The Spanish tax authority has confirmed that cryptocurrencies held in self-custodied wallets do not need to be reported on Form 721, provided the holder retains control of the private keys and the assets are not held by an overseas third-party custodian.
- Spain states that self-hosted cryptocurrency is not subject to reporting on Form 721 when the taxpayer controls the private key.
- If keys are held by a third party outside Spain, offshore custody may require reporting.
- Hot wallets and cold wallets are treated the same way; the obligation to report is determined by custody and control, not by the type of wallet.
- Even for self-custody wallets, DAC8 may still generate transaction reporting records when crypto assets are transferred between regulated platforms and self-custody wallets.
The Spanish Tax Agency outlines this treatment in Binding Consultation V0848/26, issued on April 21. Guidance from the Spanish Tax Agency on Form 721 states that the reporting requirement depends on who controls and holds the private cryptographic key.
Spain's Form 721 rules do not include self-custody wallets.
Under the rules, Form 721 applies to virtual currencies held overseas if the entity holds the private cryptographic keys on behalf of the client, or otherwise maintains, stores, and transfers these assets.
The reporting obligation applies to Spanish resident individuals and legal entities, non-resident individuals or entities with a permanent establishment in Spain, and certain other entities covered by Spain’s General Tax Law.
Beneficiaries, authorized persons, or individuals with disposal rights over eligible crypto holdings may also fall under the reporting requirements. If other conditions are met, beneficial owners are similarly subject to this framework.
The Spanish Tax Agency distinguishes between custodial and non-custodial wallets based on whether control of the cryptocurrency assets or keys is held by a third party or by the user themselves.
Whether a wallet is connected to the internet is not the determining factor. Hot wallets and cold wallets may differ in their technical setup, but the applicability of Form 721 depends on control of the private key.
If the taxpayer retains control of these keys, they are not considered to be held by a third party for reporting purposes. Therefore, cryptocurrency held under this arrangement is not included in the balances covered by Form 721.
This means that as long as the taxpayer controls the private key, hardware wallets may also be excluded from Form 721 reporting. The same treatment applies to hot wallets if they remain self-custodied.
Spain introduced a framework for reporting foreign crypto assets as early as 2023, with the first reporting period in 2024. crypto.news previously reported that Form 721 is used to declare holdings of qualifying virtual currencies on foreign platforms, with a reporting threshold of €50,000.
Offshore crypto custody may trigger reporting requirements.
Whether it falls within the scope of Form 721 depends on two conditions.
First, virtual currency must be held by a person or entity that provides custodial services for private cryptographic keys for third parties, or offers services for maintaining, storing, or transferring virtual currency.
Second, the custodian must be located outside Spain or be a foreign resident entity without a relevant permanent establishment in Spain.
The location of the service provider becomes relevant only after the first custodial requirement is met. Simply because the blockchain network is international or the wallet is accessible outside Spain does not automatically include crypto balances in the Form 721 calculation.
This distinction is reinforced in DGT Advisory Opinion V0848 26, which concerns a Spanish resident who established a U.S. limited liability company in 2025 with the intention of holding cryptocurrency assets long-term.
The taxpayer is the sole member of this LLC and has transferred cryptocurrency from their personal wallet to the company. DGT evaluated this foreign company interest and how the cryptocurrency applies to Spain’s foreign assets reporting rules.
Regarding the cryptocurrency aspect, the regulatory authority examined two possible custody arrangements.
If assets are held in self-custody and the taxpayer maintains the private key, including through physical hardware devices, the DGT states that such holdings are not subject to foreign virtual currency reporting requirements. The treatment is the same regardless of whether a hot wallet or cold wallet is used.
If private keys are held by an overseas third party, these assets may fall under Form 721 when other reporting conditions are met.
Control of the private key determines how Form 721 is processed.
Spanish authorities have partially adopted the EU’s Markets in Crypto-Assets Regulation (MiCA) definition of custody.
MiCA defines the custody and management of crypto assets on behalf of clients as holding or controlling crypto assets on behalf of clients, or holding or controlling the means of access to them. Private cryptographic keys can serve as these means of access.
This distinction separates users who hold their own keys from customers whose assets or access credentials are controlled by the service provider.
Meanwhile, regulated crypto custody has become a larger part of Spain’s financial industry. In June, Spanish banking group Cecabank launched a regulated custody platform after obtaining authorization under MiCA for crypto custody, transfers, and order reception and transmission. Renta 4 Banco is among the first institutions to use this infrastructure.
Cecabank provides custody and banking infrastructure, while Bit2Me handles trading execution, liquidity, and market access. The bank is authorized by Spain’s securities regulator, CNMV, and registered with the Bank of Spain as a crypto asset service provider.
Subsequently, custody also appeared in other cryptocurrency services in Spain. In September, Bit2Me’s forensic division, Bit2Shield, launched using multi-signature cold wallets to store digital assets seized in investigations until authorities ordered their disposal.
Self-custody may still generate other reporting records.
Not being part of Form 721 does not mean that activities related to self-custody wallets are entirely exempt from any cryptocurrency reporting framework.
The EU DAC8 tax reporting regime took effect on January 1, 2026, requiring crypto asset service providers subject to reporting obligations to collect information on reportable users and transactions.
Under the EU’s DAC8 crypto tax rules, service providers may collect transaction information when assets are transferred between regulated platforms and external addresses, including transfers to self-custody wallets. In such cases, the reporting obligation falls on service providers subject to this framework and is independent of Spain’s Form 721 pilot for reporting foreign-held virtual assets.
Form 721 focuses solely on qualified balances held abroad through third-party custodians. The Spanish Tax Agency states that virtual currencies controlled by the taxpayer's own private keys are not included when calculating the balances covered by the foreign crypto reporting requirement.
The reporting obligation may also extend beyond individuals who still hold qualifying assets as of December 31. If a taxpayer was at any point during the year an owner, beneficiary, settlor, or otherwise had disposal rights, but lost that status before year-end, they may still be required to provide information as of the date their status terminated.
If the estate falls within the scope of entities covered by Article 35.4 of Spain’s General Tax Law and meets the relevant conditions, idle estates may also require reporting; furthermore, heirs and beneficiaries will be subject to the applicable reporting requirements after the inheritance is expressly or implicitly accepted.