Trade Republic and Spain's Model 720: when to declare

Model 720 and Trade Republic: the doubt Hacienda won't clear up

On 28 February 2025, the Banco de España registered the Spanish branch of Trade Republic. In June of that same year, clients' cash accounts migrated to a Spanish IBAN. On paper, the change settled one of the most repeated questions among those who trade with the German broker: must you file Model 720? The broker's official answer is no. The small print that clients accept when opening the account suggests otherwise.

Is Model 720 mandatory with a Spanish IBAN?

The obligation to report foreign assets is triggered when the balance exceeds 50,000 euros, and only applies to cash, securities, real estate or insurance located outside Spain. With the account migrated to a Spanish IBAN, the dominant view is that the money is no longer abroad. A 2025 binding consultation, V2475-25, confirms this for cash: the account associated with an entity based in Spain is considered here for Model 720 purposes, even if it previously had a German IBAN and the threshold had never been exceeded.

So far, the official version. The problem is that the onboarding documents themselves warn that client funds are held in third-party omnibus accounts, and so are the securities acquired. Clients see this when they open the app: the cash appears deposited with entities such as Credit Agricole, JP Morgan or Deutsche Bank, not with the Spanish branch.

Omnibus accounts: the nuance that breaks the argument

This is where the reasoning splits. One thing is who your contractual entity is —the branch in Spain, supervised by the Banco de España— and another is where the money sleeps. Those who argue that Model 720 does not apply maintain that the residence of the account is determined by the depositary entity, not the bank where the cash is parked, just as with a fund or an ETF domiciled abroad. Those who are not convinced respond that in an omnibus account the client does not have an individual account in their name, and for the deposit guarantee fund the holder would be someone else.

The issue of the FGD (deposit guarantee fund) comes fully into play. If the money is in omnibus accounts, who guarantees what? Trade Republic has a Spanish banking licence, and its branch declares among its activities the taking of deposits and the custody and administration of negotiable securities. That detail is precisely the one the consultation uses for cash, but it does not close the case of a portfolio of shares as neatly.

Consultation V2475-25: resolves cash, leaves securities open

The text of the consultation raises a specific case: a person resident in Spain, a client of a German entity, with a securities and cash account with a German IBAN, who in June 2025 sees the cash account migrated to a Spanish IBAN and expects to exceed 50,000 euros for the first time already with a Spanish IBAN. The answer is that this balance is in Spain for Model 720 purposes.

The question is whether the same criterion applies to holdings and shares. Here Article 42.ter of the General Regulation on Tax Management and Inspection Actions and Procedures comes in, which extends the obligation to anyone who has held shares at any time during the year, even if they sold them before 31 December. In other words: if the portfolio exceeded 50,000 at some point in the year, some read that you must report everything, and others argue that, with custody in a Spanish branch, it no longer applies.

And there is the split year: some months with a German IBAN and others with a Spanish IBAN. What reporting obligation exists for that earlier period? No one clarifies it completely.

If Hacienda already has the data, why Model 720?

Part of the analysis suggests that Model 720 has lost much of its practical purpose. The purpose of the form is to report assets that Hacienda cannot see, and users assume that Trade Republic, by operating in Spain, reports the data to the AEAT. Interest on the account, in fact, already arrives with withholding tax: 19%. With that information in the Administration's hands, those who hold this thesis consider that the obligation to declare becomes a redundant form. Some argue that half of Model 720 has already been struck down in the courts for clashing with the free movement of European capital.

The diagnosis circulating is that the rule was born for another world: that of safe deposit boxes in Switzerland and bundles of 500-euro notes. Applied to an accounting entry in an app, it jars. It is worth remembering the penalty for not filing it: according to the summary circulating in the forum, the penalty is 150% of the value of the undeclared assets, and the statute of limitations goes from four to ten years if fraud is found. Some add that the threshold is not looked at as a snapshot, but on the last day of the year or the average of the last quarter.

Model 720 is not the same as the income tax return

Other procedures that have nothing to do with Model 720 get mixed in. In the income tax return, purchases and sales of shares must be reported with the purchase and sale values, and Trade Republic's tax report does not always offer those totals, forcing you to write them down transaction by transaction. Dividends, according to one user's account, come with withholding tax at source already deducted: the correct approach would be to declare the gross amount and separately record the withholding for double taxation relief. The broker's own annual report arrives incomplete and forces you to redo the calculations by hand.

Cash with a Spanish IBAN has an answer: it does not go in Model 720. The securities portfolio does not. No one disputes that Trade Republic reports to the AEAT; what remains unclear is whether custody in omnibus accounts outside Spain reactivates the obligation for shares, and in which of the two periods of the year. Until Hacienda says so explicitly, each client decides with the same criterion they apply to all this: doubt.