Modelo 720 is an information return, not a tax. A US citizen who is tax resident in Spain files it when foreign accounts, foreign securities and insurance, or foreign property each pass €50,000, measured separately. It is due between 1 January and 31 March for the preceding year. Nothing is paid with it.
| Filing | What it covers | Threshold | Window | Tax or information |
|---|---|---|---|---|
| Modelo 720 | Foreign accounts; foreign securities, insurance and annuities; foreign real estate | €50,000 per category | 1 January to 31 March | Information only |
| Modelo 721 | Virtual currency held abroad through a third-party custodian | €50,000 | 1 January to 31 March | Information only |
| Wealth tax | Worldwide net wealth of a resident; Spanish assets of a non-resident | Tax payable, or assets above €2,000,000 | Set by ministerial order each year | Tax |
| Solidarity tax | Net wealth above €3,000,000 | Tax payable only | Set by ministerial order each year | Tax |
| FBAR | Foreign accounts, measured from the US side | $10,000 aggregate at any time in the year | 15 April, automatic extension to 15 October | Information only |
| Form 8938 | Specified foreign financial assets, from the US side | $200,000 single or $400,000 joint at year end, living abroad | With the federal return | Information only |
Who has to file Modelo 720
Residence in Spain decides it, not citizenship. Disposición adicional decimoctava of Ley 58/2003 places the obligation on persons resident in Spanish territory, and Real Decreto 1065/2007 widens it far past legal ownership: beneficiaries, representatives, authorised signatories, anyone with power of disposal, and beneficial owners under Ley 10/2010 all fall inside it.
That width is where Americans are caught. A signature card on a parent’s account in Ohio, or a position as beneficial owner of a trust, can create a reporting duty over money that is not yours. The rules also reach someone who held a qualifying asset during the year but not on 31 December, who reports its value at the date the holding ended.
One group sits in unsettled ground. Article 93 of Ley 35/2006, the Beckham law, lets a new arrival elect to be taxed under the non-resident income tax rules for the year of the move and the five following periods. That election changes how income is taxed. It does not, in its own words, lift an information obligation Ley 58/2003 writes by reference to residence in Spanish territory.
What the thresholds are, and the €20,000 rule
€50,000, tested three times over rather than once. Accounts are one block, securities with insurance and annuities a second, real estate a third, each measured on its own total. Cross one and every item in that block is reported. Cross none and nothing is filed.
Accounts carry a second test. Article 42 bis measures both the combined balance on 31 December and the combined average over the last quarter, and exceeding either brings every account in. A year-end transfer that flatters the December balance does not help if the autumn average was above the line.
After the first filing the return is not annual. It comes round again only when the combined figure for a block rises more than €20,000 above the figure that triggered the last return, or when an asset in it was sold, closed or given up. A resident whose foreign holdings sit still for five years files once in five years.
What happens if the return is not filed
The general penalty regime applies: €20 for each item or set of items of data, minimum €300, maximum €20,000, and half of each figure where the return is filed late without a prior request from the tax administration. The special Modelo 720 regime no longer exists.
It was removed because the Court of Justice of the European Union struck it down. In Case C-788/19, decided 27 January 2022, the Court held that Spain had failed to fulfil its obligations under Article 63 TFEU and Article 40 of the EEA Agreement by treating undeclared foreign assets as “unjustified capital gains” with “no possibility, in practice, of benefiting from limitation”, by imposing a proportional fine of 150 percent of the tax on those amounts, and by imposing flat-rate fines whose total was not capped.
Ley 5/2022 then deleted the penalty paragraph from disposición adicional decimoctava and rewrote article 39 of Ley 35/2006, so the deemed-income rule no longer runs without limitation. The standard limitation period applies, and a taxpayer who proves ownership from before that period is outside the charge.
Where cryptocurrency sits
Virtual currency held abroad is a fourth and separate obligation, on its own €50,000 threshold, reported on Modelo 721 rather than Modelo 720. Letter d) was added to disposición adicional decimoctava by Ley 11/2021; article 42 quater of Real Decreto 1065/2007 sets the same 1 January to 31 March window.
The wording turns on custody, not the coins: it reaches currency held by someone safeguarding private cryptographic keys for others, where that custodian sits outside the Spanish regime. A wallet whose keys nobody else holds is not described by the article.
Whether Modelo 720 replaces the FBAR or Form 8938
It replaces neither. The three regimes run in parallel over the same money and satisfying one has no effect on the others. The FBAR is due once foreign accounts together exceed $10,000 at any point in the calendar year. Form 8938 begins at $200,000 at year end for an unmarried filer living abroad, and $400,000 on a joint return.
They also disagree about which assets are foreign, because each measures from its own capital. A $60,000 brokerage account in New York is foreign to Spain and domestic to the United States. A €60,000 account in Valencia is the reverse. An American in Madrid can report the New York account in March and the Valencia account to FinCEN in April.
