Expat financial advice from the experts

What impact does the 720 Modelo have on my pension?

720 Modelo pension

720 Modelo and my pension

Before answering ‘what impact does the 720 Modelo have on my pension’ we are best off breaking it down. Many of our clients know about the 720 Modelo but are unsure the exact details and associated implications. So……

What is the 720 Modelo?

Brought in under new legislation in 2012 The 720 Modelo requires any Spanish tax resident (those who spend 183 days plus a year in Spain) to report assets worth €50,000 or more (or currency equivalent) held outside of Spain to report to the Spanish Tax authorities.

There are 3 asset classes/categories which need to be reported if the value is over €50,000 within EACH.

  • Bank accounts
  • Investments
  • Property

Reporting your 720 Modelo

It is mandatory to report to the Spanish Tax Authorities. If they discover you have assets in any of the above asset classes with a total value over €50,000 strict penalties are imposed.  As a result, maximum charges up to 150% of the undeclared assets, €10,000 minimum fine and 4% interest have been handed out. One key factor to consider is as there is no statute of limitations regarding the Modelo 720 it is limitless as to how far they can go back.

Do I have to declare my pension for the 720 Modelo?

In short, yes you do! Whether you hold a QROPS or an International SIPP your pension will fall under the investment asset class. But, remember, at present, the 720 Modelo is only a reporting procedure. At present this does not mean you will be liable to pay anything at all on your pension pot. The punishment is however severe and not worth risking the chance for no upside.

What impact does the 720 Modelo have on pension?

In truth, very little at this stage but apart from the requirement that you do NEED to report it. We find a number of our clients that is it also a good time to review your pension. QROPS have become synonymous with overcharging and opaque structures incorporating bonds and high-risk investments. As your pension decreases what may once have made financial sense may no more. At Harrison Brook we offer a full free pension review, analysing your existing portfolio to make sure it is both cost-effective and reflects your current aims and objectives for growing or drawing down your pension pot.

To find out more about your pension position and options. Contact Harrison Brook today to speak with an advisor to discuss your options. Harrison Brook is a cross-border pension transfer specialists. We can explain and assist in discovering the options available to you. Taking you through the process of gaining valuations and repositioning portfolios to suit your exact requirements.

Take the first step.

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