MODELO 714/718
Who is required to file Modelo 714 ?
Who is required to file Form 718 ?
Do I have to include assets and rights held abroad?
Modelo 714 – Wealth Tax in Spain
Form 714 is the Wealth Tax return, a tax levied on the net assets of individuals residing in Spain and, in some cases, non-residents with assets in Spain, as of December 31 of the previous year, generally exceeding €2 million.
Form 718 is the Temporary Solidarity Tax return for Large Fortunes. This tax is new (starting in 2023) and only affects individuals with very high net worth, generally exceeding €3 million.
It is like a “complement” to Form 714, but at the state level and without regional discounts. Even if you don’t pay Form 714 in your region, if your net worth is very high, you may still have to pay Form 718.
Who is required to file Modelo 714
(Impuesto de Patrimonio)?
Those who, as of December 31, have total assets (without deducting debts or applying discounts) of more than €2,000,000 must file it, or those who are owed a tax when filing Form 714. This usually occurs if, after deducting debts and applying exemptions, the value of the assets exceeds €700,000.
Also, keep in mind that if you live in Spain on a regular basis (you are a tax resident), you must declare all your assets, regardless of where they are located. If you do not live in Spain (you are not a tax resident), you only have to declare what you have in Spain.
In some regions such as Madrid, Extremadura, and Andalusia, even if you are required to file it, you don’t have to pay anything because there is a 100% tax discount
Who is required to file Form 718 (Wealth Tax)?
Form 718 must be filed by individuals with tax residence in Spain who have a net worth exceeding €3 million as of December 31 of the fiscal year. Non-residents who have assets or rights located in Spain that exceed this threshold are also required to file. This tax, which is complementary to the Wealth Tax, seeks to tax taxpayers with greater financial means. Filing is generally done electronically, generally between April and July, coinciding with the Income Tax campaign. It is crucial to review total assets to avoid penalties.
Is the Solidarity Tax on Large Fortunes still in effect?
Yes, the Temporary Solidarity Tax on Large Fortunes (ITSGF) is in effect during the 2024 fiscal year. Initially established for the 2022 and 2023 fiscal years, its application has been extended indefinitely until wealth taxation is revised in the context of the reform of the regional financing system.
This tax is levied on the net assets of individuals exceeding €3,000,000 and is supplemented by the Wealth Tax.
|
Taxable Base |
Amount |
Remaining taxable base |
Applicable rate % |
|
0,00 |
0,00€ |
3.000.000,00€ |
0% |
|
3.000.000,00€ |
0,00€ |
2.347.998,03€ |
1,7% |
|
5.347.998,03€ |
39.915,97 |
5.347.998,03€ |
2,1% |
|
10.695.996,06€ |
152.223,93 |
en adelante |
3,5% |
Once the full amount is determined, a limit similar to the one already in place for Personal Income Tax (IRPF) and IP amounts applies. Such that, when the sum of the full amounts of IRPF, IP, and IGF exceeds 60% of the personal income tax base, The IGF quota will be reduced until it reaches this limit, without the reduction being able to exceed 80% of the IGF quota prior to said reduction. These figures are calculated in full accordance with the IP regulations.
When is Modelo 714 filed?
The deadline for filing Modelo 714 is between April 1 and June 30 of each year, declaring the worldwide assets existing as of December 31 of the previous year.
How is Modelo 714 filed?
Modelo 714 is filed exclusively electronically through the electronic headquarters of the Spanish Tax Agency (AEAT). You need a digital certificate, electronic DNI, or Cl@ve PIN system, or we, as partners of the AEAT, US Tax Consultants.
Simply fill out the Modelo with the data of your assets and rights, deduct any debts, and then calculate the tax and file the return.
What should be included in Modelo 714?
The tax is calculated on net worth, which is the difference between assets and rights less deductible debts.
The assets and rights subject to tax are real estate (market or cadastral value), bank accounts (balance as of December 31 and average balance for the last quarter), financial investments (stocks, investment funds, cryptocurrencies, life insurance, redeemable pension plans, etc.), vehicles, boats, aircraft, and other luxury goods, jewelry, art, and antiques of significant value, and intellectual or industrial property rights if they are not part of an economic activity, worldwide.