Who pays Spanish wealth tax, and how much
A Spanish resident pays on worldwide net wealth; a non-resident pays only on what is situated in Spain. The State exempt minimum is €700,000, with the main home exempt up to a further €300,000, and the State scale runs from 0.2 percent to 3.5 percent on the portion above €10,695,996.06.
Then the region decides, and it decides a great deal. Ley 19/1991 lets an autonomous community set its own exempt minimum and scale, and the Comunidad de Madrid keeps the €700,000 minimum and then rebates 100 percent of whatever liability remains. Non-residents are not shut out: the fourth additional provision gives them the rules of the community where their Spanish assets of greatest value lie.
A rebate is not an exemption from filing, which catches people told Madrid has no wealth tax. Article 37 requires a return where tax is payable or, failing that, where assets exceed €2,000,000. In a full rebate region the liability is nil and the return is still due.
What the solidarity tax adds above €3 million
Nothing below €3,000,000, and 1.7 percent to 3.5 percent above it. The State tax created by article 3 of Ley 38/2022 reduces the base by a €700,000 exempt minimum, charges nothing on the first €3,000,000, then 1.7 percent to €5,347,998.03, 2.1 percent to €10,695,996.06 and 3.5 percent beyond.
Its yield is ceded to no region, which is the point of it. A regional rebate reduces the wealth tax and cannot reach this one, so a resident of Madrid with net wealth of €6,000,000 pays nothing in wealth tax and a real amount here. For a taxpayer charged by personal obligation the three charges together may not exceed 60 percent of the income tax base, and the cut-back is capped at 80 percent of the solidarity charge.
Two changes made in December 2023 matter more than the original drafting. Real Decreto-ley 8/2023 extended the tax until wealth taxation is reviewed within the reform of regional financing, rather than the two years the original law allowed, and extended the €700,000 exempt minimum to every taxpayer, resident or not. A return is due only where tax is payable.
Why the tax treaty does not reach either tax
Because neither tax is in it. Article 2 of the 1990 convention between the United States and Spain lists the taxes covered, and on the Spanish side those are the income tax on individuals and the corporation tax. Wealth tax and the solidarity tax sit outside it, so none of its relief articles touches them.
Nor is there relief on the US side. Ley 38/2022 allows a deduction for wealth taxes paid abroad, and the United States levies no comparable tax, so there is nothing to deduct. The foreign tax credit works against income tax, which these are not. A Spanish wealth tax bill is a cost nothing offsets, which is why the region a person settles in changes the arithmetic most.
Sources
- Agencia Estatal Boletín Oficial del Estado — Ley 58/2003, General Tributaria, disposición adicional decimoctava and article 198 — https://www.boe.es/buscar/act.php?id=BOE-A-2003-23186 — checked 5 October 2026
- Agencia Estatal Boletín Oficial del Estado — Real Decreto 1065/2007, articles 42 bis, 42 ter, 42 quater and 54 bis — https://www.boe.es/buscar/act.php?id=BOE-A-2007-15984 — checked 5 October 2026
- Court of Justice of the European Union — Judgment of 27 January 2022, Commission v Spain, Case C-788/19 — https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A62019CJ0788 — checked 5 October 2026
- Agencia Estatal Boletín Oficial del Estado — Ley 5/2022, de 9 de marzo, final provisions four and five — https://www.boe.es/buscar/act.php?id=BOE-A-2022-3712 — checked 5 October 2026
- Agencia Estatal Boletín Oficial del Estado — Ley 35/2006, Impuesto sobre la Renta de las Personas Físicas, articles 39 and 93 — https://www.boe.es/buscar/act.php?id=BOE-A-2006-20764 — checked 5 October 2026
- Agencia Estatal Boletín Oficial del Estado — Ley 19/1991, Impuesto sobre el Patrimonio, articles 5, 28, 30, 37 and additional provision four — https://www.boe.es/buscar/act.php?id=BOE-A-1991-14392 — checked 5 October 2026
- Agencia Estatal Boletín Oficial del Estado — Ley 38/2022, de 27 de diciembre, article 3, Impuesto Temporal de Solidaridad de las Grandes Fortunas — https://www.boe.es/buscar/act.php?id=BOE-A-2022-22684 — checked 5 October 2026
- Agencia Estatal Boletín Oficial del Estado — Real Decreto-ley 8/2023, article 17 and additional provision five — https://www.boe.es/buscar/act.php?id=BOE-A-2023-26452 — checked 5 October 2026
- Comunidad de Madrid — Decreto Legislativo 1/2010, texto refundido de tributos cedidos, articles 19 and 20 — https://www.boe.es/buscar/act.php?id=BOCM-m-2010-90068 — checked 5 October 2026
- Internal Revenue Service — Convention between the United States and the Kingdom of Spain, 1990, Article 2 — https://www.irs.gov/pub/irs-trty/spain.pdf — checked 5 October 2026
- Internal Revenue Service — Summary of FATCA reporting for US taxpayers — https://www.irs.gov/businesses/corporations/summary-of-fatca-reporting-for-us-taxpayers — checked 5 October 2026
- Internal Revenue Service — Report of Foreign Bank and Financial Accounts (FBAR) — https://www.irs.gov/businesses/small-businesses-self-employed/report-of-foreign-bank-and-financial-accounts-fbar — checked 5 October 2026
Common questions
- Do I have to file Modelo 720 if my only accounts abroad are in the United States?
