Form 720: Cryptocurrencies And Change In Sanctions
Tax Agency (Hacienda)Tax forms
Form 720 is nothing more than an informative declaration on goods and rights located abroad. Seen in this way, it does not seem more relevant or complicated than other informative declarations, such as form 347 (annual declaration of operations with third parties) or form 179 (informative quarterly declaration of the transfer of use of housing for tourist purposes).
Well, nothing is further from reality. Since its approval in 2013, form 720 has only generated controversy, and the latest and most notorious has been the Judgment on the sanctions that Spain imposes for declaring form 720 erroneously or incorrectly, issued on January 27, 2022, by the Court of Justice of the European Union (CJEU).
As a result of the publication of the Judgment, doubts have arisen about whether form 720 is annulled or not. That is if the obligation to present it is still in force. I will answer this question below because now I want to explain to you why the CJEU has prohibited Spain from applying the specific sanctioning regime of form 720.
- Modification of Form 720 (with effect from 11/March/2022)
- Specific sanctioning regime of form 720 (not valid from 11/March/2022)
- The objective of form 720
- Form 720 continues to exist
- Obligated to present the 720 form
- Circumstances that require reporting on form 720
- You have already presented it for the first time. Do you have to present the form again in later exercises?
- Related articles
Modification of Form 720 (with effect from 11/March/2022)
In Law 5/2022, certain measures have been adopted to adapt form 720 to European regulations. As expected, the specific sanctioning regime (which we explain in the next point) has been repealed, just as the imprescriptibility of unjustified capital gains has been eliminated.
In this way, non-compliance or non-submission of form 720 within the term are tax infractions that are subject to the general regime of infractions and sanctions of the LGT in its articles 191 and following.
Specific sanctioning regime of form 720 (not valid from 11/March/2022)
I will remind you briefly what that sanctioning regime consists of.
Non-compliance or imperfect or untimely compliance with the reporting obligation relating to assets and rights located abroad had 2 types of fines:
1. 150% penalty
Fine of 150% of the tax calculated on the amounts corresponding to the value of the assets or rights held abroad.
2. Fixed amount fines
– €5,000 for each omitted, incomplete, inaccurate or false data or set of data, with a minimum of €10,000.
– €100 for each data or set of data declared after the deadline, with a minimum of €1,500.
As you can see, the amount of the penalties were disproportionate, and that disproportion is what has led the CJEU to prohibit that specific sanctioning regime.
The objective of form 720
The objective that motivated the creation of form 720 was the following… The Spanish Administration needed to obtain information from its tax residents about the assets and rights they possess abroad since it is more difficult to access that information than what they have within Spain. Therefore, it argued that the information exchanged with other EU member countries was insufficient.
The CJEU has considered that this legislation goes beyond what is necessary to achieve this objective and considers that Spain has failed to comply with its obligations concerning the free movement of capital.
Form 720 continues to exist
Therefore, form 720 is still in force and the obligation to submit it continues to exist. Still, the CJEU has prohibited the application of the disproportionate specific sanctioning regime that I have commented on above.
Therefore, in non-compliance or imperfect or untimely compliance, the general sanctioning regime regulated in the General Tax Law will be applied (arts. 27 and 28, and 178 hereinafter LGT).
In short, form 720 is current. If you must submit it, we advise you to do so within the established legal deadlines, between January 1 and March 31 of each year, in relation to the previous fiscal year.
Obligated to present the 720 form
These are the types of taxpayers who are obliged to present the form 720 if they are in any of the three cases that we list in the following point:
1. Individuals and legal entities resident in Spain.
2. Permanent establishments in Spain of non-resident natural/legal persons.
3. Entities of 35.4 LGT (remaining inheritances, community property).
Circumstances that require reporting on form 720
1. Bank accounts
Being the owner, co-owner, representative, authorized or beneficiary of accounts in financial institutions located abroad, whose average balances for the last quarter or as of December 31 jointly exceed €50,000.
Being the owner of securities, rights, insurance and income deposited, managed or obtained abroad, when they jointly exceed €50,000. Pension plans are exempt.
3. Real estate
Real estate and rights over real estate located abroad, with their joint limit of €50,000.
[Novelty included in Law 11/2021 on measures to prevent and fight tax fraud].
Being the owner, beneficiary or authorized person of virtual currencies located abroad.
As of March 16, 2022, no limit has been established below which there would be no obligation to present the form as mentioned above. Therefore, if this point is not modified before March 31, all those who have investments in cryptocurrencies whose Exchange (the company’s location or the server) is located abroad will have an obligation to present form 720.
In these moments, in form 720 of the Treasury website, it is not enabled to declare cryptocurrencies so we will be waiting for future changes.
If the regulatory development of the norm does not occur, indicating how and where to declare the possession of these assets, in 2021, cryptocurrencies cannot be declared.
You have already presented it for the first time. Do you have to present the form again in later exercises?
You should only present it in those years in which any of the three types of assets (bank accounts, securities or real estate) have increased their valuation by €20,000 in relation to the valuation reported in form 720 already submitted.
Also, you will have to resubmit form 720 when you sell a property or cancel a previously declared account.
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