From 2024, Form 721 will become compulsory for holding cryptocurrencies abroad and, therefore, the first financial year to be declared will be 2023. Below, we summarise the most relevant aspects to bear in mind, as the holding of this type of asset is becoming more and more frequent.
Who is obliged to file form 721?
Those obliged to file form 721 are individuals and legal entities resident in Spanish territory, permanent establishments in said territory of non-resident individuals or entities and the entities referred to in article 35. 4 of Law 58/2003 of 17 December 2003 on General Taxation, who are holders of virtual currencies abroad, or in respect of which they are beneficiaries, authorised or otherwise have power of disposal, or of which they are the actual holders, held by persons or entities that provide services to safeguard private cryptographic keys on behalf of third parties, to maintain, store and transfer virtual currencies, on 31st December of each year.
This obligation also extends to those who have been holders, authorised, or beneficiaries of the aforementioned virtual currencies, or have had powers of disposal over them, or have been beneficial owners at any time during the year to which the declaration refers and who have lost such status as at 31 December of that year.
Who is not obliged to report?
There is no obligation to report any virtual currency when the balances at 31 December of each type of virtual currency abroad valued in euro do not exceed, jointly, 50,000 euros. If this combined limit is exceeded, all virtual currencies must be reported.
What does the Tax Agency mean by “virtual currency”?
Virtual currency means a digital representation of value that is neither issued nor guaranteed by a central bank or public authority, is not necessarily associated with a legally established currency and does not have the legal status of currency or money, but is accepted as a medium of exchange and can be transferred, stored or traded electronically.
When is a virtual currency understood by the Tax Agency to be located abroad?
Virtual currencies will be understood to be located abroad when the person or entity or permanent establishment that holds them, providing services to safeguard the private cryptographic keys on behalf of third parties, to maintain, store and transfer these currencies is not obliged to submit the information obligation referred to in section 6 of the thirteenth additional provision of Law 35/2006, of 28 November, on Personal Income Tax and partial amendment of the laws on Corporate Income Tax, Non-Residents’ Income Tax and Wealth Tax.
The Tax Agency has made it easier for taxpayers to consult the location of virtual currency exchange service providers and/or electronic wallet custodians registered with the Bank of Spain, at the following link:
What information must be provided on form 721?
The information to be provided to the Tax Administration will comprise:
- The name and surname or company name or full name and, where applicable, tax identification number of the country of tax residence of the person or entity providing services for safeguarding private cryptographic keys on behalf of third parties, for holding, storing and transferring virtual currencies, as well as its address or website address.
- The full identification of each type of virtual currency.
- The balances of each type of virtual currency as at 31 December expressed in virtual currency units and their valuation in euro.
What is the deadline for filing form 721?
Form 721 must be filed between 1st January and 31st March of the year following the year to which the information to be supplied refers.
Marina Guerrero Castronuño.