- Yes, where they matter in size. Spain measures from Spain, so a US bank or brokerage account is a foreign account for Modelo 720 purposes. Once the combined balance on 31 December, or the combined average over the last quarter, passes €50,000, every account in that block goes on the return.
- Does filing Modelo 720 mean I owe Spanish tax on the accounts I report?
- No. Modelo 720 is an information return and nothing is paid with it. Spanish tax on those assets, if any, arrives separately through income tax, wealth tax above the €700,000 exempt minimum, or the solidarity tax above €3,000,000. The return itself creates no liability.
- Is the €50,000 threshold a single total across everything I hold abroad?
- No, it is tested three times over. Accounts are one block, securities together with insurance and annuities are a second, real estate is a third, and each is measured on its own total. Holdings just under the line in two different blocks cross nothing. A single block above €50,000 brings every item in that block into the return.
- Once I have filed Modelo 720, do I file it again every year?
- Not automatically. The return comes round again only when the combined figure for a block rises more than €20,000 above the figure that triggered the last filing, or when an asset in that block was sold, closed or given up. Holdings that sit still for five years produce one filing in five years.
- What happens if I was required to file Modelo 720 and never did?
- The general penalty regime applies: €20 for each item or set of items of data, with a minimum of €300 and a maximum of €20,000. Those figures are halved where the return goes in late without a prior request from the tax administration. The old special regime for this return no longer exists.
- Was the 150 percent Modelo 720 fine really abolished?
- Yes. In Case C-788/19, decided 27 January 2022, the Court of Justice of the European Union held that the 150 percent proportional fine, the uncapped flat-rate fines, and the treatment of undeclared foreign assets as unjustified capital gains with no limitation all breached Article 63 TFEU. Ley 5/2022 removed them.
- I am taxed under the Beckham law. Does Modelo 720 still apply to me?
- The texts do not settle it. Article 93 of Ley 35/2006 lets a new arrival be taxed under the non-resident income tax rules for the year of the move and five further periods, which changes how income is taxed. It does not in its own words lift an obligation Ley 58/2003 ties to residence in Spanish territory.
- Does Modelo 720 cover my FBAR and Form 8938?
- It covers neither. The three regimes run in parallel and satisfying one has no effect on the others. The FBAR falls due once foreign accounts together exceed $10,000 at any point in the year. Form 8938 starts at $200,000 at year end for an unmarried filer living abroad, and $400,000 on a joint return.
- Do I report cryptocurrency on Modelo 720?
- Not on Modelo 720. Virtual currency held abroad is a separate obligation with its own €50,000 threshold, reported on Modelo 721 in the same 1 January to 31 March window. The wording turns on custody: it reaches coins held by someone safeguarding private keys for others, not a wallet whose keys nobody else holds.
- I live in Madrid, where the wealth tax is rebated. Do I still file a wealth tax return?
- Where assets exceed €2,000,000, yes. Article 37 of Ley 19/1991 requires a return when tax is payable or, failing that, when the value of assets passes €2,000,000. Madrid rebates 100 percent of the liability, which leaves nothing to pay and the filing obligation untouched.
- Can the US tax treaty with Spain reduce a Spanish wealth tax bill?
- No. Article 2 of the 1990 convention lists the taxes it covers, and on the Spanish side those are the income tax on individuals and the corporation tax. Wealth tax and the solidarity tax sit outside it. The US foreign tax credit works against income tax, and the United States levies no comparable wealth tax.
A note on tax content
Tax content on this site is for general informational purposes only and does not constitute tax advice. Rules for U.S. citizens abroad depend on individual circumstances, country of residence, income sources, account structures, and applicable treaties — always consult a qualified tax professional in the relevant jurisdiction before making decisions.
The information provided by US Expat is for educational and informational purposes only. It should not be treated as personalized tax, legal, immigration, investment, insurance, or financial advice. U.S. citizens abroad should consult qualified professionals who understand their specific facts and circumstances. US Expat is not a law firm, tax filing firm, or immigration law firm.
Rules and thresholds for U.S. citizens abroad change. Pages are reviewed periodically; confirm current details with a qualified professional before acting.
