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2. Central government taxes

2.13 Reporting obligations relating to assets and rights abroad

The law regulates an obligation to report assets and rights abroad has been introduced in the legislation for individuals and legal entities (including pass-through entities) resident in Spain or nonresident with a permanent establishment.

This obligation affects accounts, securities (including insurance and life or temporary annuities) and real estate or rights over real estate, with certain quantitative and qualitative exceptions.

Although this is a purely formal obligation to be met each year in relation to information referring to the preceding year (the first return to be filed being that relating to the fiscal years ending on or after October 29, 2012), the failure to fulfill this obligation or the incorrect or late fulfillment of this obligation is subject to a costly penalty regime pursuant to which penalties are calculated per item or set of data not reported or reported inaccurately or late.

In addition, if this obligation is not fulfilled in a timely manner, the income detected will be deemed undisclosed income or an unjustified capital gain, attributable to the last earliest period of those not statute-barred, even if it can be proven that the income was generated before that, unless it is evidenced that the income was reported and tax was paid on it or that it was generated when the taxpayer was not resident in Spain. If this undisclosed income or unjustified capital gain is attributed to the taxpayer, it could entail a penalty of 150% of the tax debt derived from that attribution.

These consequences (attribution of undisclosed income or unjustified capital gains, fixed penalties and penalty of 150%) have been analyzed by the European Commission through an infringement proceeding brought against Spain (2014/4330 C (2017) 1064) in accordance with article 258 of the Treaty on the Functioning of the EU. In its reasoned opinion, the European Commission held that Spanish legislation infringes the freedom of movement of persons and workers, the freedom of establishment, the freedom to provide services and the free movement of capital.

The general return period runs from January 1 to March 31 of the year following that for which the return is filed.