Form 720 and Non-Residents: Who Files, Transition Traps, and Best Practices Before You Move

There is recurring confusion around Form 720. The short version: Form 720 applies to Spanish tax residents who must report foreign assets exceeding certain thresholds. If you are a non-resident, you generally do not file Form 720. However, many non residents become residents due to relocation for work, retirement, or family—and that is where planning (and paperwork) can make or break your first tax year in Spain. Here is a pragmatic roadmap from a tax lawyer in Spain.

1) Who is a Form 720 filer?

You become a Form 720 filer when you are tax resident in Spain and, at year-end, you hold reportable foreign assets above category thresholds. The three categories are:

1. Bank and deposit accounts held abroad.
   
   

2. Securities, rights, and life assurance held abroad (shares, bonds, funds, certain policies).
   
   

3. Real estate and rights over real estate located abroad.
   Thresholds are assessed by category. After your first filing, you typically re-file only when the category increases beyond a set amount, or when there are new assets or particular changes.
   
   

2) Non-residents: what you file instead

If you remain non-resident, your focus is NRIT using Form 210 (rental, deemed income, capital gains), municipal plusvalía for urban property transfers, and potential VAT/withholding obligations if you trade in Spain. Form 720 is irrelevant until you meet Spanish tax residency criteria.

3) Becoming resident: plan your arrival year

The year you become tax resident is pivotal. Spain uses tests such as >183 days or centre of vital interests. Ahead of the year you expect to qualify as resident:

• Build a foreign-asset inventory (accounts, portfolios, policies, properties).
  
  

• Gather year-end statements, ownership percentages, and beneficial ownership details (trusts, private companies).
  
  

• Decide whether to simplify complex structures that add compliance cost but no strategic benefit.
  
  

• Align with double tax treaties so your first resident income tax return doesn’t contradict your Form 720.
  
  

4) Asset category nuances and grey areas

• Life insurance and policies with an investment component: Understand whether the surrender value is reportable and how it is measured.
  
  

• Unlisted shares and private companies: Identify your ownership percentage, voting rights, and valuation basis.
  
  

• Trusts and foundations: Spain focuses on beneficial ownership and control; documentation is essential.
  
  

• Joint accounts and minors: Report according to your share and responsibility; retain birth certificates or guardianship proof if relevant.
  
  

• Currency conversion: Convert values using the appropriate method and keep a clear record of the rates and dates applied.
  
  

5) Consistency with your resident return

Your first resident income tax return (IRPF) and Form 720 must tell the same story: account numbers, policy identifiers, and real estate titles should match. Mismatches invite questions. If you own a foreign company and also receive dividends or salary, cross-check names, amounts, and dates.

6) Penalty awareness and posture

While penalty frameworks evolve, your safest approach is complete, timely, and consistent disclosure once you are resident. Keep copies of statements, contracts, valuations, and residence certificates. If you discover an omission, act promptly and seek advice on corrective filings.

7) Case study: the early mover advantage

A UK family plans to relocate on 10 January next year, likely becoming tax resident that same year. Six months before moving, they:

• Compile an asset map of bank accounts, ISAs, a pension wrapper, a life policy, and a holiday home in Portugal.
  
  

• Close redundant accounts and consolidate custodians to reduce document sprawl.
  
  

• Obtain policy valuations and clarify beneficial ownership of a family company.
  
  

• Engage a lawyer in Spain to set timelines for Form 720 and the first resident IRPF return.
  Result: smooth first year, consistent filings, and no scramble for missing statements.
  
  

8) Best practices checklist before you move

• Decide your arrival year strategy (resident this year or next).
  
  

• Inventory foreign assets by category with identifiers and values.
  
  

• Gather beneficial ownership documents for trusts and private companies.
  
  

• Create a digital archive by category and year.
  
  

• Coordinate with a tax advisor in Spain and your home-country accountant to avoid double reporting or inconsistent valuations.
  
  

9) FAQ snapshot

• I am non-resident but own a home in Spain and stocks in the US. Do I file 720? No, not until you are tax resident in Spain.
  
  

• Do I report crypto on 720? Treatment can be technical—seek current guidance if resident. It should be reported on Form 721, similar to 720 but only for crypto-assets.
  
  

• What if I become resident mid-year? Plan your cut-off and align account statements to the relevant year-end.
  
  

Moving to Spain and unsure if Form 720 will apply to you? Speak to a tax lawyer in Spain used to guiding non residents through residency transitions. Book here: https://calendar.app.google/JVoXFG8h3eiu1eGu5