News on tax measures to prevent and fight tax fraud

On July 11, Law 11/2021, of July 9, on measures to prevent and fight tax fraud, came into force; among other provisions, the norm introduces “the obligation to supply information on balances and operations that maintain the holders of virtual currencies”. Ultimately, it is essential to declare the positions of the cryptocurrencies and, specifically, to inform through Form 720 (Informative declaration on assets and rights located abroad) of the ownership of those virtual currencies that are located abroad, and in particular from exchanges.

Obligation to submit the declaration of assets abroad: model 720

The regulation, RD 1065/2007, establishes a joint limit of € 50,000 below which there would be no obligation to present the model 720, but in the case of virtual currencies there has been no modification so far; therefore, a limit has not been established below which there would be no obligation to present the aforementioned form 720, so, if the regulation is not modified between now and February, all those who have investments in cryptocurrencies located abroad would be obliged to present form 720.

On the other hand, currently, there is also legal uncertainty about how to value the positions of cryptocurrencies. In the case of traded securities, current accounts or deposits, the positions take as reference December 31 of each year or based on the average of the valuation of the last quarter. In this case, since there is no regulatory development in this regard, we are awaiting the regulations that tell us how to proceed with the declaration of cryptocurrencies in that form.

In any case, we must note that the non-presentation of form 720 entails significant penalties that can range from 5,000 euros for omitted data to a minimum penalty of 10,000 euros.

Registration of positions through programs or specialized platforms

For all these reasons, we recommend that our clients who own cryptocurrencies abroad carry out a record of the positions of their cryptocurrencies in order to be able to credit the balances of the cryptocurrencies taking into account the valuation as of December 31, or the average valuation of the last trimester.

At ADDWILL Partners, SLP, we provide specialized advice in the field of cryptocurrencies; for this reason and in response to these needs, we highly recommend using tools to keep the record such as Trackcoin, Cointracking, Cointracker or other similar programs with which to keep track of their positions in the exchanges or their private wallets in this last quarter of 2021 in order to be able to calculate, if necessary, the average value of the amounts of the cryptocurrencies.

In any case, if you need advice on the tax implications of investing in cryptocurrencies, or tax advice to declare the positions before the Spanish Tax Agency, at ADDWILL PARTNERS, SLP we have an expert team on the matter, who can answer your questions.