The Spanish tax authority Agencia Tributaria (AEAT) has introduced the form Modelo 721 to prevent tax evasion as it relates to cryptocurrencies and other crypto assets.
Spanish taxpayers and legal entities are obligated to use form 721 to declare holdings of cryptocurrencies and crypto assets outside of Spain in their annual crypto tax declaration in Spain.
Read this article to learn more about form 721, who needs to use it, how to use it and how it is different from form 720.
👆 Form 721 at a glance
- Form 721 is used to declare crypto holdings with foreign exchanges, platform or similar
- It is only needed if the total value of all crypto holdings held outside of Spain exceeds 50.000 €
- The deadline for form 721 is 31.03.2023
What is form 721?
Form 721 has been implemented as a consequence of the new law of anti-fraud measures (July 2021). It is used to declare crypto assets deposited with exchanges or platforms located outside of Spain in order to prevent fraud and tax evasion.
The new form 721 is necessary because the form 720 was not intended to be used for cryptocurrencies and other crypto assets.
Who needs to use form 721?
Individual taxpayers and legal entities with a residency in Spain are obligated to use from 721 to report crypto assets located outside of Spain ONLY IF the total value of these crypto assets exceeded 50.000 € as of 31.12. of the tax year in question.
The Agencia Tributaria will use the average cryptocurrency prices from 31.12. to determine the value of your crypto assets.
Who doesn’t need to use form 721?
Virtual currencies located outside of Spain do not need to be reported in form 721 if their total value does not exceed 50.000 € on 31.12. or if they belong to public administrations and bodies as outlined in Article 9.1 of Corporate Income Tax.
When do you need to use form 721?
The use of form 721 is mandatory from January 2023. So if you fall under the outlined reporting requirements, you will need to use the form to declare crypto assets in your tax declaration for the tax year 2022.
When is the deadline for form 721?
You need to declare your foreign crypto assets using form 721 between 01.01. and 31.03.
Be aware that this deadline is earlier than the deadline for your regular tax declaration!
What information needs to be included in form 721?
Similarly to form 720, form 721 requires the following information:
- Full name of the taxpayer or the name of the company
- Telephone number
- Identification of the platform that holds the crypto assets
- Identification of each crypto asset in units and euros
- Balance of each crypto asset as of 31.12. in units and euros
- Balance of crypto assets at the beginning of the year
- Number of crypto assets sent and received during the year
Blockpit: Crypto Portfolio Tracker & Tax Calculator
The scope of information needed to fill out form 721 is very extensive and can easily result in hours and hours of work – especially when you are holding many different cryptocurrencies and assets, or when a lot of transactions have occurred during the year.
Blockpit offers a free crypto portfolio tracker to keep track of your crypto assets wherever they are and can save you countless hours of collecting transaction data.
When is a crypto asset considered to be located outside of Spain?
Crypto assets are only considered to be in a foreign country when they are held with a person or entity that does not have a residence or permanent establishment in Spain.
Furthermore, this person or entity must provide services to safeguard the private cryptographic key safekeeping services for maintaining, storing and transferring virtual assets.
In other words: Your crypto assets are considered to be located outside of Spain when you store them on a “hot wallet” with a crypto exchange or a similar platform or even with an individual that controls the keys to your wallet.
So you don’t need to use form 721 when you lose your Ledger hardware wallet on a vacation.
Form 721 vs Form 720 – What’s the difference?
Before the introduction of form 721, form 720 was used to declare all financial assets located outside of Spain. Form 720 is not intended to be used for the declaration of cryptocurrencies or other crypto assets, which is why form 721 was introduced in 2023.