Form 721: Informative declaration on virtual currencies located abroad

Form 721 is an informative declaration through which certain taxpayers must notify the Tax Agency of their holdings of virtual currencies ‘located abroad’ when said currencies are held by a third party not resident in Spain that provides private cryptographic key safeguarding services, as of 31 December of each year.

Filing deadline

• General deadline: from 1st of January to 31st of March of the year following that to which the information declared refers.

Obligated parties

In general, the following must file Form 721:

• Natural and legal persons resident in Spain, and
• Permanent establishments in Spain of non-resident persons or entities, when they meet the objective requirements relating to virtual currencies held abroad.

What must be declared?

Information must be provided on virtual currencies held in custody as at 31st of December by persons or entities located abroad that provide services to:

• safeguard private cryptographic keys on behalf of third parties, and
• enable the holding, storage and transfer of virtual currencies.

Form 721 is not required when, for example:

• the currencies are held in wallets under the taxpayer’s own control (without third-party custody), or
• the custody/safeguarding service is provided by a person or entity resident in Spain; in these cases, for the purposes of this reporting obligation, they are not considered to be ‘located abroad’.
• The taxpayer is covered by the special regime for posted workers (Art. 93 LIRPF, ‘Beckham Law’), as specific treatment is applied for tax purposes and the AEAT considers this a case of non-obligation.

When is it first submitted?

The obligation to submit form 721 arises when the combined value of virtual currencies held abroad exceeds 50,000€.

When must it be submitted again?

Once submitted for the first time, it must generally be submitted again when:

• There is an increase of more than 20,000€ in the total value compared to that determined in the last return.
• There are cases of extinction of ownership/reported position (e.g. transfer or cancellation), in which case the virtual currencies affected must be reported in accordance with the criteria of the Spanish Tax Agency (AEAT).