On the other hand, deductible debts include mortgages on declared assets, personal loans, and other legally recognized debts.
The taxpayer’s primary residence, regardless of the autonomous community, is exempt up to €300,000.
Do I have to include assets and rights held abroad?
Yes, properties, bank accounts, investments, and other assets outside of Spain must be included.
Valuation of Assets
When you declare a property located abroad you must use the highest of the following values: the acquisition value, which is the price at which you purchased the property, including taxes and associated fees (notary, registry, etc.); the value verified by the tax authorities, if the tax authorities have performed an administrative appraisal of the property; or the cadastral value in the country of origin, if the country where the property is located has an official land registry.
If you have bank accounts in foreign currencies (USD, GBP, CHF, etc.), the balance must be converted to euros using the official exchange rate published by the European Central Bank (ECB) as of December 31 of the corresponding fiscal year.
The Tax Agency has specific rules, but they may raise questions.
Relationship between Modelo 714 and Modelo 720 (Report of assets abroad)
The relationship between Modelo 714 (Wealth Tax), Modelo 720 (Declaration of Assets Abroad), and Modelo 100 (Income Tax Return – Personal Income Tax) is key for those with assets in Spain and abroad.
Modelo 720 is for information purposes only and does not entail paying taxes. However, it is mandatory for Spanish tax residents who have assets abroad worth more than €50,000 in any of the three categories: bank accounts, securities, shares, insurance and investments, and real estate.
Modelo 714, on the other hand, is a tax, which varies by autonomous community, provided that the taxpayer’s net assets exceed €700,000, and all assets must be declared, including those held abroad.
Possible conflict: If a taxpayer declares an asset on Modelo 720 but does not include it on Modelo 714, the Tax Agency may investigate the taxpayer for possible tax evasion.
Relationship between Modelo 714 and Modelo 100 (Personal Income Tax)
Modelo 100 is the Income Tax return (IRPF) and reflects the taxpayer’s annual income.
Modelo 714 taxes net assets (what you have, not what you earn). Some assets declared on Modelo 714 may generate income that must be included on Modelo 100. For example, rental properties are declared on Modelo 100 as real estate income, and second homes are declared under the special income attribution regime, but the same property is included on Modelo 714 as part of assets.
Possible conflict: If there is a significant discrepancy between the assets declared on Modelo 714 and the income reported on Modelo 100, the AEAT may investigate.
In general, inconsistencies between Modelos can lead to inspections, for example, when assets are declared on Modelo 720 but not on Modelo 714, or when having a large amount of assets on Modelo 714 but declaring little income on Modelo 100, this may raise suspicions of undeclared income.
Modelo 714 by Autonomous Community
The Wealth Tax (Modelo 714) in Spain varies significantly depending on the Autonomous Community, as each Autonomous Community has the authority to establish minimum exemptions and specific discounts. The specificities for each Autonomous Community are detailed below:
• Community of Madrid, Extremadura and Andalusia: Applies a 100% tax discount on the tax, which effectively exempts taxpayers from payment, although the obligation to file a return remains if the established thresholds are exceeded.
• Region of Murcia: It establishes a minimum exemption of €3,700,000, which represents a 100% bonus for those whose assets are less than the minimum exemption.
• The Balearic Islands and Cantabria: Has raised the tax-exempt minimum to €3,000,000, meaning that only assets exceeding this amount are subject to the tax.
• Aragon: Establishes a minimum exemption of €400,000.
• Catalonia, and the Valencian Community: Maintains the tax-exempt minimum at €500,000, lower than the national minimum of €700,000, which means that more taxpayers are subject to the tax compared to other regions.
• Navarre: Establishes a tax-exempt minimum of €550,000.
• The Basque Country: Sets the tax-exempt minimum at €800,000.
• All other Autonomous Communities: In general, they apply the national tax-exempt minimum of €700,000, with the possibility of specific adjustments according to current regional regulations.
