- The Spanish tax authority, Hacienda, had made it mandatory for all crypto holders to declare their crypto assets.
- Failure to do so would attract fines to the tune of 5,000 euros.
- This year, the agency has sent close to 14,800 notices to such persons who have defaulted on filling out their crypto declarations.
Though regulation and taxation of cryptocurrencies is a hotly debated issue, several countries have traditional mechanisms in place to tax the crypto-wealthy. Spain is one such country with a strict, no-nonsense tax authority. Declaring crypto holdings in their income statements is essential, and any failure to do so would lead to hefty fines to the tune of 5,000 euros or $5,900.
Massive operation undertaken
Spain is known to be a world-class destination for crypto investments. This does not come without certain hurdles, such as the strict taxation regime. Reports suggest that about 14,800 defaulting crypto holders this year have already received the warning notifications to declare their digital assets for the year 2020. Interestingly, only profitable transactions and trades are liable to be declared in their income sheets. Consider an example of buying Bitcoins worth 10,000 euros earlier and selling them in 2020 for 200,000 euros. The person needs to declare only 190,000 euros as his crypto holdings as that is the profit margin from the transaction. Profits need not necessarily be only through trades. If crypto assets are used to acquire property or any other investment, then they are also liable to be declared.
Previous year’s more extensive operation
The recent undertaking by Hacienda is not the first time such an operation has been implemented. In 2019, almost 14,700 warnings were sent, and in 2020, close to 66,000 such notifications were sent to defaulters. The considerable increase in the previous year’s numbers may be because of a rising number of crypto investments in that year. The country’s Secretary of State for the Economy Ana de la Cueva has stated that, unlike the fiat systems, there is no protection for crypto investors in case of a default by a third party. This may also be one reason for the agency releasing a set of guidelines on preventing crypto tax evasions.
In any case, Hacienda’s massive operation will surely increase the number of crypto-holders under the taxation umbrella.
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