Form 720 and Form 721 are mandatory information returns for tax residents in Spain who hold assets and rights abroad or cryptocurrencies, respectively. In this article, we explain the key aspects of each form, the required documentation, and how to comply with these tax obligations.
Form 720: Declaration of Assets and Rights Abroad
Form 720 must be filed by tax residents in Spain who, as of 31 December of the tax year, have assets valued at over €50,000 in any of these three categories:
- Bank accounts: Balances in current accounts, deposits, and other financial products held in foreign financial institutions.
- Securities, rights, insurance, and income: This includes shares, investment funds, life insurance, and pension plans managed outside Spain.
- Real estate and rights over real estate: Properties or usufruct rights located abroad.
It is important to emphasise that the €50,000 threshold is cumulative for each category of assets, not for each individual item. For example, if you have several bank accounts abroad that together total €55,000, you must declare all those accounts.
When must Form 720 be filed again?
- If you lose ownership of assets previously declared.
- If the total value of assets in any of the categories increases by €20,000 or more compared to the last submitted return.
Documentation required for Form 720:
- Bank accounts: Bank statements from 30 September to 31 December and balance certificates as of the year-end.
- Real estate: A land registry extract from the country where the property is located and purchase invoices or deeds of acquisition.
- Securities, rights, and insurance: A valuation report as of 31 December and certifications issued by managing entities.
Form 721: Cryptocurrency Declaration
As of 2023, taxpayers are also required to report their cryptocurrency holdings abroad via Form 721, a specific extension of Form 720 tailored to digital assets.
Who is required to file it?
- Tax residents in Spain who hold cryptocurrencies stored in exchanges (trading platforms) located outside Spain.
- Those whose cryptocurrency wallets managed by these platforms exceed a cumulative value of 50,000 euros.
What information must be included?
- Cryptocurrency balance as of 31 December: Including details of each type of digital asset (Bitcoin, Ethereum, etc.).
- Managing entity: The name of the platform or exchange where the assets are stored.
- Number of units and valuation in euros: Based on the market value at the end of the fiscal year.
Documentation required for Form 721:
- Reports or statements from trading platforms detailing the cryptocurrencies held and their valuation as of 31 December.
- Custody certificates issued by the exchange, if available.
- Transaction history, if necessary, to justify the reported values.
What happens if Form 720 or Form 721 is not submitted?
Failure to comply with these obligations can lead to significant administrative penalties. While penalties related to Form 720 have been softened following a ruling by the European Court of Justice, it remains crucial to fulfil these requirements to avoid potential tax issues.
How Can We Help You?
At EBF Consulting, we have a specialised team ready to assist you with:
- Determining whether you are required to submit Form 720, Form 721, or both.
- Collecting the necessary documentation and preparing your return.
- Answering your questions about the tax treatment of foreign assets or cryptocurrencies.
Remember, the deadline for submitting your documents to us is 15 February, to ensure we meet the official filing deadline of 31 March.
Don’t leave it until the last minute. Contact us today to schedule a meeting and ensure you comply with all your tax obligations.