Spanish tax authorities have confirmed that cryptocurrencies stored in self-hosted wallets do not need to be declared according to Form 721, provided that the holder retains control of the private keys, and the assets are not held by overseas third-party custodian institutions.

• Spain states that when taxpayers control the private keys, self-hosted cryptocurrencies held by them are not within the scope of declaration for Form 721.
• If the keys are held by a third party outside of Spain, the overseas custody may potentially require declaration.
• The same handling method applies to both hot wallets and cold wallets; what determines the obligation to declare is the right of custody and control, not the type of wallet.
• Even for self-hosted wallets, when encrypted assets are transferred between a regulated platform and a self-hosted wallet, DAC8 may still generate transaction reporting records.

The Spanish Taxation Administration specified this approach in the binding advisory opinion V0848 dated April 21st. The guidelines issued by the Spanish tax authorities regarding Form 721 state that the reporting requirements depend on who controls and holds the private encryption keys.

Spain Form Rule 721 does not include self-hosted wallets

According to the rules, Form 721 applies to virtual currencies located overseas, provided that these assets have their private encryption keys held on behalf of customers by entities, or that the assets are maintained, stored, and transferred in some other manner.

The obligation to declare applies to individual and corporate residents of Spain, non-resident individuals or entities that have a permanent establishment within Spanish territory, as well as certain other entities covered by Spain's General Tax Law.

Beneficiaries, authorized persons, or those who have the right to dispose of eligible encrypted holdings may also fall under the scope of the reporting rules. If other conditions are met, the actual owners are also subject to this framework.

The Spanish tax authorities distinguish between managed wallets and unmanaged wallets based on whether control over the cryptographic assets or keys is held by a third party or by the user themselves.

Whether a wallet is connected to the internet is not a decisive factor. Hot wallets and cold wallets may differ in technical settings, but the applicability of Form 721 depends on control over the private keys.

If taxpayers retain control over these keys, it does not fall under the category of keys being held by a third party for the purpose of tax declaration obligations. Therefore, cryptocurrencies held under such an arrangement are not included in the balance covered by Form 721.

This means that as long as taxpayers control the private keys, hardware wallets may not fall within the scope of declaration for Form 721. If they are still self-managed, the same rules apply to hot wallets as well.

Spain introduced a framework for reporting foreign crypto assets as early as 2023, with the first reporting period in 2024. crypto.news Previous reports indicated that Form 721 is used to report holdings of qualified virtual currencies on foreign platforms, and there is a threshold of 50,000 euros for the reporting obligation.

Overseas crypto custody may trigger reporting requirements.

Whether to include within the Form 721 range depends on two conditions.

Firstly, virtual currencies must be held by individuals or entities that provide private encryption key custody services for third parties, or that offer services for the maintenance, storage, and transfer of virtual currencies.

Secondly, the custodian must be located outside of Spain, or be a foreign resident entity that does not have any permanent establishment within Spain.

Only after the first hosting requirement is met does the location of the service provider become relevant. Just because the blockchain network is international, or because a wallet can be accessed outside of Spain, does not mean that encrypted balances will automatically be included in the Form 721 calculation.

This distinction is reinforced in DGT Consultation Opinion V0848 26. The consultation involves a Spanish resident who established an American limited liability company in 2025 with the intention of holding crypto assets for the long term.

The taxpayer is the sole member of this LLC, and has transferred cryptocurrencies from a personal wallet to the company. DGT has assessed the rights and interests of this overseas company, as well as how cryptocurrencies should be applied to the regulations for declaring assets outside of Spain.

In terms of cryptocurrencies, the regulatory authorities examined two possible custody arrangements.

If assets are held in a self-managed manner and the taxpayer keeps the private keys, including through physical hardware devices (as indicated by DGT), such holdings are not subject to the reporting requirements for foreign virtual currencies. The same approach applies whether hot wallets or cold wallets are used.

If the private keys are entrusted to a third party overseas, then when the other declaration conditions are met, these assets may fall within the scope of Form 721.

Private key control determines the handling method for Form at 721.

Spanish authorities have partially drawn on the definition of custody in the European Union's 'Regulation on Markets for Crypto-Assets' ( MiCA ).

MiCA will represent the custody and management of encrypted assets on behalf of clients, meaning to keep or control the encrypted assets for them, or to manage the means of accessing them. Private encryption keys can serve as these means of access.

This distinction separates users who retain their own keys from those whose assets or access credentials are controlled by service providers.

At the same time, regulated crypto custody has become an even larger part of Spain's financial industry. In June, the Spanish banking group Cecabank launched a regulated custody platform after obtaining authorization for crypto custody, transfers, as well as order reception and transmission under MiCA. Renta and Banco were among the first institutions to use this infrastructure.

Cecabank provides hosting and banking infrastructure, while Bit2Me is responsible for areas such as transaction execution, liquidity, and market access. The bank has obtained authorization from the Spanish securities regulatory agency CNMV and is registered with the Bank of Spain as a provider of crypto asset services.

Thereafter, this approach to custody also appeared in other cryptocurrency services in Spain. The forensic department of Bit2Me Bit2Shield was launched in September, using multi-signature cold wallets to store the digital assets seized during investigations until authorities ordered their disposal.

Self-hosting may still result in other reporting records.

Not belonging to Form 721 does not mean that activities related to self-hosted wallets are completely exempt from any encryption reporting frameworks.

The EU's DAC8 tax declaration system came into effect on January 1, 2026, requiring crypto asset service providers subject to the declaration obligation to collect information on declarable users and transactions.

According to the EU DAC8 crypto taxation rules, when assets are transferred between a regulated platform and an external address, including transfers to self-hosted wallets, service providers may collect transaction information. In such cases, the obligation to report lies with the service providers that are bound by this framework, and it is independent of Spain's Form 721 test regarding holdings of foreign virtual currencies.

Form 721 focuses on the qualified balances held overseas through third-party custodian institutions. The Spanish Tax Authority stated that virtual currencies controlled by taxpayers' own private keys are not included in the calculation of the balances covered by overseas cryptocurrency declarations.

The reporting obligation may also apply to individuals who still held qualifying assets as of December 31. If a taxpayer was the owner, beneficiary, authorized person, or had some other right to dispose of the assets during the year, but lost that status before the end of the year, they may still be required to provide information corresponding to the date when their status ceased.

If the estate falls within the scope of entities covered by Article 35.4 of Spain's General Tax Law and meets the conditions, an idle estate may also require declaration; similarly, heirs and legatees will be subject to relevant declaration requirements after explicitly or implicitly accepting the inheritance.