The Model 720 is an administrative process but a VERY important one for all people who have bank accounts, property and any other financial interest outside Spain.
It is correct that there was some confusion when the legislation was originally announced. For most people things are now clear but we DO recommend taking advice as a matter of course as there are several things that are only logical when you know how the legislation was arrived at.
The new form is required because tens of billions of euros left Spain last year. The tax authorities, not unreasonably, want to know where it has gone. The Modelo 720 applies to all people who are Spanish tax resident.
Our experience is that many people say that they are not resident because they have not filled in a form or they pay tax in the UK. That may not be the case.. For example, you do NOT have to fill in a form to be Spanish tax resident. Nor can you as an individual “choose” between one country or another. It is always the Hacienda that decides based upon the rules.
Here are two resources that might help people.
Questions and Answers on Form 720
Update on Reporting Overseas Assets
However, if there are any other questions, please ask and I will do my best to answer.