What is the ETE form? Obligation to declare to the Bank of Spain if you have certain capital movements abroad

Many companies and natural persons are unaware of the existence of the so-called ETE form (Statement of Foreign Transactions) and the obligation to present it if a certain number of transactions with non-residents is exceeded or if they have assets in foreign countries.

The Statement of foreign economic  transactions and asset and financial liability balances are regulated in the Circular 4/2012 of the Bank of Spain, and is an informative statement with statistical purposes that is presented to the Bank of Spain in order to declare transactions carried out with non-residents and any assets and liabilities held abroad.

It must be noted that this ETE form is a different statement to that of model 720 regarding the Informative statement of assets and rights located abroad that we have already discussed in previous posts, which is presented before the State Tax Administration Authority and is therefore an informative tax statement.

Who should present the ETE form and what exactly should be declared?

This statement must be presented by all natural or legal persons resident in Spain who hold assets or liabilities abroad and/or who have carried our economical transactions with non-residents, provided that the sum of such assets and liabilities or the sum of the transactions carried out exceeds 1 million euros in the preceding year.

In particular, the following must be declared to the Bank of Spain:

• Operations carried out with non-residents, whatever its nature and regardless of whether said operations are paid or liquidised.

It must be noted that this also includes commercial operations involving the issuance of invoices to non-residents or the purchase of goods and services by foreigners.

• Foreign asset and liability balances and variations of any kind: accounts in bank entities, deposits, debt securities, shares, properties, derivatives, etc.
• What is the deadline for declaring and how do I present the form?

The deadline to present the statement depends on the volume of transactions carried out in the preceding calendar year or asset and liability balances held abroad on the 31^st December of the preceding year, in such a way that:

• It must be presented annually (until 20^th January of the following year), if the sum of the transactions is less than 100 million euros. Moreover, if the sum of said transactions is less than 50 million euros, an annual summary statement must be presented.
• It must be presented quarterly (20 days of the following month at the end of each quarter) if the sum of said operations is at least 100 million but no more than 300 million euros.
• Finally, it must be presented monthly (first 20 days of the following month) if the sum of said operations is equal to or more than 300 million euros.

However, in the event that these limits have not been exceeded in the preceding year, but they are exceeded throughout the current year, said statement must still be presented as frequently as corresponds.

Moreover, as anticipated, if the sum of the operations or asset and liability balances in the preceding year is less than one million euros, you are not obliged to present an ETE form unless the Bank of Spain expressly requires you to do so.

In any case, if you are obliged to present this statement, then you must include all operations carried out within the period, regardless of the individual quantity of each of them.

With regards to the mode of presentation, the aforementioned form must be submitted electronically to the Bank of Spain’s Statistics Department.

How do I calculate these limits?

In order to work out how often the statement must be presented in a given year, the following calculations must be carried out:

• Sum of the charges and payments of all operations carried out with non-residents in the preceding
• Sum of the foreign asset and liability balances on 31^st December of the preceding

The highest of the two sums shall determine the frequency of the statement.

What happens if I don’t present it or I present it after the deadline?

The penalty system applicable to the ETE form is rather strict and is regulated in Spanish Law 19/2003, of 4^th July, on the legal regime of capital movements and foreign economic transactions. The regulation establishes that:

• The following will be considered a serious violation: (i) failure to declare operations that exceed 6 million euros or (ii) the inaccuracy of any data in the statement with regards to operations that exceed 6 million euros. In this case, the penalties may amount to half of the sum of the undeclared operation, with a minimum of 6,000 euros.
• On the other hand, the following will be considered as a minor violation: (i) presentation after the deadline, (ii) failure to declare operations of less than 6 million euros or (iii) the inaccuracy of any data of a value of less than the aforementioned sum of 6 million euros. In the event of a minor infraction, the penalties may amount to up to a quarter of the sum of the operation, with a minimum of 3,000 euros.

In this post we have attempted to give a brief summary and highlight the most important aspects of the ETE form, although we always recommend that you revise your specific situation with a reliable tax consultant who is familiar with this legislation because it is a highly specialised and rare topic.