Modifying Tax Laws
The María Jesús Montero-led Ministry of Finance is actively working to strengthen local control and surveillance over crypto activities in Spain. Accordingly, the Ministry of Finance is working on legislative modifications to the General Tax Law, focusing on Article 162.
Reports indicate that the changes will allow the Spanish Tax Agency to locate and seize cryptocurrency assets with unpaid taxes owned by individuals. Furthermore, a significant part of a royal decree that was implemented on February 1 was the Ministry of Finance receiving legislative powers to seize crypto assets of tax defaulters.
A consequence of this decree is that it has substantially increased the number of institutions with the authority to collect taxes through crypto remittances. Before the latest development, the Treasury limited access to report submissions to only financial organizations, such as savings platforms, credit cooperatives, and banks.
However, the recent regulatory changes have broadened the tax landscape, allowing several entities to join in efforts to implement the new tax policies.
Fighting Tax Evasion
Along with its attempts to tighten control over crypto-related issues, the Spanish Treasury is preparing to take a more aggressive approach against tax evasion. With the new program, the regulator will direct banks and electronic money institutions to provide thorough information on all card transactions.
This move will help improve the government’s efforts in detecting and combating tax evasion cases. However, the rapid deployment of these changes will create regulatory problems.
Hence, the country is taking a proactive approach by enacting appropriate legislation to prevent such problems. Recall that the Spanish Ministry of Economy and Digital Transformation announced plans to implement the EU’s Markets in Crypto-Assets Regulation (MiCA), the first comprehensive cryptocurrency regulatory framework for EU member nations.
Furthermore, Spain plans to enforce a nationwide MiCA adoption by December 2025, six months before the formal EU date. Therefore, observers believe that this decision shows Spain’s commitment to harmonizing its regulatory framework to align with the region’s regulatory policies.
Declaring Crypto Holdings To Tax Authorities
Furthermore, the government has set a strict deadline for Spanish residents holding crypto assets on offshore platforms to declare their stash to the tax bodies. Hence, the government issued Form 721, which crypto holders must fill and submit on or before March 31, 2024.
According to a December 2023 directive, individual and institutional taxpayers must declare the value of their crypto funds in accounts outside of Spain. However, it is worth noting that the declaration obligation only applies to persons whose crypto holdings are up to 50,000 euros (about $54,000).
Hence, individuals who want to deposit their assets in self-custody platforms face a slightly different tax reporting procedure. They are to report their holdings on the usual wealth tax Form 714.
The implementation of this regulatory step reflects the Spanish government’s commitment to guaranteeing rigorous oversight of crypto holdings, particularly those held on international platforms.
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