Declaring foreign assets: European obligations and what they mean for those relocating to Andorra

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🏁 Understanding the obligation to declare foreign assets

Reporting assets and rights held outside the country of residence has become a central element of international tax cooperation. As transparency standards evolve — particularly through CRS — and anti-avoidance rules intensify, many European countries have strengthened their controls over foreign wealth.

Approaches differ significantly: Spain maintained one of Europe’s strictest penalty regimes; France integrates foreign-asset reporting into the annual income tax return; and Italy combines reporting obligations with specific taxes on foreign holdings.

For individuals considering moving their tax residency to Andorra, understanding these obligations — especially in the country of origin — is essential to avoid penalties and ensure a smooth and coherent transition.

➤ To expand on this context, we recommend the article Why so many entrepreneurs relocate to Andorra.

🌍 Why countries require the declaration of foreign assets

These obligations stem from coordinated action by the OECD, the Global Forum and the European Union. Although the CRS framework allows tax administrations to identify foreign accounts and financial investments, it does not cover all scenarios. For this reason, many states maintain additional domestic reporting requirements.

In practice, these obligations enable authorities to:

• understand the scope of foreign wealth capable of generating taxable income,
• prevent opaque structures or fictitious relocations,
• ensure coherence between declared income and assets held abroad.

➤ For a detailed explanation of international transparency, we recommend Common Reporting Standard (CRS): the global standard of tax transparency

🇪🇸 Spain: Modelo 720 after its legal reform

Spain introduced Modelo 720 in 2012 to declare foreign assets — bank accounts, financial assets, real estate and, since 2022, cryptocurrency held abroad. The obligation is divided into blocks with thresholds of €50,000 per asset category.

For nearly a decade, Spain’s penalty regime was among the harshest in Europe: fixed fines of €5,000 per error or omission and the non-prescription of undeclared assets treated as unjustified capital gains. On 27 January 2022, the Court of Justice of the European Union declared the system incompatible with EU law.

The legislative response came through Law 5/2022, which completely reformed the sanctioning system:

• removal of all 720-specific penalties,
• application of the general penalty system in the LGT (Articles 198 and 199),
• elimination of the non-prescription rule,
• revision of the tax impact for non-declared assets.

The obligation to file Modelo 720 remains, with the same €50,000 thresholds, but the consequences for errors or late filing are now proportionate and aligned with EU principles.

➤ For a broader view of Andorra’s tax framework, we recommend Taxation in Andorra: structure, tax rates and real advantages.

🇫🇷 France: foreign accounts, financial assets and crypto-assets within the IRPF

France does not use a standalone form like Modelo 720. Instead, foreign-asset reporting is integrated into the personal income tax return. Tax residents must declare:

• accounts opened, used or closed abroad,
• life-insurance contracts with non-French institutions,
• digital assets held abroad (Form 3916 / 3916-bis).

France applies a strict but proportionate range of penalties: €1,500 per undeclared account, rising to €10,000 when the institution is located in a non-cooperative jurisdiction.

This integrated model reduces litigation and facilitates voluntary regularisation when taxpayers wish to update or correct their situation.

🇮🇹 Italy, Portugal, Belgium and other European models

Italy combines foreign-asset reporting with specific taxes on wealth held abroad. Residents must declare:

• foreign accounts, investments and immovable property through Quadro RW,
• financial assets under IVAFE,
• real-estate assets under IVIE.

Portugal has no form equivalent to Modelo 720 but requires taxpayers to report foreign income and identify relevant foreign accounts.

Belgium requires the declaration of foreign accounts both in the income tax return and with the Central Point of Contact of the National Bank of Belgium — a dual mechanism that strengthens administrative oversight.

Germany, Switzerland and the Netherlands do not have standalone forms but require worldwide wealth to be declared for income tax purposes or, where applicable, wealth tax.

🏔️ What happens when taxpayers relocate to Andorra

Moving one’s tax residency to Andorra completely reshapes the situation:

• Andorra does not require any declaration of foreign assets.
  There is no equivalent to Modelo 720 nor any French- or Italian-style form.

However, the absence of internal Andorran obligations does not eliminate responsibilities in the country of origin. It is essential to determine:

• the exact date on which tax residency in Spain, France or Italy ends,
• whether the final foreign-asset declaration must still be filed,
• how to coordinate the departure year with the tax authorities of the former country.

In practice, many errors arise from insufficient planning during the year of exit, such as:

• filing the final Modelo 720 (or equivalent) late,
• maintaining foreign accounts undeclared prior to relocation,
• failing to update account ownership or mandates,
• inconsistencies in the wealth declared for the departure year.

➤ To understand the criteria for tax residency, we recommend “Administrative vs. tax residency in Andorra: key differences

Conclusion: transparency, planning and a secure transition to Andorra

Foreign-asset reporting has become a cornerstone of European tax compliance. Spain maintains the most structured model (especially through Modelo 720), France integrates reporting obligations into the income tax system, and Italy combines information requirements with specific taxes on foreign wealth.

For individuals relocating to Andorra — a jurisdiction with no foreign-asset reporting obligations — it is essential to understand the rules still applicable in the country of origin. Proper planning prevents penalties, reduces uncertainty and ensures a secure and coherent transition to Andorran tax residency.

📩 If you wish to analyse your situation or confirm whether you must file Modelo 720 or any equivalent declaration, you can request your personalised consultation just below or through the contact form.

Last revised: November 2025.