The Ministry of Finance has recently approved three new information statements in relation to virtual currencies. These are models 172, 173 and 721.
The informative statements, forms 172 and 173, refer to the balances and operations carried out with virtual currencies (commonly called cryptocurrencies) by natural and legal persons.
These declarations must be completed and presented by those companies in charge of providing services to safeguard cryptocurrencies on behalf of third parties, primarily or in connection with another activity, as long as the service providers have a tax domicile or a permanent establishment in Spain. They are known as “Exchanges”, and some of the most important are Binance, Coinbase, Crypto, and Kraken.
The information provided by the entities through forms 172 and 173 will be reflected in the taxpayers’ tax data. With this, the Tax Agency will have information on both the holders of virtual currencies and the purchase and sale transactions they carry out provided by the cryptocurrency service providers themselves.
The third information obligation is form 721, its presentation is the responsibility of taxpayers who have a joint balance in cryptocurrencies as of December 31 with a market value greater than 50,000 euros. The submission period runs from January 1 to March 31 of each year.
Who should present it?
Natural or legal persons residing in Spain as long as the following conditions are met:
- Be the owner of virtual currencies or have the status of beneficiary or authorized thereof.
- That cryptocurrencies are guarded by entities that provide services to safeguard cryptographic keys.
- That the cryptocurrencies are located abroad.
And when is it understood that virtual currencies are located abroad?
When the entity that custody them is not obliged to present forms 172 and 173.
Let us remember that forms 172 and 173 are only presented by those entities that have a tax domicile or a permanent establishment in Spanish territory.
So: how can we know if the entity that custody our cryptocurrencies is domiciled or has a permanent establishment in Spain?
As reported by the Tax Agency’s own electronic headquarters, the Bank of Spain maintains an interactive registry of these entities, which allows anyone to verify where the service providers with virtual currencies are located. Among other ways to access said registry, one of the simplest is to enter the link provided by the AEAT in its frequently asked questions on this topic, and, through an interactive search tool, locate said information about the location. of these entities.
Thus, if a registered service provider with a tax domicile that is not located in Spain appears in this registry, we know that it will be necessary to inform and present form 721.
What information is included in the model?
Only and exclusively that relating to the virtual currencies that we have in the exchanges, that is, in the custody services.
What information is NOT included in the model?
- NFTs: unique ownership certificates for things that we can find on the internet, such as images, videos, music, or even texts.
- The virtual currencies that we have deposited in the HOT and COLD wallets.ç
When does the model have to be resubmitted?
Once form 721 has been presented, it must be checked each year if the total of cryptocurrencies abroad have exceeded the amount declared the previous year presented by 20,000 euros. If it exceeds them, the model must be submitted again. If not submitted, the next year must be compared against the valuation from 2 years prior (the last year submitted).
What does it mean not to present model 721?
For not submitting the informative return within the TIME limit, the Law establishes a fine of €20 for each data or set of data not presented, with a minimum of €300 and a maximum of €20,000.
If it is submitted after the deadline but without prior request, the sanction and the limits are reduced by half.
Written by: Max Cladellas, Associate at Manubens Abogados. Barcelona, Spain.
Read the full article https://pragma.international/article/clarifications-on-the-informative-declaration-of-virtual-currencies-located-abroad#no-back
