Spain’s Tax Agency Clarifies Form 721 Rules for Crypto Wallets

• The Tax Agency says Form 721 applies to foreign crypto held by third-party custodians.
• Taxpayers’ private-key control determines whether they must file Form 721.
• Crypto held in self-custody wallets is exempt from Form 721 balances.

Spain’s Tax Agency has clarified how taxpayers should determine whether crypto they hold overseas needs to be reported on Form 721, which is the form used to declare virtual currencies held outside Spain.

The clarification focuses on an important difference between custodial and non-custodial wallets. The Tax Agency states that Form 721 applies to Spanish residents who hold, control, or beneficially own crypto abroad when it is held by a third party that manages private keys on their behalf.

This requirement applies only if the custodian is located outside Spain or does not operate through a Spanish permanent establishment.

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