What is Form 721 regarding the obligation to declare virtual currencies abroad before March 31?
Puigverd Assessors analyzes the 721 form regarding the obligation to declare virtual currencies abroad before March 31.
25/03/2025
The growing adoption of cryptocurrencies has led tax authorities to implement measures to ensure transparency and tax compliance. In Spain, one of these measures is Form 721 , an informative return on virtual currencies held abroad. For the 2024 tax year, taxpayers have until March 31, 2025, to file this return.
The obligation to file Form 721 is established in Order HFP/886/2023, of July 26, published in the Official State Gazette (BOE) on July 29, 2023. This order approves the form and establishes the conditions and procedures for its submission.
Individuals and legal entities resident in Spain, as well as permanent establishments in Spanish territory of non-resident entities, who hold virtual currencies abroad, are required to submit Form 721.
Those who are beneficiaries, authorized persons, or those who hold the power of disposal over said currencies, or who are the actual owners of them, held by entities that provide services to safeguard private cryptographic keys on behalf of third parties, are also obligated.
The obligation to file Form 721 arises when the combined value of virtual currencies held abroad exceeds €50,000 as of December 31 of the corresponding year . Once the declaration has been filed for the first time, it will only be required to be filed again in subsequent years if the combined balance of virtual currencies increases by more than €20,000 compared to the previously declared balance.
Those obliged must provide the following information in form 721:
Form 721 must be filed between January 1 and March 31 of the year following the year to which the information relates. For example, for fiscal year 2024, the filing deadline is from January 1 to March 31, 2025.
Form 721 is submitted electronically through the Tax Agency's Online Office. A digital certificate or Cl@ve PIN is required to access the service. The process involves completing the required information on the form and submitting it electronically.
Failure to comply with the obligation to file Form 721 can lead to significant penalties. Although the specific regulations on penalties applicable to Form 721 are still being developed, they are expected to be similar to those established for Form 720, which may include significant fines. Therefore, it is essential to comply with this obligation to avoid potential penalties.
For business owners and entrepreneurs working with cryptocurrencies, it is essential:
Legal framework of model 721
The obligation to file Form 721 is established in Order HFP/886/2023, of July 26, published in the Official State Gazette (BOE) on July 29, 2023. This order approves the form and establishes the conditions and procedures for its submission.
Who is required to file Form 721?
Individuals and legal entities resident in Spain, as well as permanent establishments in Spanish territory of non-resident entities, who hold virtual currencies abroad, are required to submit Form 721.Those who are beneficiaries, authorized persons, or those who hold the power of disposal over said currencies, or who are the actual owners of them, held by entities that provide services to safeguard private cryptographic keys on behalf of third parties, are also obligated.
Thresholds for the obligation to declare
The obligation to file Form 721 arises when the combined value of virtual currencies held abroad exceeds €50,000 as of December 31 of the corresponding year . Once the declaration has been filed for the first time, it will only be required to be filed again in subsequent years if the combined balance of virtual currencies increases by more than €20,000 compared to the previously declared balance.
Information to be provided in form 721
Those obliged must provide the following information in form 721:- Identification of virtual currencies: type and quantity of each.
- Balance as of December 31: value in euros of virtual currencies.
- Identification of the custodian entity: name and address of the entity that holds the virtual currencies.
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 relates. For example, for fiscal year 2024, the filing deadline is from January 1 to March 31, 2025.
Procedure for submitting Form 721
Form 721 is submitted electronically through the Tax Agency's Online Office. A digital certificate or Cl@ve PIN is required to access the service. The process involves completing the required information on the form and submitting it electronically.
Penalties for failure to comply with the obligation to declare
Failure to comply with the obligation to file Form 721 can lead to significant penalties. Although the specific regulations on penalties applicable to Form 721 are still being developed, they are expected to be similar to those established for Form 720, which may include significant fines. Therefore, it is essential to comply with this obligation to avoid potential penalties.
Considerations for business owners and entrepreneurs
For business owners and entrepreneurs working with cryptocurrencies, it is essential:- Maintain detailed records: Keep accurate accounting of virtual currency transactions and year-end balances.
- Identify the location of assets: Determine whether virtual currencies are held abroad to assess reporting obligations.
- Get tax advice: Consult with professionals specializing in cryptocurrency taxation to ensure compliance with tax obligations.