If you live in Spain and have cryptocurrencies abroad that exceed €50,000, you are obliged to declare them. For this purpose, Form 721 has been established, an obligation that seeks to ensure fiscal transparency and tax compliance.
It is important to note that the Model 721 is an informative statement and does not in itself imply the payment of taxes. Taxes will be payable if profits have been obtained from the purchase and sale of cryptocurrencies. But this must be included in the Personal Income Tax return that is filed every year between May and June. Form 721 is filed in the first three months of the year.
Who must file Form 721?
It doesn't matter if you are Argentinean, Colombian or Mexican. Every tax resident in Spain, whether foreign or Spanish, must declare their cryptocurrencies abroad. These are the conditions to take into account:
- Any person or entity resident in Spain with cryptoassets for €50,000 or more in platforms outside the country must file Form 721.
- Applies to accounts in exchanges, private wallets and any other form of digital storage of cryptocurrencies.
- It does not distinguish between holding and operation; it is sufficient that the assets exist abroad.
- Holders of cryptocurrencies on decentralized platforms must also assess whether they meet the requirements to declare.
When and how is it presented?
- It must be declared annually between January 1 and March 31.
- The status of assets as of December 31 of the previous year is reported.
- It is only filed again if there is an increase of more than €20,000 with respect to the last tax return.
- The filing is done through the electronic headquarters of the Tax Agency, using a digital certificate or Cl@ve PIN. If you do not have one, a manager from our office can file it on your behalf.
- It is advisable to keep documentation supporting the value of the declared cryptocurrencies, such as exchange statements or blockchain records.
Consequences of not declaring
From MBT Abogados we always recommend filing the tax return. Not filing it can generate these inconveniences:
- Fines of €5,000 for each omitted or erroneous data, with a minimum of €300.
- The tax authorities could consider undeclared cryptocurrencies as unjustified capital gains, with additional penalties of 50% on their value.
- Inspections can result in account blockages and unexpected tax audits.
- Failure to file may complicate the regularization of assets in the future, limiting the ability to move funds legally.
But let's see it explained with a practical example. Maria, resident in Spain, owns €55,000 in cryptocurrencies on an international platform. She does not file Form 721 thinking that she will not be detected. Two years later, she decides to sell part of her assets and transfer them to her account in Spain. Hacienda detects the income and requires him to justify the origin of the funds, imposing fines and additional taxes.
Importance of tax planning
To avoid problems, it is essential to be informed and comply with tax obligations. If you have cryptoassets abroad, we recommend you to evaluate your situation and make the corresponding declaration.
- Periodically review the value of cryptoassets to see if they exceed the €50,000 threshold.
- Maintain clear records of transactions and custody of assets.
- Consult with a specialist in international taxation for proper planning and to avoid penalties.
When does the statute of limitations expire?
If you did not know about Form 721 and you missed the deadline for filing it, perhaps the best thing to do is to wait for the statute of limitations to expire. The statute of limitations is 4 years from the day following the end of the voluntary period for filing the form. In other words, if Form 721 was due in March 2025, the statute of limitations would expire in April 2029.
This 4-year period can be extended if the Tax Agency initiates a verification or inspection procedure, or if it is considered that there was a tax offense.
Differences with Model 720
- Model 720 is intended to declare assets abroad such as bank accounts, real estate or business holdings, while Model 721 focuses exclusively on cryptocurrencies.
- Both forms share the same filing date, but Form 721 is a recent tax innovation adapted to the digital era.
- The penalties in the Model 721 follow a similar criterion to that of the 720, although they may still be subject to regulatory modifications.
If you need information about the Model 720, we recommend you to read this post of our blog.
We are a law firm in Barcelona specialized in advising Latin Americans, and Argentineans in particular, on international taxation. If you need help with Form 721, you can contact us for a consultation. Our lawyers' fees for one hour of consultation in person or by videoconference are 150€.
