Spain introduces new tax reporting obligations for virtual currencies

Published on 25th Jul 2022

Taxpayers involved in virtual currencies need to report transactions via three new forms to the tax authorities

From the 2022 financial year onwards, taxpayers that hold, supply, operate, intermediate and provide custody services for virtual currencies are obliged to report to the Tax Agency on these transactions, with three new forms approved – forms 172, 173 and 721 – for this purpose.

In order to strengthen tax control over taxable events relating to virtual currencies, Law 11/2021 of 9 July on measures to prevent and combat tax fraud, transposing Council Directive (EU) 2016/1164 of 12 July 2016, which lays down rules against tax avoidance practices and amends other Spanish tax regulations, establishes two new reporting obligations that relate to the holding and operation of virtual currencies.

Who is obliged to report?

Article 3 section 6 introduces two new points to the thirteenth additional provision of Law 35/2006, of 28 November, on personal income tax.

Persons and entities resident in Spain and permanent establishments within the Spanish territory of persons and entities that are resident abroad and provide safekeeping or custody services of private cryptographic keys on behalf of third parties for the holding, storage and transfer of virtual currencies (whether the service is provided on a principal basis or in connection with another activity) are obliged to report their balances in virtual currencies.

Likewise, the persons and entities that provide exchange services between virtual currencies and legal tender, between different virtual currencies, intermediate in the performance of these transactions, or provide services to safeguard private cryptographic keys on behalf of third parties to hold, store and transfer virtual currencies have the obligation to provide information on the virtual currency transactions in which they are involved.

Also, section 26 of article 13, which amends sections 1 and 2 of the additional provision 18 of Law 58/2003 of 17 December 2003 on general taxation, establishes a reporting obligation on virtual currencies located abroad and the identification of the holders, the authorised persons and beneficiaries and the persons who have the right to dispose of these balances.

Where to find the new rules

The regulatory development of the new reporting obligations on virtual currencies can be found in the new articles 39 bis, 39 ter and 42 quater of the general regulations on tax management and inspection actions and procedures and on the development of common rules for tax application procedures, approved by Royal Decree 1065/2007, of 27 July 2007.

The Ministry of Finance has published two draft orders approving, on the one hand, Form 172 "Informative statement on balances in virtual currencies" and Form 173 "Informative statement on transactions with virtual currencies" and, on the other, Form 721 "Informative statement on virtual currencies located abroad", which establish the requirements, procedures and deadlines.

Final comment

Forms 172 and 173 should be filed on an annual basis before the month of January of the year following the year to which the information reported relates.

Form 721 must be filed between 1 January and 31 March. However, there will be no obligation to report any virtual currency when the balances at 31 December, valued in euros, do not exceed €50,000.

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* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

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