Cryptocurrencies: new obligation to declare in the 720 Form

The year 2022 is gradually approaching. At the beginning of the year, we must remember that the deadline for filing the Form 720 (declaration of assets and rights located abroad) for the 2021 financial year will begin on 1st January and end on 31st March 2022.

Law 11/2021, of 9 July, on measures to prevent and combat tax fraud, introduced for the common territory (the Basque Country and Navarre are outside the common territory), the obligation to declare a new block of assets located abroad corresponding to CRYPTOCOINS OR VIRTUAL CURRENCIES.

In other words, from 2021 onwards, cryptocoins or virtual currencies are part of the assets and rights located abroad (i.e. balances in bank accounts, real estate, securities and insurance) that can be declared.

This obligation will fall on the holders, beneficiaries, authorised or otherwise disposing of such virtual currencies. Regarding this last set of persons obliged to declare, we understand this to refer to those persons or entities that provide services for safeguarding private cryptographic keys on behalf of third parties, for holding, storing and transferring virtual currencies.

Therefore, from 2022 onwards, these VIRTUAL CURRENCIES or CRYPTOCOINS MUST BE DECLARED IN THE FORM 720 for the financial year 2021.

For the time being, this new obligation to declare has been introduced at the legal level, i.e. in the distant and much feared Eighteenth Additional Provision of Law 58/2003, of 17 December, General Tax Law, as amended by Law 11/2021 mentioned above. It therefore remains to be regulated, which we hope will be in line with the monetary thresholds and circumstances envisaged for the other blocks mentioned, without overlooking some important technical issues specific to cryptocurrencies, mainly referring to the different wallets.

Finally, as always with the cudgel in hand, for the case of non-compliance with the obligation to report virtual currencies located abroad, the penalty shall consist of a fixed pecuniary fine of 5,000 euros for each item or set of data relating to each virtual currency individually according to its class, which should have been included in the declaration or which should have been provided incompletely, inaccurately or falsely, with a minimum of 10,000 euros.

Meanwhile, the penalty will be 100 euros for each piece or set of data referring to each virtual currency individually considered according to its class, with a minimum of 1,500 euros, when the declaration has been submitted after the deadline without prior request from the State Agency of Tax Administration.

The tax department of Ventura Garcés is at your disposal to help you prepare and subsequently file the Form 720.