Crypto: Spain System – Declarative and Taxation Challenges for Expats

Spain has become one of the most demanding jurisdictions in Europe regarding the reporting and taxation of virtual currencies. For expatriates residing in the country, understanding these rules is not optional: the Spanish Tax Agency (AEAT) has progressively consolidated a strict framework that combines personal income taxation, wealth tax exposure, and far-reaching reporting obligations. The publication of binding rulings such as V0315-24 and V1012-25 confirms the interpretation of the authorities and clarifies the scope of the Modelo 721 and related duties.

Crypto: Spain System declarative and taxation for expats

The obligation to report crypto assets abroad through Modelo 721 applies to Spanish tax residents holding virtual currencies custodied by third parties outside Spain, provided that their joint balance exceeds EUR 50,000 at year-end. The reporting threshold is evaluated on the global value of all assets, meaning that stablecoins pegged to fiat (such as USDT or BUSD) are explicitly included within the legal definition of “monedas virtuales.” This interpretation eliminates any potential loophole based on their near parity with official currencies. Once the threshold is surpassed, all assets must be disclosed, even if individual wallets remain below the limit.

Crucially, the distinction between custodial and non-custodial wallets is central. Assets held in hardware wallets (Ledger, Trezor) or cold wallets where the taxpayer retains full control of private keys are excluded from Modelo 721, since they are not considered “custodied by a third party.” Conversely, any funds held in centralized exchanges (Kraken, Binance, Bittrex, etc.) located outside Spain must be reported, regardless of whether they are denominated in crypto or fiat. If those exchanges are resident in Spain, the obligation under Modelo 721 does not apply; however, holdings may still trigger obligations under Modelo 720 (foreign bank accounts, securities, and real estate) or domestic wealth tax reporting.

Ruling V0315-24 also makes clear that fiat balances kept in centralized exchanges abroad can fall under the reporting scope of Modelo 720 (foreign bank accounts), if the annual balances exceed the EUR 50,000 threshold. In practice, this means that expatriates often face dual reporting duties: crypto balances under Modelo 721 and fiat balances under Modelo 720, depending on the nature and location of custody. The AEAT’s doctrine insists that reporting requirements are cumulative and not mutually exclusive.

At the same time, ruling V1012-25 provides guidance on the valuation and disclosure mechanics. Balances must be reported as of December 31, with valuation based on the market price at that date published by major platforms. The AEAT accepts reasonable estimates where no consolidated quotation exists. Importantly, the obligation is triggered by exceeding the EUR 50,000 limit at year-end, not by quarterly averages or temporary spikes. In subsequent years, reporting remains mandatory if balances increase by more than EUR 20,000 relative to the last declared threshold.

The Spanish system is further reinforced by the connection with Wealth Tax (Impuesto sobre el Patrimonio) and Personal Income Tax (IRPF). Crypto holdings above certain thresholds must be included in the annual wealth tax declaration, with rates depending on the Autonomous Community (ranging from 0.2% up to 3.5%). Disposals of crypto generate taxable capital gains subject to progressive IRPF rates (19% to 30%), while staking rewards, mining, or business-related crypto income are taxed as general income, potentially reaching 47%. Non-compliance exposes taxpayers to severe penalties, including fines of EUR 5,000 per undeclared item in Modelo 721, and surcharges of up to 200% of unpaid tax in income tax assessments.

For expatriates, this creates a highly complex environment. Arriving in Spain with pre-existing crypto portfolios abroad requires immediate planning to determine (i) whether assets are held in custodial exchanges or private wallets, (ii) whether fiat balances are simultaneously reportable under Modelo 720, and (iii) whether wealth tax thresholds are surpassed locally. The lack of planning often leads to double exposure: disclosure under Modelo 721 and taxation under both IRPF and wealth tax.

At Business Expats, we assist international professionals, entrepreneurs, and investors in navigating this demanding system. Our advisory covers the full lifecycle of crypto compliance in Spain: onboarding portfolios into the Spanish tax net, optimizing the structuring of custody (to distinguish custodial vs non-custodial obligations), preparing Modelo 721 and Modelo 720 with technical accuracy, and aligning crypto strategies with IRPF and Wealth Tax implications. We also anticipate the impact of European developments (DAC8, CARF, MiCA), which will increase the automatic exchange of crypto data across borders and make detection of undeclared assets inevitable.

The Spanish system is clear: expatriates cannot ignore their crypto portfolios. But with proper structuring, transparent reporting, and strategic tax planning, compliance can be achieved without losing efficiency. In a context of growing international transparency, proactive management is not only the safest approach—it is the only sustainable one.

Julio César Sánchez

Co Founder Business Expats

For further information regarding Crypto Assets Taxation register to our free webinar "Crypto Taxation in Spain: Cumplimiento, Planificación y Retos Transfronterizos" to be held next 9th of September via Google Meets.

Schedule a Free Consultation or contact our founders to prepare the right way for you in Spain.

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