If you hold the keys to your cryptocurrencies, you do not need to file model 721, even if the exchange is outside Spain. It is only required if a foreign provider holds the keys and the balance exceeds 50,000 euros as of December 31.
The obligation to file model 721 depends on who holds the keys, not on where the exchange is located. The binding consultation V0848-26, dated April 21 and signed by the General Directorate of Taxes, responds to a tax resident in Spain who created an LLC in the United States to hold cryptocurrencies long-term.
According to merca2.es, the regulation requires a provider that offers custody services for private keys on behalf of third parties, not resident in Spain and without a permanent establishment here. This is established by article 42 quater of the General Regulation on tax management and inspection procedures.
If the taxpayer retains control of their private keys without delegating custody to anyone, that holding is excluded from the declaration. It does not matter whether it is an online wallet or a physical device kept at home, because what matters is the control.
Being excluded from model 721 does not mean that Hacienda is unaware of those cryptocurrencies or that the holder is free from taxation. Gains from sales are still subject to income tax (IRPF).
Below 50,000 euros as of December 31, there is generally no model 721. Once filed for the first time, it must be refiled in subsequent years if the total balance increases by more than 20,000 euros compared to the amount of that first filing.
The case analyzed has a twist: the taxpayer contributed the cryptocurrencies they had in a personal wallet to the LLC. After the contribution, the coins belong to the company, and the holder has a stake in a foreign entity, which may require them to file model 720. Model 721 looks at the coins, while model 720 looks at the corporate participation.
A self-employed person with crypto must review three things: the value of their positions as of December 31, who holds the keys, and whether they have transferred assets to a company outside Spain. The filing deadline is published each year in the taxpayer calendar of the Tax Agency.
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