Form 720, how to avoid penalties

One of the most controversial aspects of Form 720 is that which refers to sanctions. Although Model 720 is an informative return, failure to file it or filing it after the deadline may imply the Treasury’s imposition of significant penalties. This post tells you how to avoid these sanctions and what you can do if they have already notified you of a sanction.

What sanctions can you impose about Form 720?

If you have, for example, a bank account in Italy with more than 50,000 euros and do not declare it, you may be fined. The penalties for this Form are that they can be very high and cause severe damage due to a simple mistake.

It is essential to know that it is a grave tax offence not to file on time or submit Form 720 incompletely, inaccurately or with false data. Likewise, filing by means other than electronic, computerised or telematic means is a severe tax offence.

The sanctions that can be imposed are the following:

• Suppose you fail to comply with the obligation to report on accounts in credit institutions located abroad. In that case, the sanction will be a fixed fine of 5,000 euros for each piece of information or data set, with a minimum of 10,000 euros. If you submit the declaration after the deadline, the penalty will be 100 euros for each piece of information or data set with a minimum of 1,500 euros.
• If you fail to comply with the obligation to report securities, assets, securities, rights, insurance and income deposited, managed or obtained abroad, the sanction will consist of a fine of 5,000 euros for each piece of information or data set a minimum of 10,000 euros. If you present the declaration after the deadline without a requirement from the Treasury, the penalty will be 100 euros per data with a minimum of 1,500 euros.
• If you fail to comply with the obligation to report real estate abroad, the penalty will also be 5,000 euros with a minimum of 10,000 euros. Filing after the deadline carries the same penalty, 100 euros for each piece of information with a minimum of 1,500 euros.

How to avoid penalties in Form 720?

As you have seen in the previous section, penalties can be pretty large, so it is essential to act to avoid them by doing this:

• Find out whether or not you are required to submit Form 720. For this, you can consult the regulations that appear on the Tax Agency website. However, you should know that those who exceed 50,000 euros in some of the three following groups of goods are required to declare Form 720 for the first time:
  • Accounts.
  • Values.
  • Property.

On the other hand, there will be the obligation to present Form 720 for the second and successive times, if there is an increase of 20,000 euros in the groups that were included in the first return, or if there are more than 50,000 euros in any of the groups that they did not show up.

• Meet the submission deadlines. The informative declaration of assets and rights abroad is presented between January 1 and March 31. If it is not possible to make the presentation online within the established period for technical reasons, it may be submitted within four calendar days following the end of the period.
• Request information. It is essential, if you have accounts abroad, that you request information about them to find out the balance as of December 31 of each year or at the closing date of the account. You will have to do the same with the values.
• Hire an expert tax advisor in Form 720. If you have doubts about whether or not you have to present Form 720, you have submitted it with errors, you are going to present it after the deadline, or you have been imposed a tax penalty, you must consult with an expert tax advisor so that:
  • Analyses your case and all the documentation that you have collected from it.
  • Advises you on the best way to act to comply with the law.
  • Creates Form 720.
  • Appeals the imposition of the sanction in the case in which it is considered reasonable. We see it in the next section.

What can you do if the Tax Agency has already notified you of a penalty?

If you receive a notification from the Treasury imposing a penalty, you can do the following:

• Check the date you received the notification to know what time frame you have to reply. In general, the notification usually arrives by mail in a reliable way (certified mail). It is essential to consider that there may be some cases in which you do not physically receive the notification. Still, it could be considered that you have received it, for example, if the gatekeeper of your property receives it, if you refuse it or if the notification is returned because You are absent.
• Please read the notice carefully. Seeing an envelope from the Tax Agency in the mailbox can cause some concern, but it is essential to open it and check it. It can request additional information regarding the Model 720, a check or an inspection procedure, for example. Keep in mind that not all checks or inspections have to end with a penalty.
• Get advice on the possibility of appeal. Before acting, you must consult with an expert tax advisor in Form 720 so that they can advise you on the viability of an administrative appeal or an economic-administrative claim before the Administrative Economic Court (TEAR) of each autonomous community.

As you have seen, Form 720 can impose the imposition of important sanctions, so you must act with caution, take advice and anticipate any problem to avoid an inspection by the Tax Agency.