Spain’s Tax Administration Agency, Agencia Tributaria, recently announced new regulations that require Spanish citizens to disclose their cryptocurrency holdings exceeding 50,000 euros held on foreign platforms for tax purposes. This move aims to ensure effective taxation of cryptocurrency holders within the country’s jurisdiction. The regulations will come into effect in January next year, and individuals and businesses impacted will need to report their crypto assets held abroad by the end of 2023.
Form 721: Reporting Crypto Assets Held Abroad
To comply with the new regulations, Spanish residents and citizens must use Form 721, a specific declaration form designed for virtual assets held on non-Spanish platforms. This form will enable them to officially report their crypto holdings for tax purposes. The declaration period for reporting crypto assets spans from January 1, 2024, to April 1, 2024.
For individuals who self-custody their crypto assets, they will need to report their holdings through the standard wealth tax form 714. This allows the tax authorities to adequately assess the wealth and tax liabilities of individuals possessing virtual assets.
Over the past year, Spain has shown a growing interest in the crypto sector and has taken steps to foster a regulated crypto environment. The country aims to accelerate the implementation of the European Union’s Markets in Crypto Act (MiCA). In line with this goal, regulatory licenses have been granted to major crypto platforms like Coinbase, Kraken, and Crypto.com by the Spanish authorities.
Spain is not the only country making significant efforts to tax crypto holders. Tax agencies in the UK and the US are also taking steps to regulate and tax cryptocurrency activities within their jurisdictions. In the US, the Internal Revenue Service (IRS) has been seeking information from crypto platforms like Kraken and Coinbase to identify crypto users and ensure they are paying their taxes. Kraken, for example, has agreed to provide the IRS with profile information and transaction records for customers who transacted more than $20,000 between 2016 and 2020.
The new tax regulations in Spain highlight the increasing scrutiny on cryptocurrency holdings and activities. With the implementation of Form 721 and the requirement to report crypto assets held abroad, Spanish citizens must ensure compliance with these regulations to avoid potential penalties and legal repercussions. This move aligns with the country’s commitment to fostering a regulated crypto environment and mirrors global efforts to tax crypto holders. As the crypto industry continues to evolve, it is essential for individuals and businesses to stay informed about their tax obligations and report their crypto assets accurately to regulatory authorities.