Model ETE for non residents in Spain is a reporting obligation that may affect international transactions such as property sales to non-resident buyers.
What is the Model ETE?
The Model ETE (Survey on Economic Transactions and Balances of Assets and Liabilities with the Exterior) is a mandatory declaration managed by the Bank of Spain. Its purpose is to collect information regarding:
• Economic transactions conducted with non-residents.
• Balances of assets and liabilities that Spanish residents hold abroad.
This declaration is essential for monitoring capital flows and ensuring compliance with European and international financial transparency regulations.
Who must submit the Model ETE?
The Model ETE must be submitted by any natural or legal person residing in Spain who meets any of the following criteria:
1. Economic transactions with non-residents:
o Operations involving payments or receipts with entities or individuals classified as non-residents.
2. Holding of assets or liabilities abroad:
o Any balance, at the end of the fiscal year, corresponding to assets or liabilities held with the exterior.
3. Balance variations:
o Changes in assets or liabilities held with the exterior that do not constitute economic transactions, such as transfers between accounts belonging to the same holder in Spain and abroad.
Frequency of submission:
The frequency of submission depends on the total amounts of assets, liabilities, and transactions conducted during the year:
• Less than 1 million euros: Submission is not required (unless expressly requested by the Bank of Spain).
• Between 1 million and 50 million euros: Annual summary declaration.
• Between 50 million and 100 million euros: Detailed annual declaration.
• Between 100 million and 300 million euros: Quarterly declaration.
• More than 300 million euros: Monthly declaration.
Model ETE in property sales to non-residents:
If a resident in Spain (natural or legal person) decides to sell a property located in Spain to a non-resident buyer, the operation may be subject to the submission of the Model ETE. The transaction includes the following characteristics:
• The sale of the property constitutes an economic transaction between a resident and a non-resident.
• The transaction amount exceeds 1 million euros.
• The buyer transfers the funds from a foreign bank account to a Spanish bank account belonging to the resident seller.
In this case, since the amount exceeds 1 million euros but does not surpass 50 million euros, the resident must submit the annual summary version of the Model ETE.
Deadline for submission: By 20 January of the year following the transaction.
Penalties for non-compliance:
Failure to submit the Model ETE or submitting it incorrectly can result in significant financial penalties:
1. Serious infringements:
o Failure to declare operations exceeding 6 million euros.
o Penalty: Up to half of the undeclared amount (minimum: 6,000 euros).
2. Minor infringements:
o Submission after the deadline or errors in operations below 6 million euros.
o Penalty: Up to one-quarter of the undeclared amount (minimum: 3,000 euros).
3. Late submission without prior request:
o Delay of up to 6 months: Fine of up to 300 euros.
o Delay of more than 6 months: Fine of up to 600 euros.
Final considerations on Model ETE:
In conclusion, the Model ETE is an obligation that, although often overlooked, may be required in significant transactions such as the sale of real estate to non-residents.
Proper identification and timely submission are essential to avoid penalties and comply with the requirements of the Bank of Spain.
Given the complexity of the scenarios and the amounts involved, it is advisable to assess each case individually to determine whether there is an obligation to report and under what conditions.
ÁLVARO MORALES SOUSA
PARTNER – LAWYER
CUSTOM REPRESENTATIVE
tax@templecambria.com
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