Paolo Ferretti, an Italian settled in Valencia, filed his first 720 in March 2024 with the figures for 2023: two accounts in Milan that together held 62,000 € on 31 December and a share portfolio with a broker in Luxembourg worth 85,000 €. In 2025 he filed nothing, because nothing much had changed. In 2026, going through his statements for 2025, he found this: the accounts held 79,000 € between them and the portfolio, after a good year on the stock market, 108,000 €. On top of that, in September he had closed one of the Milan accounts and moved the money to the other. Did he have to file again? Yes, for two different reasons, and it is worth understanding both.
The general rule: it is not repeated every year
The Regulations (Royal Decree 1065/2007) say the same thing in the three articles that govern Modelo 720, the Spanish return on assets held abroad: filing in later years is compulsory only when the joint value of the block has increased by more than 20,000 € compared with the value that determined the filing of the last return. It is in paragraph 5 of article 42 bis for accounts, paragraph 5 of article 42 ter for securities, funds and insurance, and paragraph 7 of article 54 bis for real estate.
That sentence has three practical consequences:
- the increase is measured block by block, not across everything you hold abroad;
- the reference point is not the previous year but the last return filed for that block;
- what counts is the net increase of the whole block, not that of any single item.
The mistake of comparing with the previous year
Because the comparison is with the last return filed, small increases accumulate. The Agencia Tributaria, the Spanish tax agency, illustrates this in its frequently asked questions on the form with an example of this kind, which we apply to Paolo's portfolio:
| Tax year | Value of the securities block | Change on the previous year | Change on the last return (2023) | Files? |
|---|---|---|---|---|
| 2023 | 85,000 € | — | — | Yes (first time) |
| 2024 | 97,000 € | +12,000 € | +12,000 € | No |
| 2025 | 108,000 € | +11,000 € | +23,000 € | Yes |
Had Paolo looked only at how much the portfolio rose in 2025, he would have concluded that 11,000 € does not create an obligation. But against what he declared in 2023 the rise is 23,000 €, and that is over the limit. Once he files for 2025, that 108,000 € becomes the new reference for the years that follow.
The same happened in his accounts block: 62,000 € declared in 2023 against 79,000 € in 2025 is 17,000 € more. On its own, that increase would not oblige him to file. But for accounts the comparison has to be repeated with the two figures used in this block, the balance on 31 December and the average balance for the last quarter; if either of them has grown by more than 20,000 € over the figure in the last return, the form is filed again.
The second reason: closing something already declared
Even if no block grows, there is one situation that always requires filing: ceasing to hold an item that had already been declared. The Regulations impose it in all three blocks, in wording that allows no exceptions: filing "shall in any case be compulsory" when the account is closed, the securities are sold or the property is transferred.
That is why Paolo also files for his accounts block: in September he closed an account he had declared in 2023. In the return for 2025 he reports that account with the date of closure and its balance on that day, and the account that remains open with its year-end balances.
| What happens during the year | Consequence for the 720 |
|---|---|
| You close an account already declared | The form is filed: date of closure and balance on that date |
| You stop being an authorised signatory on a declared account | The form is filed: date of revocation and balance on that date |
| You sell a declared property | The form is filed: value and date of transfer |
| You sell securities and reinvest everything in other reportable securities | Only the balances on 31 December, according to the Agency's criteria |
| You close an account you never had to declare | Nothing is filed for it |
The fourth row saves pointless work for anyone who turns over their portfolio: if the proceeds of a sale are reinvested in full in other securities in the same block, the Agencia Tributaria takes the view that it is enough to declare the year-end positions. The fifth row also comes from its frequently asked questions: if an asset never created an obligation, closing it does not create one either.
How the exchange rate comes into it
Paolo holds everything in euros, but many taxpayers do not. According to the criteria published by the Agencia Tributaria, exchange rate movements do count when measuring the 20,000 € increase for accounts and securities: an account in Swiss francs can require you to file again without a single extra franc being paid in, simply because the euro has weakened. Not so for real estate: once the acquisition value has been fixed in euros, later movements in the exchange rate are not taken into account for that calculation.
A numerical example with a dollar account, declared at the time as 90,000 USD at a rate of 1.10 USD to the euro:
- value declared: 90,000 / 1.10 = 81,818 €;
- two years later the balance is still 90,000 USD, but the rate on 31 December is 0.85 USD to the euro (a rate assumed for the example);
- new value: 90,000 / 0.85 = 105,882 €;
- increase: 24,064 €, over 20,000 €, so the form is filed again.
The rates are made up to show how the mechanism works, but the effect is real: with volatile currencies you have to recalculate every year even if the nominal balance does not move.
A block losing value does not oblige you to file anything. What obliges you is closing, selling or ceasing to be an authorised signatory on something already declared. Many people confuse the two and either file every time the stock market falls or forget to report the account they closed in the summer.
If you have filed before and do not know whether you need to this year, in the Modelo 720 form you can tell us what you declared, in which year and what has changed since.
Which reference to use when there have been several 720 returns
If you have filed more than once, the comparison figure for each block is the one from the last return you filed for that block. Your last return for accounts may be from 2022 and your last one for securities from 2024. Keeping a note of the date and the joint value used for each block saves a great deal of doubt: without it, rebuilding the reference means reopening old returns and checking which exchange rate was applied.
Nor is it advisable to file "just in case" every year without needing to: it has no negative consequences, but it changes your reference. If you file voluntarily with a higher value, the next increase will be measured from there.
Where the penalty comes in if you miss it
Forgetting the second filing has the same consequences as forgetting the first: the general regime for information returns in the Ley General Tributaria (the Spanish general tax act), which is reduced if you file late before Hacienda, as the Spanish tax office is commonly known, asks you to. We cover it in what happens if I file it late and, in more technical detail, in the guide on when the 720 has to be filed again.
Tracking these references year by year, block by block, is one of the tasks we take on at Salama Tax for people who have already filed at some point: that page describes how we organise it and what we need from each tax year.