Question
I’m hearing Spain Tax conflicting information about the 720 form. My understanding is that it’s now required (as of 2023) to report retirement funds (e.g., 401(k)). This wasn’t the case previously according to my gestor.
First question is if this is true, that retirement funds are now reportable—I’m under 60 years old and not even using these funds. The other question is, if this is true, are any growth earnings on a 401(k) taxable, even if I’m not using these funds?
Answers
These are the answers of Spainguru’s Facebook group members:
“I have always reported my 401(k) on the Modelo 720. You do not pay taxes on the growth of your investments. Taxes are paid when any money is withdrawn because it is considered as income.”
“The tax treaty applies. You need to speak to a tax specialist.”
(Tax expert answer – this is not legal advice) “It has always been reportable according to us based on the body of Spanish law, decisions published by DGT (Director General de Tributos) – equivalent to the US Treasury and others.
The reason, in my opinion, is that this form similar to 714 (wealth tax) is not an income tax law, and so not covered under the US-Spanish tax treaty.
What might have changed is the interpretation of the law based on latest developments of jurisprudence, court decisions and audits from Hacienda = Agencia Tributaria = equivalent to US IRS. Like Einstein said, the questions are the same, but the answers have changed.
It has always been our position that all US pensions except Social Security, are reportable in 720 and 714.
Income tax, Modelo 100 is a bit different. Many thought and still think that income inside (interest, dividends, and capital gains) are taxed in Spain but NOT appreciation (paper gains), similar to the treatment of an investment account.
However, we studied the issue in 2025 and did an analysis with a Spanish gestor, Spanish tax lawyer, a dual Spanish/US citizen and former tax arbitrage employee of Wells Fargo and a US tax professional; and we concluded that based on the US-Spain tax treaty, the Memorandum of Understanding of such treaty and Consulta Vinculante V1291-22 from Hacienda among others, income realized and unrealized inside US pensions is not taxable in Spain UNTIL distributed.
Furthermore, based on that consulta vinculante, income from pensions should be taxed as gains from capital (ingreso de capital mobiliario), that carry a lower tax rate than income from work, a win for expats if we take this position.
Please note that the conclusion of other professionals may be different, and a Consulta Vinculante is NOT law, it is an interpretation of the law. But in our opinion, it is guidance we can rely on and if Hacienda reverses itself, the taxpayer would be liable to pay back taxes and interest, but not penalties.
The taxpayer can preemptively avoid this risk by treating distributions from US pensions as income from work and choosing to pay the higher tax if he wishes.
Our position is that income from inside US pensions would still not be taxable until taken out even if Hacienda reverses this Consulta Vinculante, otherwise why would the countries have a treaty in the first place? And the memorandum of understanding makes it clear that 401(k), IRA, and Roth IRA are pensions within the framework of the treaty.
There is a nuance about Roth IRAs which I chose not to develop here because it is hard to explain. Since Roth IRA distributions, if qualified, are not taxed in the US, it is not so in Spain but there are things the taxpayer can do to minimize this inconvenience.
Everybody is different and general advice should not be applied to a specific situation, details matter. THIS IS NOT TAX ADVICE.”
Conclusion
According to the responses from the community, U.S. retirement accounts such as 401(k)s have generally been reportable on Spain’s Modelo 720, and this requirement is not necessarily new.
While some professionals may have different interpretations, many have reported their accounts for years. The consensus is that the growth of these accounts is not taxable in Spain until funds are withdrawn, at which point they are treated as income.
However, the details of taxation, including how withdrawals are classified, can vary depending on interpretations of Spanish tax law and international treaties.
Given the complexity of tax matters, seeking professional advice from someone knowledgeable in both Spanish and U.S. tax regulations is recommended.
