Evolution of assets on the basis of form 720

• The Tax Agency is launching a new tool for the analysis of the information incorporated into the 'model 720' that will streamline, systematize and reinforce the control of assets and income
• Combined with big data analysis methods, it allows for the establishment of new search criteria for tax risk patterns and their extension to more complex corporate structures.
• The tool shows that the net balance of assets abroad declared in the '720' has grown by 6.7 billion between 2012 and 2015, and especially in accounts, funds and real estate
• The need to make real ownership transparent, which was required by the Special Tax Declaration, causes the amount of the shares declared in the 720 to decrease significantly and the accounts to increase.

 

July 29, 2016.- The Tax Agency has launched a new tool to manage the analysis of information entered by taxpayers in the 'form 720' of assets and rights abroad. This tool, which will streamline, systematize and strengthen the control of assets and income, offers the possibility of establishing the evolution of the net balances of assets declared abroad and shows that, between 2012 and 2015, the value of the assets and rights declared in Form 720, adjusted based on the modifications and cancellations reported by taxpayers in the form, has grown by 6.7 billion euros, to exceed 97.7 billion. The total amount of assets and rights declared for the first time so far exceeds 141 billion.

The total balance of 97.7 billion in 2015 is broken down into almost 44 billion in securities and rights (shares), more than 20.2 billion in funds, more than 18.3 billion in bank and credit accounts, 11.6 billion in real estate and 3.6 billion in insurance. Between 2012, the first year for which the 720 declaration was required, and 2015, the transfer of declared amounts between two categories of assets and rights is particularly notable: accounts and shares. Thus, while the value of the former increases by more than 3.3 billion euros, the value of securities is reduced by more than 2.2 billion.

This evolution is closely linked to the need to make ownership transparent as required by the Special Tax Declaration, so that the true owner of the assets and rights would present the DTE and also assume legal ownership of the same. As a result, taxpayers have been reflecting the cancellation of shares in interposed companies and structures and the parallel incorporation of assets in accounts in their name in Form 720.

On the other hand, between 2012 and 2015 the balance of the funds has grown by more than 3 billion, the amount declared for real estate by 2.2 billion and the value of insurance and life annuities by 380 million.

 

Distribution by country and goods 

According to the distribution by country, in 2015 more than a third of the declared global balance was concentrated in Switzerland (almost 20.2 billion) and Luxembourg (close to 13.5 billion). By type of asset, Switzerland also stands out in shares and accounts (7.4 and 5.9 billion, respectively), where the transfer of declared amounts between both categories of assets is particularly noticeable in the 2012-2015 comparison, with a reduction in values and a consequent increase in accounts.

As for the other categories of assets and rights, more than 70% of the total funds correspond to Luxembourg (more than 8.1 billion) and Switzerland (6.3 billion). Luxembourg is also the leading country in terms of insurance balance (1.3 billion), while in real estate the highest amounts are in France and the United Kingdom, with close to 2 billion in both cases.

In turn, while the evolution of the equity balances between 2012 and 2015 is marked, in the case of some countries, by specific corporate transactions and general investment dynamics, such as the decline in shares in the Netherlands and the increase in funds in Luxembourg, in other cases the gradual process of surfacing of taxable bases can be seen, as for example, in the fact that Andorra, Panama, Liechtenstein and the Bahamas are four of the five countries with the greatest decline in overall balances, for a combined amount for the four territories of almost 2.3 billion euros.

 

Asset control from 720 onwards

The new tool that allows access to the net balances of each year declared in Form 720 offers the Tax Agency the possibility of establishing a common thread between the different declarations of the model that are presented annually. This facilitates both the determination of changes in assets and taxable events to be regularised, as well as the analysis of a permanently updated situation of assets and rights, for the purposes of tax control.

The combination of this instrument with big data strategies and methods will allow for greater use of the information available in the Agency's database and massive processing of the information, favouring the establishment of new criteria for searching for tax risk patterns and their extension to more complex corporate structures.

In this way, the Tax Agency is strengthening the control of assets based on the 720 form that it has been maintaining in recent years, and which has already generated, beyond the actual regularizations that are carried out, a significant improvement in the voluntary compliance of the declarants of the form.

Thus, the taxable base declared in the Personal Income Tax for 2014 by the filers of 720 was already 9.4% higher than that of the 2010 Personal Income Tax, and their total rate had increased by 23.8%, compared to the decreases recorded in the bases and rates of all Personal Income Tax filers.

 

The following tables are attached to the Press Release:

Evolution of the asset balances declared in the model (2012-2015) Amounts in euros
Asset balances declared in model 720 broken down by type of asset or right 2012 Amounts in euros
Asset balances declared in model 720 broken down by type of asset or right 2015