| Rules | 18th additional provision LGT and arts. 42 bis, 42 ter and 54 bis RD 1065/2007 | Law 19/1991 |
| Which assets | Only those located abroad | The resident's entire worldwide wealth (art. 5) |
| Threshold | 50,000 € per block | Obligation to file if tax is payable or if the assets exceed 2,000,000 € (art. 37) |
| Debts | Not deducted | Deductible debts are subtracted |
| Deadline | 1 January to 31 March | Income tax return season |
Article 5 of the Spanish wealth tax act is the piece that connects the two: residents are taxed under personal liability, on their entire net wealth wherever the assets are located. Everything that appears on a resident's 720 forms part, by definition, of their wealth for the purposes of this tax.
The same assets, different values
For much of the valuation, the 720 Regulations refer to the wealth tax rules. But they do not always coincide, and it is worth knowing where they diverge:
| Asset | Value on the 720 | Value for wealth tax |
|---|---|---|
| Bank account | The balance on 31 December and the average balance for the fourth quarter are reported | The higher of the two, with adjustments for funds withdrawn to buy assets or pay debts (art. 12) |
| Listed shares | According to the Agency's criteria, the price on 31 December or the wealth tax rules | Average trading value for the fourth quarter (art. 15) |
| Real estate | Acquisition value | The highest of the cadastral value, the value established for other taxes or the acquisition value (art. 10) |
| Life insurance | Surrender value | Surrender value (art. 17) |
| Pension plan with no surrender and no qualifying event | Not declared | Whether the exemption in art. 4.Cinco applies has to be analysed |
Ana María's calculation
With her figures, and applying an average fourth-quarter price slightly below the closing price:
- Account in Bogotá: balance on 31 December 180,000 €, average balance for the fourth quarter 172,000 €. Wealth tax: 180,000 €.
- Portfolio: 950,000 € on 31 December; fourth-quarter average, let us say, 925,000 €. Wealth tax: 925,000 €.
- Flat in Medellín: acquisition value 140,000 €. For wealth tax, the highest of the values in article 10; for a foreign property without a Spanish cadastral value, the reference available is usually the acquisition value, although you have to check whether any other established value exists.
- Home in Valencia: it does not appear on the 720 (it is in Spain), but it does appear for wealth tax, where the law provides a partial exemption for the main home.
With the assets abroad alone, the total exceeds 1,200,000 €. With the home, the total value of her assets comes close to the 2,000,000 € which, under article 37, creates an obligation to file even if the tax works out at zero. And if, after the tax-free allowance and the rules of her autonomous community (Spain's regional governments), there is tax to pay, she is obliged in any event.
The tax-free allowance is set by each autonomous community; if it has not legislated on it, article 28 of the state law applies 700,000 €. Reliefs and rate scales also depend on the community, which is why we give no tax figure here: it is calculated with the rules in force in the community of residence in each tax year.
When someone files a 720 showing 1.2 million outside Spain and does not file wealth tax, the authorities do not need to look for anything: the taxpayer has supplied the figures. That is the most expensive combination, because the omission in wealth tax does carry tax, and when corrected by Hacienda, as the Spanish tax office is commonly known, it comes with interest and a penalty. We do not guarantee that tax will be payable in every case, but the question has to be asked.
If you hold assets abroad and have never checked whether wealth tax applies to you, in the Modelo 720 form you can give us your autonomous community and an estimate of what you hold in Spain and abroad; with that we check both obligations at once.
The reverse combination
The opposite also happens: taxpayers who file wealth tax with all their assets, including those abroad, and never filed the 720 because "everything has already been declared". The wealth tax return does not replace the 720. What it does do is greatly reduce the underlying risk: if the assets were in the wealth tax return, it is hard to argue that they were unjustified. What remains is the formal 720 penalty, which since 2022 has been governed by the general regime for information returns, and which we explain in what happens if I file it late.
Consistency from one year to the next
The relationship also works over time. An account that appears on a year's 720 with 180,000 € and is missing from the wealth tax return for the same year, or a property declared at 140,000 € on the 720 and at 90,000 € for wealth tax without explanation, are the inconsistencies that show up first in an automatic cross-check. You do not have to use the same figures, because the rules are different, but you do have to be able to explain each difference.
Cases where the relationship changes
- The regime in article 93 LIRPF (the Spanish income tax act): anyone who applies it is not obliged to file the 720 and, for wealth tax, is taxed under real liability, only on assets located in Spain.
- Spouses: each files their own 720 and their own wealth tax return, with the percentages resulting from their matrimonial property regime. In Ana María's case, which part of each asset belongs to each spouse depends on the regime governing their marriage, and if it is Colombian it has to be confirmed by a professional there.
- Joint limit with income tax: the law provides a combined cap on income tax and wealth tax that can reduce the tax payable; it is explained in the guide on the joint income and wealth tax limit.
If you are wondering whether you are obliged, the guide on the obligation to file wealth tax goes through the cases, and the one on valuing assets for wealth tax sets out each rule in detail.
At Salama Tax we prepare the 720 and wealth tax as a single piece of work for residents with international assets; that page explains what it includes and how each filing season is organised.