Modelo 721: crypto sold before 31 December and cold wallets

Binding ruling V5066-26, issued on 24 June 2026, resolves two recurring questions in the Modelo 721 filing season: what happens to positions opened and closed during the year, and whether currency held in a cold wallet must be reported. Both answers are favourable to the taxpayer and, in their outcome, correct. The first, however, rests on narrower reasoning than its wording suggests, and its scope depends on a fact the ruling assumes and which should not be overlooked.

The ruling is binding under article 89.1 of Law 58/2003, the General Tax Act. It binds the Administration in relation to the taxpayer who requested it and expresses the criterion applicable to cases presenting the same facts and circumstances. It is administrative doctrine, not case law.

Background and questions raised

The taxpayer, an individual resident in Spain, held during 2025 a type of virtual currency in custody on a foreign exchange platform, until he sold his entire position in December. He also holds another type of virtual currency, which he keeps in a cold wallet. He does not say whether he was obliged to file the information return in earlier years.

He asks whether he must file Modelo 721 for 2025 and, if so, which currency, what balance and what date he should report.

Given the taxpayer's silence on earlier years, the DGT sets an express premise: that he acquired the currency sold in December during 2025 itself. The first conclusion is built on that premise.

The legal framework

The obligation derives from paragraph d) of the eighteenth additional provision of the General Tax Act and is developed in article 42 quater of the General Regulation on tax management and inspection procedures, approved by Royal Decree 1065/2007. It is discharged by filing Modelo 721 between 1 January and 31 March of the year following that to which the information relates.

The ruling restates the two objective conditions the DGT set out in ruling V2290-23 of 28 July 2023: that the currency be held in custody by persons or entities providing services to safeguard private cryptographic keys on behalf of third parties, and that those persons or entities be neither resident in Spain nor permanent establishments in Spanish territory. Currency is treated as situated abroad where its custodian is not obliged to provide the information required by paragraph 6 of the thirteenth additional provision of the Personal Income Tax Law.

Three elements of the provision are decisive for the analysis. Paragraph 1, in its second subparagraph, extends the obligation to persons who were holders at any time during the year and had ceased to be so by 31 December, in which case the information relates to the date on which ownership ended. Paragraph 5.d) exempts from any obligation where the balances at 31 December, valued in euros, do not together exceed fifty thousand euros. And paragraph 6 provides that, in the years following the first return, a further return is required only if the aggregate balance has increased by more than twenty thousand euros, save where ownership has been lost, in which case filing is required in all cases.

Currency acquired and sold within the same year

The DGT concludes that mere changes in the euro value of balances over the year are irrelevant, that the determining element is ownership of the balances at 31 December, and that, there being no ownership at that date because the position was liquidated during the year, the taxpayer is not required to file the return. It adds that, since the currency was both acquired and disposed of in the same year, he need not report the loss of ownership either.

The conclusion is correct, but its formulation oversimplifies. To say that ownership at 31 December is the determining element is not accurate in light of the second subparagraph of paragraph 1, which regulates precisely the case of a person who was a holder during the year and ceased to be so before that date. Read literally, the taxpayer falls within that subparagraph: he was a holder in 2025 and had lost ownership by 31 December. The provision does not exclude him from the scope of the obligation; it includes him.

What explains the result is not the absence of an obligation but the exemption. Paragraph 5.d) measures the fifty-thousand-euro threshold on balances at 31 December, and in the case examined that balance is nil as regards the currency sold, while the currency held in the cold wallet does not count because it lies outside the objective scope. The exemption therefore applies. And the DGT had already specified, in ruling V0162-26 of 29 January 2026, that the exemption attaches to the currency and not to the event giving rise to the obligation, so that, once earned, it extends both to ownership and to its loss. It is that doctrine, which ruling V5066-26 does not cite, that allows the conclusion that the extinction need not be reported.

There remains the apparent contradiction with the third subparagraph of paragraph 6, which makes the reporting of a loss of ownership mandatory in all cases. The ruling itself mentions it, stating that its conclusion is without prejudice to that subparagraph. The systematic reading is that the provision belongs to the regime of successive returns: a person who was already obliged to file in an earlier year cannot rely on the twenty-thousand-euro increase rule to omit reporting an extinction. For a person who was never obliged to file, the subparagraph does not operate.

The premise on which the conclusion depends

It follows that the ruling's conclusion rests entirely on the premise the DGT set in the face of the taxpayer's silence: that the currency was acquired during 2025 and that there was no obligation to file in earlier years.

Where that premise is not met, the outcome is reversed. A taxpayer who held the position at 31 December 2024 with an aggregate balance above fifty thousand euros, and who was therefore obliged to file Modelo 721 for that year, must file for 2025 if he sells during the year, reporting the balance at the date on which ownership ended. The DGT said so expressly in ruling V0848-26 of 21 April 2026, making the exemption for loss of ownership conditional on the taxpayer not having become obliged to file in an earlier year.

