Key takeaways:
- Spanish residents must report foreign crypto assets over $55,000 by March 31, 2024
- Spain combats crypto tax evasion, issuing 328,000 warnings in 2023, a 40% increase from the previous year.
In a bid to bolster control and oversight in the cryptocurrency taxation landscape, Spain has mandated residents with crypto assets on non-Spanish platforms to declare them by March 31, 2024.
The country’s tax agency has introduced Form 721, a dedicated declaration form for virtual assets held abroad, requiring legal residents and citizens to officially report their holdings on non-Spanish platforms for tax purposes.
Individuals and businesses affected by this directive must disclose their crypto holdings held abroad as of December 31, 2023. The declaration period spans from January 1, 2024, to April 1, 2024, as part of Spain’s broader efforts to regulate the burgeoning crypto space within its borders.
According to the regulations, only individuals with crypto assets exceeding $55,000 on their balance sheets are obligated to report their foreign holdings.
A nuanced approach is taken for those using self-custodial crypto wallets, as they will need to disclose their holdings through the standard wealth tax form 714.
This reflects an attempt to balance regulatory oversight with the practicalities of various crypto storage methods. The move comes weeks after Spain’s main financial authority denounced phony promotions for cryptocurrency assets and emphasized the importance of businesses adhering to local regulations.
The Spanish tax authority, Agencia Tributaria, has been intensifying efforts to enforce taxation on local holders of crypto assets.
In April 2023, the agency sent a staggering 328,000 warning notices to individuals who had failed to pay taxes on crypto for the 2022 fiscal year, representing a 40% increase compared to the previous year.
This proactive stance underscores the agency’s commitment to regulating the burgeoning crypto market, with ongoing efforts to bring various regulations into play.
Spain aims to stay ahead in crypto regulation, with the Spanish Ministry of Economy and Digital Transformation reporting in October that the first comprehensive European Union crypto framework, the Markets in Crypto-Assets Regulation, will be enforced nationally in December 2025—six months before the official deadline.
These measures highlight Spain’s dedication to creating a robust regulatory framework to govern the rapidly evolving crypto landscape within its borders.
