Bank accounts abroad and Modelo 720: holders, joint holders and authorised signatories

Keeping a bank account in another country is common among people living in Spain. It may be used to receive a pension, to manage family expenses or to hold savings built up before moving.

When reviewing Modelo 720, however, asking who the money belongs to is not enough. Being a joint holder, or being authorised to operate a foreign account, can also create a reporting duty, even if you are not the sole owner of the funds or the money belongs to someone else.

The review has to take into account your tax situation, your relationship with the account, the reportable balances and any available exceptions.

Who should review their foreign accounts?

This article is addressed mainly to individuals who are tax resident in Spain and hold accounts with financial institutions located abroad.

The duty may affect holders, representatives, authorised persons, beneficiaries, persons with powers of disposal and beneficial owners, on the terms set by the regulations.

It is therefore worth including in the review both personal accounts and those in which you can act for family or professional reasons. Including them in the initial inventory does not mean that all of them must be reported: the requirements and exemptions still have to be checked.

Holder, joint holder and authorised signatory: what is the difference?

These positions are not equivalent:

Ask the bank for an updated certificate if the documentation available does not clearly identify your position.

It should not be inferred merely because you can access the banking app or because your name appears in a communication.

What if I am the holder and can also operate the account?

According to the Spanish Tax Agency, where the same person is both the holder and authorised on the same account, the position reported is that of holder. It should not be duplicated merely because both conditions are met.

How does the €50,000 limit work?

For a first return, the review considers whether the combined balances of the reportable accounts exceed €50,000, looking at two figures:

• The combined balance at 31 December.
• The combined average balance of the last quarter.

The limit is not applied to each account individually or per country. A duty may exist even if no single account exceeds €50,000 on its own.

For example, a person may be the holder of an account with €40,000 and authorised on another with €30,000. The Tax Agency confirms that this combination may create a reporting duty where no ground for exemption applies.

If I share an account, do I divide the balance between the holders?

You should not automatically divide the balance to decide whether the threshold is exceeded.

The Tax Agency provides that, for shared accounts, the total balances are reported without prorating and the corresponding percentage of participation is stated.

Example: an €80,000 account shared 50/50

Two individuals who are tax resident in Spain share a foreign account with a balance of €80,000 at 31 December.

They cannot conclude that they fall outside the duty because €40,000 corresponds to each of them. If the other requirements are met and no exception applies, each person must review their duty taking the full balance into account and stating their participation.

A return filed by one joint holder does not automatically replace the other one.

Must I report an account if I am only authorised?

A duty may exist even where the funds are not yours.

This is a common situation where a person resident in Spain is authorised on their parents’ foreign account to help them with payments or administrative matters.

The analysis must separate two questions: the power to operate and the ownership of the money. The reporting duty may arise from the first, without that meaning that the authorised person is treated as the owner of the funds.

For that reason, keep the authorisation document and a documented explanation of your relationship with the account. Avoid attributing to yourself a percentage of ownership that does not reflect your real position.

What about company accounts?

A professional authorisation also deserves review, but it does not mean that every company account must be included automatically.

There are exceptions linked, among other cases, to accounts duly recorded and identified in the accounting records on the terms required by the regulations. The Tax Agency expressly contemplates a case in which an account of a resident company, correctly accounted for and exempt, does not count for its authorised signatory.

It is not enough that the money belongs to a company: the conditions of the exception must be evidenced.

What if I close the account or stop being authorised?

Closing an account or revoking an authorisation does not necessarily remove the reporting duty.

If an account was subject to reporting and the authorisation is later revoked, it may be necessary to report the termination, its date and the balance existing at that time. It should also be checked whether a reporting duty previously existed, even if it was not fulfilled.

By contrast, if there was never a duty to report an account, not even in the year of its cancellation, the Tax Agency indicates that its closure does not by itself create a duty to report it.

What documentation should you request from the bank?

To prepare the review, ask for:

• Full identification of the institution and the account.
• A certificate of your position as holder, joint holder or authorised signatory.
• The balance at 31 December.
• The average balance of the last quarter.
• The dates of opening, of becoming a holder or of the grant of the authorisation.
• Evidence of cancellation or revocation, where it exists.
• Information on the currency.
• Documentation on the participation in and ownership of the funds where relevant.

If you have already filed Modelo 720, also provide the previous returns and their supporting documents.

Check the certificates when you receive them. A statement of transactions may not contain all the necessary data, especially the average balance of the last quarter.

Common mistakes to avoid

Mistakes usually stem from an incomplete identification of the accounts:

• Reviewing only the accounts whose money is yours.
• Dividing shared balances before checking the threshold.
• Assuming that another joint holder reports for everyone.
• Ignoring old authorisations that are still in force.
• Leaving out closed accounts without reviewing their history.
• Treating a company account as exempt without documentation.

An orderly list of accounts and positions allows these situations to be detected before completing the form.

Frequently asked questions

Must I report if I have never used the authorisation?

Non-use does not by itself exclude the duty. It must be checked whether an authorisation was in force and whether the other requirements are met.

Is the account reported only once if it belongs to a married couple?

Not necessarily. Each spouse’s position must be analysed, together with their ownership and, where relevant, the matrimonial property regime. One return does not automatically replace the other.

Does reporting as an authorised signatory mean paying tax on the money?

Reporting on Modelo 720 does not by itself make the authorised person the owner of the balance. The reporting duty and the taxation applicable to the true holders must be kept separate.

How is Modelo 720 filed?

It is filed electronically. It may be filed by the interested party using the accepted identification systems or by a third party authorised to act on their behalf. It is advisable to keep the acknowledgement and to check that the return has been filed correctly.

Review your foreign accounts with complete information

Before deciding whether you must file Modelo 720, identify all your banking positions and request the necessary certificates. The review should reflect both your own accounts and the authorisations you hold over accounts belonging to others.

At MH Legal & Seguros we can help you review your situation and coordinate the necessary tax advice, with service in your language and offices in Dénia, Gandia and Villalonga.

Contact our team at info@mhlegalyseguros.com to discuss your case.

Official sources