Ruling V5066-26 is not, therefore, a general rule that sales made before 31 December relieve the taxpayer of Modelo 721. It is a rule for positions opened and closed within the same year by a person with no prior obligation. Anyone who reads the ruling without regard to its premise and omits to report the liquidation of a position he had been reporting will be in breach.

Currency held in a cold wallet

The second conclusion rests on the same doctrine in ruling V2290-23, which distinguishes between custodial and non-custodial wallets according to who controls the private keys, and between hot and cold wallets according to whether they are connected to the internet, and observes that, generally speaking, cold wallets function as non-custodial. The DGT concludes that, to the extent the taxpayer himself retains control of the private keys, the currency falls outside the objective scope of the obligation.

The criterion is correct and consistent with earlier doctrine, including ruling V0848-26. Its conditional formulation should nonetheless be emphasised. What matters is not the name of the device but effective control of the keys. The term cold wallet describes a technical method of storage, not a legal regime, and there are cold-storage services offered by platforms in which the keys remain under the provider's control, which are custodial for all purposes. Likewise, hardware wallets combined with key-recovery services provided by third parties, or multi-signature arrangements in which one of the signatories is a service provider, may introduce an element of custody that the ruling does not examine. In those cases exclusion cannot be assumed.

What the ruling does not analyse

The ruling resolves the reporting obligation and does not extend to other consequences of the facts described which should be borne in mind.

Exclusion from Modelo 721 does not affect taxation. The December sale gives rise to a capital gain or loss which is included in the savings base for personal income tax for 2025. The currency held in the cold wallet forms part of the resident's estate for Wealth Tax purposes and, where applicable, for the Temporary Solidarity Tax on Large Fortunes, regardless of the fact that it is not reported on Modelo 721. A reporting obligation and a tax liability operate on different planes, and the absence of the former says nothing about the latter.

Nor does the ruling address the practical effect of measuring at 31 December. A taxpayer may have held positions well above the threshold during the year and not be obliged to file if he liquidates them before the year end. It would be a mistake, however, to infer from this a route to opacity. Modelo 721 is not the only channel of information available to the Administration: transactions carried out through providers subject to the reporting obligations deriving from European Union rules on the automatic exchange of information on crypto-assets, and from their equivalent under the OECD framework, reach the Administration by that route, and the capital gain must in any event be declared for personal income tax.

And the ruling does not address evidence of self-custody. A taxpayer who contends that his currency falls outside the scope of Modelo 721 because he holds it in self-custody must be able to prove it in an assessment, under article 105.1 of the General Tax Act. The traceability of transfers from the platform to the cold wallet address, and documentation of the device and its configuration, are the elements that support that position.

Assessment

In its outcome the ruling is correct on both points. The exclusion of positions opened and closed within the same year by a person with no prior obligation accords with the exemption in paragraph 5.d) and with the doctrine in ruling V0162-26. The exclusion of currency held in self-custody is a direct consequence of the first objective condition of the obligation.

Our criticism concerns the reasoning on the first point. Presenting ownership at 31 December as the determining element of the obligation disregards the fact that the provision itself regulates loss of ownership during the year, and leaves unexplained why the conclusion does not extend to a person who had been filing. The reply would have been clearer had it located the basis in the exemption in paragraph 5.d), cited the doctrine of ruling V0162-26 that complements it, and warned expressly that the outcome would be the opposite where there was an obligation in earlier years. The DGT itself had given that warning two months earlier in ruling V0848-26, and its omission here is what may mislead.

Concluding observations

Ruling V5066-26 confirms two useful criteria for the Modelo 721 filing season. Virtual currency held in custody on a foreign platform which is acquired and sold in full within the same year gives rise to no reporting obligation, not even for the loss of ownership, provided the taxpayer was not obliged to file the return in earlier years. And currency whose private keys the holder himself controls falls outside the scope of the obligation.

To apply those criteria correctly, the prior question is always the taxpayer's filing history. A person who filed Modelo 721 in any earlier year must report the liquidation of his positions even where it occurs before 31 December. A person relying on exclusion for self-custody must verify that he effectively controls the keys and keep the evidence of it. And the absence of a reporting obligation must never be confused with the absence of tax: the capital gain is declared for personal income tax and currency in self-custody counts for Wealth Tax.

Lullius is a tax boutique based in Palma de Mallorca specialising in international tax, private wealth and tax litigation. The authors contributed the Spain chapter to the tax litigation guides of both Chambers and Partners (Tax Controversy 2026) and The Legal 500 (Tax Disputes Comparative Guide 2026).

Legal notice. This article is provided for general information only. It reflects the position as at September 2026 and does not constitute legal or tax advice, nor does it create a lawyer-client relationship. No action should be taken, or refrained from, on the basis of its content without specific professional advice on the particular facts. Lullius accepts no responsibility for any loss occasioned by reliance on this material.