Form 720 for Resident Aliens

It is common for many foreign nationals who take up residence in Spain to maintain bank accounts, investments, insurance policies, or real estate in their country of origin. The problem arises when this financial situation is not reviewed from a tax perspective, and the taxpayer discovers too late that their residence in Spain may trigger reporting obligations regarding assets located outside the country.

Form 720 for foreign residents requires a systematic review: what assets exist, where they are located, who is listed as the owner, how long they have been held, what documentation can verify this, and whether the individual should be treated as a tax resident in Spain. It is not just a form; it is a tax snapshot of assets located abroad that must be prepared with meticulous care.

The Tax Agency defines Form 720 as an informational return regarding assets and rights located abroad. Official information can be found on the Tax Agency’s website.

Tax Advice on Overseas Assets

Form 720 particularly affects foreigners who arrive in Spain with assets they have already accumulated in another country. Bank accounts opened years ago, family homes, financial investments, insurance policies, equity interests, or property rights may continue to exist outside of Spain after the move.

The issue is not merely whether those assets generate income. There may also be a reporting obligation. Therefore, the review should begin by organizing the taxpayer’s asset inventory and determining which assets or rights may be relevant from a tax perspective in Spain.

IN DIEM addresses this review as part of its advisory services to tax attorneys serving foreign residents in Spain, from a personal, documentary, and preventive perspective.

When Should a Resident Alien File Form 720?

The turning point usually comes when a person becomes a tax resident in Spain or when they discover that their assets held abroad may trigger reporting requirements. It can also occur while preparing an income tax return, upon receiving a notice from the Tax Agency, or when arranging an estate, a sale, or a family restructuring.

Accounts, securities, insurance, and rights outside Spain

Bank accounts held abroad are one of the most common scenarios. Many foreign nationals maintain accounts in their country of origin for family, work, or savings reasons, without initially associating them with a potential Spanish tax obligation.

Securities, funds, insurance policies, shares, or property rights located outside of Spain may also need to be reviewed. The analysis should not be limited to the name of the financial product, but should also consider its ownership, location, documentation, and any potential reporting requirements.

Properties located abroad

Real estate located outside of Spain warrants special attention. It may be a family home, an inherited property, a rental property, or an asset that the individual retains in their country of origin.

If part of the foreign assets consists of real estate, the review may require a specific analysis of real estate held abroad while residing in Spain. This page does not cover international real estate taxation, but it does identify real estate as a potentially relevant item on Form 720.

Documentation and Ownership of Assets

A proper review of Form 720 cannot be based on estimates. It is advisable to gather bank statements, deeds, certificates, banking documents, contracts, proof of ownership, and any other documents that allow for the proper identification of the assets.

It is also important to review situations involving joint ownership, family assets, old accounts, shared rights, or assets that the person considers inactive but that continue to exist formally outside of Spain.