The duty to fulfil this Form related to assets and rights out of Spain is based on the following facts:
The entity, established as an Investment Club from Madrid Stock Market, has the legal form of a Community of goods and it is participated by several partners which made their investment through a foreign broker in the United States of America. Said broker acts through two different accounts:
- In one of them, the result of his transactions with financial derivates is shown daily and,
- The second one is an omnibus account, titled by the broker, which serve as a warranty deposit for the transactions with financial derivates.”
The Spanish Tax Office establishes, according to articles 42 bis and 42 ter of the General Regulation of the Tax Procedure, that it is mandatory to submit the informative Form 720 related to assets and rights abroad, not only for communities of goods and estates of deceased person but also for other entities without legal status being an economic unit or separate group of assets capable of taxation.
Therefore, if the Community of goods is the bearer of accounts, shares, rights, insurances and real estate located abroad, it will be required to submit an informative form referred to said assets, unless any of the exemptions from articles 42 bis and 42 ter occur.
In addition to that, whoever appears as legal representative, authorised personnel or beneficiary, or those who have disposal power over the assets, must also submit the informative declaration.
Thus, as long as any of the co-proprietors is found in any of the aforementioned situations, it will be mandatory to submit the informative Form 720, unless some of the exemptions envisaged on the Regulation of the Tax Procedure emerge.
Furthermore, the Spanish Tax Office establishes, regarding derivative financial instruments, that they are not considered as stock or representative rights of participation on legal entities, nor as representation of transfer of own capital to third parties, therefore they are not subject to the obligation to submit the Form 720.
The consultant expresses that she has an instrumental account in relation to the investment of derivates, which she uses trough a foreign broker established abroad. This account gathers cash deposits made as a warranty of the operations with derivates. It is mandatory to submit the informative declaration regarding these instrumental accounts, since they are considered monetary accounts or deposits.
Hence, as long as none of the premises from article 42 bis. 4 of the Regulation is met, the requester entity must report on the omnibus accounts related to the foreign broker when the count of all foreign-located accounts exceeds 50.000€ - account balance on the 31st of December or average balance from the last quarter.
With regard to share purchases as part of the foreign broker operations, they are considered marketable securities subject to the informative declaration. Considering that some of the accounts might include cash and shares, the obligation to report on assets and rights established abroad must be taken into account separately. Namely, the count of balances will be made separately for cash and for transferable securities in order to establish the obligation to submit the form.
 Royal Decree 1065/2007, from 27th of July.
B Law & Tax
International Tax & Legal Advisors