Modelo 721 explained: Spain’s new form for declaring crypto assets
This year, Spain has introduced a new form in order to track crypto assets held abroad by its residents. Here's everything you need to know about that form and exactly who must file one.
The Modelo 720 is the form you must present to the Spanish tax authorities to show declare the assets you hold abroad that are more than €50,000.
This year, the Spanish government have introduced a new form, which is an extension of this, but specifically for crypto assets, called the Modelo 721.
Like the Modelo 720 the deadline in which to complete it is March 31st, so it's coming up fast. Read on to find out if you need to file one or not.
There are also two new forms on top of this for this year, the Modelos 172 and 173, but these forms are only for crypto platforms and exchanges, so are not necessary to complete for the average crypto holder.
READ ALSO: Do I really need to declare foreign assets to Spain's taxman by March 31st 2024?
You might think that this kind of defeats the purpose of crypto, because the idea is that amount you have and the transactions you make are anonymous, but it’s a way for the Spanish government to combat money laundering and fiscal fraud.
It’s also used as a way to find out how many crypto assets you hold, so that if you do sell them in the future, the government is aware of how much money you might potentially make from it. This is because selling cryptocurrencies is taxable in Spain.
The new Modelo 721 applies equally to Spanish citizens and foreigners legally resident in Spain and is for information purposes only. In other words, you won’t be expected to pay tax on assets held abroad but can be fined if you don’t declare them.
Who must complete the new 721?
Like the 720 it’s only for assets that are worth €50,000 or above. As the value of crypto assets changes minute to minute and can dramatically change over just a few days, you must declare the assets held on a particular date.
This date is December 31st of the previous year, in this case, December 31st 2023.
This means that if your crypto assets were valued at more than €50,000 on the last day of last year, then you must complete the form. If not, then it’s not necessary.
Those who hold crypto in foreign exchanges
Secondly, the form is only for assets held abroad, not within Spain, so this means any crypto held in foreign exchanges.
An exchange is the place where you buy and sell cryptocurrencies from. Some people choose to store their crypto assets in these exchanges too.
Back in 2021, the Bank of Spain approved a Royal Decree-Law which modified Law 10/2010 on the prevention of money laundering and the financing of terrorism.
According to this decree, cryptocurrency exchanges that operate in Spain must register with the Bank of Spain. To do this, they must comply with a series of requirements of commercial and professional honourability, as well as have appropriate procedures and bodies for the prevention of money laundering.
Currently, there are around 70 exchanges inscribed with the Bank of Spain including Binance, Bit2Me, BitPanda, Criptan, Bitbase and Bitonovo. You can find a full list of them here if you scroll to the bottom.
This means that anyone who owns crypto assets stored in these exchanges doesn’t need to complete the 721 because they are not considered to be foreign, if they're registered with the Bank of Spain.
What about crypto assets held in wallets?
Many people choose not to hold their crypto assets in exchanges, but instead hold onto them themselves in what’s known as a crypto wallet. These wallets are stored on personal devices such as computers. Crypto lawyers in Spain agree that these wallets are considered to be in the country and the crypto held in them is not based abroad.
This means that even if your crypto assets were worth more than €50,000 on December 31st 2023, but they were held in a wallet and not in a foreign exchange, you are exempt from completing the Modelo 721.
What do I need to provide if I need to declare the Modelo 721?
- Your name or company name if you’re holding crypto as an autónomo.
- Your fiscal identification number or NIF (this is essentially the same as your NIE)
- Your address
- All the different types of cryptocurrencies you own
- The amount that you own in cryptocurrency units and the amount they were worth in Euros on December 31st 2023.
You will need to show official proof of this, which can sometimes be downloaded as a type of statement of your movements from these exchanges.
What happens if I’m still unsure if I need to complete the 721?
If you have a gestor and they know that you own crypto assets because you’ve asked them about them before, they may be telling you now that you need to complete the Modelo 721 before the upcoming deadline.
The problem is that because this is so new and many regular gestores are not versed in the world of crypto, they may be telling you to complete it when you actually don’t need to.
If you’re still unsure, it’s worth contacting a specialised crypto lawyer in Spain who knows what they’re talking about so that mistakes aren’t made.
Do I declare money I’ve made from crypto on this form?
No, this form is only informative. If you made any money from crypto by buying and selling, you will need to declare your profits, regardless of where the crypto is held or how much profit you made.
This is completely separate from the Modelo 721. Any profits you’ve made will be presented in the yearly declaración de Renta instead.