In the absence of a specific scale established by the autonomous community, the state scale applies, which is progressive and consists of the following sections:
- Up to €167,129.45: 0.2%
- From €167,129.45 to €334,252.88: 0.3%
- From €334,252.88 to €668,499.75: 0.5%
- From €668,499.75 to €1,336,999.51: 0.9%
- From €1,336,999.51 to €2,673,999.01: 1.3%
- From €2,673,999.01 to €5,347,998.03: 1.7%
- From €5,347,998.03 to €10,695,996.06: 2.1%
- More than €10,695,996.06: 3.5%
The Autonomous Communities with their own tax scale are Asturias, Cantabria, Catalonia, the Valencian Community, Galicia, the Balearic Islands, the Region of Murcia, Navarre, and the Basque Country.
Strategies to minimize the impact of
Modelo 714.
Some expats are considering strategies such as donations or holding companies to reduce their taxable assets.
They are also considering transferring their tax residence to regions with tax breaks.
Penalties for errors or omissions in Modelo 714 (Wealth Tax)
If you do not file Modelo 714 correctly, the Tax Agency may impose penalties. The fines vary depending on the type of violation:
1. Failure to file Modelo 714 when required.
If you were required to file a tax return and didn’t, there is a minimum penalty of €200 if you file it late without a request from the Tax Office. If the Tax Office requires the return, the fine can be 50% to 150% of the amount you owed to pay, plus late payment interest.
2. Late filing (without prior request).
If you file Modelo 714 late, but before the Tax Office detects it, there is a fixed penalty of €200. If you were required to pay the tax, surcharges apply to the amount due up to 3 months late: 1% + 1% additional for each month; between 3 and 12 months, the fixed penalty is 15%; and more than 12 months, the penalty is 20% + late payment interest.
3. Errors or inconsistencies in the tax return.
If there are errors or omissions in the declared data (for example, failure to include an asset) and the Treasury detects the error and considers that information has been concealed, the fine can range from 50% to 150% of the defrauded tax. However, if you correct the error before an inspection, it is possible to avoid or reduce penalties.
The Spanish Tax Agency has increased its oversight of high-net-worth expatriates as part of the 2025 Annual Tax and Customs Control Plan.
Why is it important to use the same tax preparer for all your returns?
When it comes to taxes, consistency and accuracy are key. Using the same preparer for all your tax returns in Spain and the US (personal income tax, wealth tax, corporate tax, Modelo 720, Modelo 1040, FinCEN 114, etc.) offers several advantages:
Consistency between Returns: Each tax return is interconnected. For example, Modelo 714 (Wealth) must match the Personal Income Tax Return (IRPF) (Modelo 100) regarding income and assets. If you use different tax preparers, errors can occur in the information you report on each Modelo, generating inconsistencies that may attract the attention of the Tax Agency.
Tax Optimization and Tax Savings: A single advisor can structure your taxation efficiently and take advantage of deductions and exemptions in one tax that reduce the burden on another (for example, offsetting losses in Corporate Income Tax).
Reducing the Risk of Errors and Penalties: The Tax Agency cross-references data between Modelos, for example, Modelo 720 on assets abroad with Modelo 714 on Wealth, and the Tax Agency cross-references them with the IRS. A tax preparer who handles all your returns will ensure there are no discrepancies, avoiding inspections or fines.
Deep Understanding of Your Personal Situation: An advisor who knows your financial history can anticipate problems and opportunities. You won’t have to review everything from scratch every year, which saves time and money.
What can I do now?
Here’s the list of necessary documentation for us to prepare Modelo 714 for you. Don’t hesitate to call us at +34 915194392, send us an email, or request a free appointment so we can explain the first steps and answer any questions you may have. US Tax Consultants.
CONTACT US
Visit us
Travesía de las Cañas, 2 – 28043 Madrid, Spain
Monday – Friday: 9am–2pm, Saturday & Sunday: Closed
Naval Station Rota – Rota Gateway Mall – 11530 Rota, Spain
Monday – Friday: 11m–6pm, Saturday & Sunday: Closed
Sitio do Alportel 32A – Sao Bras de Alportel – Algarve 8150-014, Portugal
Call us
+34 915 194 392
Write us
info@ustaxconsultants.es