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Miriam Sánchez González. 

Do you have cryptos? Check your obligations

Before April 1, remember to check if you have cryptos abroad and comply with the new obligation to report to the tax authorities through form 721.


What is form 721?

Form 721 is an informative declaration on the holding of virtual currencies (cryptos) located abroad. Let us remember that this type of assets had no place in the already known Model 720 regarding the holding of assets and rights located abroad, so its ability to evade tax control was high.


What is meant by “virtual currency”?

Virtual currency is understood as a digital representation of value not issued or guaranteed by a central bank or public authority, not necessarily associated with a legally established currency and not having the legal status of currency or money, but which is accepted as a means of exchange and can be transferred, stored or traded electronically. We are therefore faced with elements where the guarantee of payment is not given by a central bank or a public institution, but by a decentralized system in which the authority of the users gives the transaction its validity, through the bockchain technology.

The best known virtual currencies with Bitcoin or Ethereum.


When is a virtual currency understood to be located abroad?

It will be understood that the currency is located abroad when the person or establishment that custodies them providing services to safeguard the private cryptographic keys on behalf of third parties, to keep, store and transfer such currencies was not obliged to submit the reporting obligation before the Tax Administration on balances in each currency, identification of holders etc.


What is the deadline for filing Form 721?

Form 721 must be filed between January 1 and March 31 of the year following the year to which the information to be reported refers, being this year 2024 the first year in which there is an obligation to report the information for the year 2023. . In this sense, the information related to the fiscal year 2023 must be supplied to the Tax Administration between January 1 and April 1, 2024, as March 31 is a Sunday.


Who is obliged to file Form 721 and under what limits?

Individuals and legal entities resident in Spanish territory, permanent establishments in said territory of non-resident individuals or entities, among others, who are holders of virtual currencies abroad or in respect of which they are beneficiaries, authorized or otherwise hold power of disposal, or of which they are actual holders, are obliged to file tax form 721, provided that the value of the cryptocurrencies abroad exceeds 50,000 euros as of December 31, 2023.

Specifically, “there will be no obligation to report on any virtual currency when the sados as of December 31, 2023 valued in euros, do not exceed together 50,000 euros “. If this joint limit is exceeded, all virtual currencies must be reported.

Once the declaration has been filed in the following years, it will only be compulsory to file the declaration when the joint balance at December 31, 2023 has increased by more than 20,000 euros with respect to the last declaration filed. In any case, it will be obligatory to file the tax return in respect of virtual currencies for which the condition of being obliged to file the tax return has been extinguished before December 31. In other words, if in one year there is an obligation to file a tax return for exceeding the value of 50,000 euros, only if this value is increased by more than 20,000 euros will there be an obligation to file a tax return in the following year, unless the obligation to file a tax return has been extinguished before December 31, for example, due to the sale of the virtual currency, in which case there will also be an obligation to file a tax return informing of this loss of ownership.

In relation to this first year of obligation, it should be noted that:

There will be no obligation to report on the ownerships that are cancelled before December 31, 2023, as they are virtual currencies for which there has been no previous obligation to declare. Let us remember that this is the first year of application of this model.
A virtual currency, purchased in 2023 and sold before December 31, 2023, with a balance of more than 50,000 euros, will not be reported either.

Do you need help? Here in Cigarrán Abogados can help you (+34) 91.355.85.15

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