We will cover how profits from crypto trading are taxed in Spain in another article, so keep an eye out on the site.
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The Modelo 720 is the form you must present to the Spanish tax authorities to show declare the assets you hold abroad that are more than €50,000.
This year, the Spanish government have introduced a new form, which is an extension of this, but specifically for crypto assets, called the Modelo 721.
Like the Modelo 720 the deadline in which to complete it is March 31st, so it's coming up fast. Read on to find out if you need to file one or not.
There are also two new forms on top of this for this year, the Modelos 172 and 173, but these forms are only for crypto platforms and exchanges, so are not necessary to complete for the average crypto holder.
READ ALSO: Do I really need to declare foreign assets to Spain's taxman by March 31st 2024?
You might think that this kind of defeats the purpose of crypto, because the idea is that amount you have and the transactions you make are anonymous, but it’s a way for the Spanish government to combat money laundering and fiscal fraud.
It’s also used as a way to find out how many crypto assets you hold, so that if you do sell them in the future, the government is aware of how much money you might potentially make from it. This is because selling cryptocurrencies is taxable in Spain.
The new Modelo 721 applies equally to Spanish citizens and foreigners legally resident in Spain and is for information purposes only. In other words, you won’t be expected to pay tax on assets held abroad but can be fined if you don’t declare them.
Who must complete the new 721?
Like the 720 it’s only for assets that are worth €50,000 or above. As the value of crypto assets changes minute to minute and can dramatically change over just a few days, you must declare the assets held on a particular date.
This date is December 31st of the previous year, in this case, December 31st 2023.
This means that if your crypto assets were valued at more than €50,000 on the last day of last year, then you must complete the form. If not, then it’s not necessary.
Those who hold crypto in foreign exchanges
Secondly, the form is only for assets held abroad, not within Spain, so this means any crypto held in foreign exchanges.
An exchange is the place where you buy and sell cryptocurrencies from. Some people choose to store their crypto assets in these exchanges too.
Back in 2021, the Bank of Spain approved a Royal Decree-Law which modified Law 10/2010 on the prevention of money laundering and the financing of terrorism.
According to this decree, cryptocurrency exchanges that operate in Spain must register with the Bank of Spain. To do this, they must comply with a series of requirements of commercial and professional honourability, as well as have appropriate procedures and bodies for the prevention of money laundering.
Currently, there are around 70 exchanges inscribed with the Bank of Spain including Binance, Bit2Me, BitPanda, Criptan, Bitbase and Bitonovo. You can find a full list of them here if you scroll to the bottom.
This means that anyone who owns crypto assets stored in these exchanges doesn’t need to complete the 721 because they are not considered to be foreign, if they're registered with the Bank of Spain.
What about crypto assets held in wallets?
Many people choose not to hold their crypto assets in exchanges, but instead hold onto them themselves in what’s known as a crypto wallet. These wallets are stored on personal devices such as computers. Crypto lawyers in Spain agree that these wallets are considered to be in the country and the crypto held in them is not based abroad.
This means that even if your crypto assets were worth more than €50,000 on December 31st 2023, but they were held in a wallet and not in a foreign exchange, you are exempt from completing the Modelo 721.
What do I need to provide if I need to declare the Modelo 721?
- Your name or company name if you’re holding crypto as an autónomo.
- Your fiscal identification number or NIF (this is essentially the same as your NIE)
- Your address
- All the different types of cryptocurrencies you own
- The amount that you own in cryptocurrency units and the amount they were worth in Euros on December 31st 2023.
You will need to show official proof of this, which can sometimes be downloaded as a type of statement of your movements from these exchanges.
What happens if I’m still unsure if I need to complete the 721?
If you have a gestor and they know that you own crypto assets because you’ve asked them about them before, they may be telling you now that you need to complete the Modelo 721 before the upcoming deadline.
The problem is that because this is so new and many regular gestores are not versed in the world of crypto, they may be telling you to complete it when you actually don’t need to.
If you’re still unsure, it’s worth contacting a specialised crypto lawyer in Spain who knows what they’re talking about so that mistakes aren’t made.
Do I declare money I’ve made from crypto on this form?
No, this form is only informative. If you made any money from crypto by buying and selling, you will need to declare your profits, regardless of where the crypto is held or how much profit you made.
This is completely separate from the Modelo 721. Any profits you’ve made will be presented in the yearly declaración de Renta instead.
We will cover how profits from crypto trading are taxed in Spain in another article, so keep an eye out on the site.
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