Modelo 721 is the informational return on cryptocurrencies and other crypto assets held outside Spain, approved through Order HFP/887/2023. It came into force for the 2023 tax year — with first-time filing in January 2024 — and represents a new formal obligation for Spanish-resident individuals and companies with exposure to digital assets held in foreign custody. Its structure mirrors that of Modelo 720 (the overseas assets declaration), though with several important differences.
Regulatory Background: Origins and Mechanics
The obligation to declare foreign-held crypto assets stems from the amendment to General Tax Law 58/2003 introduced by Law 11/2021 on Measures for the Prevention and Combat of Tax Fraud. This law established two crypto information reporting obligations: one covering transactions carried out in Spain (Modelo 172, filed by Spanish exchanges) and one covering assets held abroad (Modelo 721, filed by the taxpayer themselves).
Modelo 721 applies when the combined value of crypto assets held in foreign custody exceeds €50,000 on 31 December. Once the initial threshold is crossed, the obligation persists in subsequent years even if the balance drops below that level, provided it exceeded €50,000 at any point during the year. Value is calculated using market prices at the assessment date.
Which Crypto Assets Must Be Declared
The regulation defines “crypto asset” broadly: any digital representation of value or rights that can be electronically transferred and stored using distributed ledger technology or similar technology. In practice, this covers:
- Cryptocurrencies (Bitcoin, Ether, Solana, etc.)
- Utility tokens and governance tokens
- Stablecoins (USDT, USDC, DAI and equivalents) held on foreign exchanges or wallets
- NFTs with significant economic value
- Security tokens representing interests in real-world assets
Assets held on exchanges or wallets based in Spain are not subject to Modelo 721, as Spanish service providers already have their own reporting obligations to the AEAT under Modelos 172 and 173.
Information Required in the Return
For each crypto asset declared, Modelo 721 requires identifying: the name and type of asset, the custodian entity or person (foreign exchange or third-party wallet), the number of units held and the euro-denominated balance as of 31 December. Where assets are in self-custody wallets hosted on foreign servers, the taxpayer acts as their own custodian.
The first filing for the 2023 tax year — due by 31 January 2024 — produced fewer declarations than the tax authority expected, signalling that enforcement scrutiny will intensify significantly in 2024 and 2025. This pressure will be further reinforced by the automatic exchange of tax information between European administrations under DAC8, which enters into force in 2026.
The Penalty Regime: No Amnesty, No Proportionality Problems
Unlike Modelo 720, whose penalty regime was partially struck down by the Court of Justice of the EU in 2022 as disproportionate, Modelo 721 has been designed with that ruling in mind. Applicable penalties are:
- €5,000 per data item or set of data relating to the same undeclared or late-filed crypto asset, with a minimum of €10,000 per return
- €500 per data item for voluntary late filing without a prior AEAT request, with a minimum of €1,500
While these figures are substantial, they are lower than those in the original Modelo 720 (which could reach 150% of the undeclared value), making them less vulnerable to a European legal challenge. Importantly, failure to file Modelo 721 does not automatically trigger an imputation of unjustified income in personal income tax (IRPF) or corporate tax (IS), as was the case under the harsher Modelo 720 rules.
Interaction with Income Tax and Corporate Tax
Modelo 721 is an informational return, not a tax assessment: filing it does not generate any payment obligation in itself. However, its content provides the basis for AEAT controls on whether gains and losses from crypto assets have been correctly reported in the substantive tax returns.
For individuals, crypto asset disposals are taxed as capital gains or losses within the savings base of IRPF, at rates of 19%-28% depending on the gain bracket. For companies subject to corporate tax (IS), these transactions flow into the general taxable base. Exchanging one crypto asset for another — for example, Bitcoin for Ether — constitutes a taxable event in Spain and must be reported, which means maintaining a detailed transaction log throughout the year is essential.
What to Do If You Hold Crypto Assets Abroad
The first step is a comprehensive inventory of all digital assets and their custodians, distinguishing between exchanges headquartered outside Spain, self-custody wallets on foreign servers, and DeFi protocols with non-Spanish legal domicile. Next, assess whether the €50,000 threshold was exceeded at any point during the year or specifically on 31 December.
If a filing obligation exists, collect account statements or transaction histories from the relevant foreign platforms. For self-custodied assets, valuation requires accessing publicly available price sources and documenting the methodology in a way that can withstand scrutiny in a potential tax audit.
At BMC our specialist tax team is here to help. See our tax services.
