Bulletin | September 7, 2021

Reporting Requirements for Modelo 720: OPES and COPIA

Bulletins issued by Overseas Trust and Pension Limited (OTAP) provide insights and commentary on topical industry matters. The bulletin and its contents are not intended as advice nor should they be construed, interpreted or used as such.

For use by Professional Advisers only.

It is important to understand the obligations as a Spanish resident to report under Modelo 720. This Q&A considers such obligations in respect of Foreign Pensions offered by Overseas Trust and Pension (OTAP) including OPES (Spain) and COPIA.

What is the Modelo 720?

It is a report that is submitted online by a person who becomes resident in Spain within that fiscal year. The report is done over and above their tax return and stipulates the assets that they own outside of Spain where the value of that asset is €50,000.00 or more. Reportable assets, fall into the below 3 categories:

  1. Accounts held with financial institutions
  2. Investments including amongst others: shares, securities, life insurance policies and annuities
  3. Immovable Property

Who are the Parties involved in the Reporting?

  • The owner of assets
  • The settlor of a trust where the settlor is the beneficiary of that trust
  • An authorised signatory
  • Any party having authority to dispose of an asset on the legal owners behalf (including those assets held with a company/trust or fiduciary).

Foreign Pension Plans

The Spanish Dirección General de Tributos (‘DGT’) confirmed the conditions under which a Foreign Pension or Retirement Plan becomes reportable under Modelo 720. Stating that in certain circumstances where the individual has contributed to a Foreign Pension scheme which allows that individual to surrender the scheme in the same way as they could a life assurance product, the scheme must be reported on the Modelo 720.

The principle behind this is that if a client can access all the capital within a Pension fund it shouldn’t be treated any differently than a life insurance bond for reporting purposes.

In addition to this broad statement the Spanish legal code requires Pensions to display three very specific characteristics. These being:

  1. The assets under the Pension are derived from irrevocable contributions made to the Pension.
  2. The purpose of the foreign Pension is to provide benefits in retirement.
  3. The Pension is treated fiscally and regulated as a Pension in the territory from which it is issued. IV. The Pension is a separate legal entity from the member of the Plan and owns the assets in the Pension.
  4. The assets held in the Pension are managed by a professional manager with no intervention from the member.
  5. The member cannot have access to retirement benefits without the prior approval by the Pension Plan.

Annuities paid from a Pension

Where a Spanish resident is in receipt of an annuity paid from a Foreign Pension, they must report the capitalised value of the annuity and the method of calculation.

Where can I get the Capitalised Value of my Annuity?

OTAP can be contacted directly to provide such information where an annuity is issued by them in respect of OPES and COPIA Pension Plans.

Authored by

Ryan Levy, BCom in Financial Management & Certificate in International Trust Management
International Business Consultant, Overseas Trust and Pension