Declaring past foreign income you never reported

Terms used

• Hacienda — Hacienda is Spain's tax authority.
• Declaración complementaria — A declaración complementaria corrects a return you already filed by adding income or tax you left out.
• Declaración extemporánea — A declaración extemporánea is a return filed after its deadline, with no earlier request from Hacienda.
• Modelo 720 — Modelo 720 is the yearly declaration of assets held abroad, due when a category exceeds €50,000.

Key rules

• Come forward first: Filing before Hacienda contacts you means no penalty, only tax, surcharge and sometimes interest.
• Criminal limit: Unpaid tax above €120,000 in one tax and year can be a criminal offence.
• Pay on time: Paying tax and surcharge together on time cuts the surcharge by 25%.
• After a notice: Once Hacienda has written to you, late-filing rules stop applying and penalty reductions of 30% and 25% apply instead.

Come forward before Hacienda contacts you

Fixing an omission yourself is by far the cheapest route. Assume Hacienda may already see your foreign accounts. Spain receives account data from foreign banks every year: balances, interest, dividends and sale proceeds for people who are Spanish residents. This comes through automatic exchange with more than 100 countries, the EU and the US. So do not count on it going unnoticed.

If you come forward first, no penalty is imposed. You pay the tax, a surcharge and, in some cases, interest.

Which late declaration to file

• Declaración complementaria: for a year where you already filed a return but left out income. You add the missing income and the extra tax.
• Declaración extemporánea: for a year where you never filed a return at all.

Declare foreign income on the usual income tax return. Claim credit for foreign tax you already paid on it, so you are not taxed twice. The decision below helps you pick.

What it costs

The surcharge depends on how late you are. The 1% and 15% figures are set out in the timeline below. In short, the surcharge grows month by month for the first year, with no interest. After that it is flat, and interest is added.

Pay the tax and the surcharge together, on time, and the surcharge drops by 25%. Filing without paying on time loses that cut.

If you owe nothing for a year, there is no surcharge. A penalty can still apply.

The criminal line

Unpaid tax above €120,000 in one tax and year can be a criminal offence. Paying the full debt plus interest before Hacienda notifies an inspection, or before a complaint is filed, removes criminal liability. If any year is near or above this amount, get a tax adviser before you file.

If Hacienda has already written to you

Once you have received a request or notice, the late-filing route no longer applies. A penalty process can follow. You can then agree to the assessment for a 30% cut in the penalty, and pay on time for a further 25%. The two cuts can be combined.

Foreign assets

Separately from the income, check whether your assets abroad passed €50,000 in any category on 31 December. If so, modelo 720 is due between 1 January and 31 March. Since the 2022 reform, a late or missing filing is penalised under the ordinary rules, not the old harsh fixed fines. The filing duty itself remains.

Use the checklist below to work through each year.

Choosing between options

Which kind of late declaration do you file for a year with unreported foreign income?

• Declaración extemporánea: You never filed a return for that year, so you file it late, before Hacienda asks for it.

Choose by whether a return for that year is already on file. Either way, file before any request from Hacienda arrives, and pay on time to cut the surcharge by 25%. The surcharge amounts are set out in Penalties, surcharges and interest on late or wrong filings.

Timeline and deadlines

• Check you have not received a notice from Hacienda about the years you left out: before you start

• Add the missing income to a return you already filed (declaración complementaria), or file the return you never filed (declaración extemporánea): as soon as you can, before any request arrives

• Pay the tax and the surcharge together to cut the surcharge by 25%: on time, within the payment period given

• Expect a surcharge of 1% plus 1% per full month of delay up to 12 months, with no interest: in the first 12 months of delay

• Expect a flat 15% surcharge plus late-payment interest: after 12 months of delay, with interest from the day after the 12 months

• If a check has already started, agree to the assessment for 30% off the penalty and pay it on time for a further 25% off: after a check starts

Checklist

• Check that you have not received any request or notice from Hacienda about the years you want to fix.

• List the foreign income you never reported, year by year, with the foreign tax you already paid on it.

• Add up the unpaid tax for each year and check whether any single tax and year is above €120,000.

• Hire a tax adviser before filing if any year is above €120,000, so you regularise before an inspection is notified.

• File a declaración complementaria for years you already filed, or a declaración extemporánea for years you never filed, on the usual form with the foreign tax credit applied.

• Pay the tax and the surcharge on time together to get the 25% cut on the surcharge.

• Check whether your foreign assets passed €50,000 in any category on 31 December and file modelo 720 if they did.

What to watch out for

• Waiting until Hacienda writes to you: Once Hacienda sends a request about a year, you can no longer file late as a voluntary filer, and a penalty process may follow. File the missing return before any notice arrives, and if a notice has already come, reply to it and ask a tax adviser for help.

• Unpaid tax above €120,000 in one tax and year: Unpaid tax above €120,000 in one tax and year can be a criminal offence, with 1 to 5 years in prison and a fine of one to six times the amount. Pay the full debt plus interest before an inspection is notified or a complaint is filed, which removes criminal liability. Use a tax adviser.

• Filing but not paying on time: If you file without paying the tax and surcharge on time, you lose the 25% cut on the surcharge. Pay the tax and surcharge together when you file.

• Thinking no tax due means no consequence: If no tax is owed, no surcharge applies, but a penalty may still be imposed for the omission. File the correct return anyway.

• Forgetting modelo 720: Foreign assets above €50,000 in a category must be declared each year, and a late or missing filing is penalised under the general rules. File modelo 720 between 1 January and 31 March for the assets you held on 31 December.

Frequently asked questions

Does Hacienda already know about my foreign bank accounts?

Yes, Hacienda probably already receives data on your foreign accounts if you are a Spanish tax resident. Foreign banks report balances, interest, dividends and sale proceeds under automatic exchange schemes that Spain has used since 2017, including the OECD standard, an EU directive and a US agreement. Treat the data as already on file when you decide whether to come forward.

Do I still have to file modelo 720 after the 2022 reform?

Yes, you still file modelo 720 each year between 1 January and 31 March if a category of foreign assets is worth more than €50,000 on 31 December. After the first filing, you update it only if a category grows by more than €20,000. The 2022 reform removed the old fixed fines, so a late or missing filing is now penalised under the general rules.

Can I combine the 30% and 25% penalty reductions?

Yes, the two penalty reductions can be combined once a check has started. You get 30% off if you agree to the assessment and a further 25% if you pay within the voluntary payment period without appealing. Coming forward before any check avoids the penalty altogether, so these reductions are the fallback.