April 1rst: Deadline to submit the new form model 721 «Informative declaration on virtual currencies located abroad»

Presenting the model 721 is compulsory for those who have been holders, authorized or beneficiaries of cryptocurrencies abroad for more than 50,000 euros in total at December 31rst of the previous. The presentation of the model in subsequent years will only be accurate if the cryptocurrency balance increases by more than 20,000 euros.

We inform you that the new model 721 “Informative declaration on virtual currencies located abroad” was implemented because of Law 11/2021, on anti-fraud measures, and it was approved and developed by Order HFP/886/2023, of 26th of July, which establishes the conditions and procedure for its presentation.

This regulation became mandatory to declare cryptocurrencies deposited in exchanges or platforms located outside of Spain, in order to prevent fraud and tax evasion. This obligation has been postponed, but finally, this year 2024, all citizens who have had cryptocurrencies abroad in the year 2023 must review whether they must present this declaration.

Taxpayers who own cryptocurrencies abroad must present the new form model 721 each year. This new declaration is very similar in content to form 720 (which is already used to declare other assets located abroad):

• Form 721 must be submitted by those who have been holders, authorized or beneficiaries of cryptocurrencies abroad for more than 50,000 euros in total in December 31rst of the previous year.
• The presentation of the model in subsequent years will only be accurate if the cryptocurrency balance increases by more than 20,000 euros.

Who is required to present form 721?

 Natural and legal persons resident in Spanish territory; those with permanent establishments in Spain of non-resident persons or entities and the entities referred to in article 35.4 of Law 58/2003, of December 17, General Tax (recumbent inheritances, communities of goods…), that are holders of virtual currencies abroad, or in respect of which they have the status of beneficiaries, authorized or in some other way have power of disposition, or of which they are real owners, custody of persons or entities that provide services to safeguard private cryptographic keys on behalf of third parties, to maintain, store and transfer virtual currencies in December 31rst of each year.

This obligation also affecting to those who have been holders, authorized, or beneficiaries of the virtual currencies, or those who have had powers of disposal over them, or have been real owners at any time of the year to which the declaration refers and who have lost this condition on December 31 of that year. In these cases, the information to be provided will correspond to the date on which the extinction occurred.

With respect to which virtual currencies will this information obligation not apply?

This information obligation will not apply to the following virtual currencies:

• Those owned by the entities referred to in article 9.1 of Law 27/2014, of November 27, on Corporate Tax.
• Those owned by legal persons and other entities resident in Spanish territory, as well as permanent establishments in Spain of non-residents, registered in their accounting individually and identified by their name, value and custody entity and country or territory in which are located.
• Those owned by natural persons residing in Spanish territory who carry out an economic activity and keep their accounting in accordance with the provisions of the Commercial Code, registered in said accounting documentation individually and identified by their name, value and entity of custody and country or territory in which they are located.
• There will be no obligation to report on any virtual currency when the balances as at December 31rst of each type of virtual currency abroad valued in euros do not jointly exceed 50,000 euros. If this joint limit is exceeded, all virtual currencies must be reported.

What is meant by “virtual currency”?

Virtual currency will be understood as that digital representation of value not issued or guaranteed by a central bank or public authority, not necessarily associated with a legally established currency and which does not have the legal status of currency or money, but which is accepted as a mean of exchange and can be transferred, stored or negotiated electronically.

When is a virtual currency located abroad understood?

Virtual currencies will be understood to be located abroad when the person or entity or permanent establishment that guards them by providing services to safeguard private cryptographic keys on behalf of third parties, to maintain, store and transfer said currencies is not required to submit the information obligation referred to in section 6 of the thirteenth additional provision of Law 35/2006, of November 28, on Personal Income Tax. (IRPF)

In the following interactive query from the Bank of Spain, you can consult the location of providers of virtual currency exchange services for fiduciary and/or custody of electronic wallets registered with the Bank of Spain:

Entity Registry (bde.es)

Presentation deadline for model 721

Form 721 must be submitted between January 1 and March 31 of the year following the year to which the information to be supplied refers.

This 2024 will be the first year in which this form must be submitted. Thus, any person or entity that has had crypto assets in 2023 must present form 721 between January 1 and March 31, 2024 (in this year 2024, since March 31 is a Sunday, the deadline is until April 1)

What information must be provided in form 721?

Those required to present form 721 must provide the information contained in the annex to Order HFP/886/2023, of July 26, which approves said model.

Thus, the information to be provided to the Tax Administration will include:

• 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 that provides services to safeguard private cryptographic keys on behalf of third parties, to maintain, store and transfer virtual currencies, as well as your home address or website address.
• The complete identification of each type of virtual currency.
• The balances of each type of virtual currency in December 31 expressed in virtual currency units and their valuation in euros.

If the obligation to declare had expired before December 31, the information to be provided will be that corresponding to the date on which said extinction occurred.

For more details you can consult the Content of the informative declaration on virtual currencies located abroad, form 721

 What are the sanctions if form 721 is not submitted?

Failure to present form 721 will entail a fine of €300, if required by the Administration, and €150 for presenting it incorrectly.

You can also be fined €20 for undeclared/required registration or €10 for doing it incorrectly

JDA/SFAI