New laws have been approved in Spain which will close a legal loophole through which citizens could avoid declaring assets they have in virtual currencies.
As the tax man everywhere closes the gap between himself and crypto, Spain’s Council of Ministers has approved draft laws which seek to close loopholes in the law by which citizens could obfuscate their crypto holdings and therefore avoid paying taxes on earnings.
Finance Minister María Jesús Montero has stated that Spanish authorities will now have the backing of the law to seek “the identification of the holders and the balances contributed by these virtual currencies,” – essentially, to know the identities and balances of citizens with crypto holdings, even those held off-shore.
The new laws come set against the backdrop of a number of legal reforms which seek to raise more taxes for Spain at a time when the country is struggling to meet welfare spending obligations, as youth unemployment stands at 33%. It is speculated that the introduction of these new bills could see an extra tax dividend of €850 million. Other newly approved laws include a 0.2% tax levied against purchases of listed shares with a €1 billion+ value and a restructuring of the trading tax system, known as the “Tobin Tax”, which will see taxes calculated based only on holdings at the beginning and at the end of trade sessions.
Furthermore, a task force of 200 officials is to have its remit broadened. Where previously it focussed its attention on tax defaulters who owed the Spanish treasury more than one million euros, that threshold has been lowered to €600,000. The list of countries designated tax-havens by the Spanish authorities has also been expanded in an effort to close all available legal loopholes for tax avoidance.
These laws, which many will see as highly off-putting and an invasion of privacy, may seem contrary to Spain’s general stance on crypto. Spain has been hurrying to set up a legal framework regarding cryptocurrency in 2018 and has so far taken a fairly positive stance towards it. Whilst these new tax reforms target private individuals, it has been eager to present itself as business-friendly. In February, lawmakers sought to pass laws designed to be inviting to blockchain and cryptocurrency companies, providing them with an incentive to set up shop in Spain including tax breaks.
“We want to set up Europe’s safest framework to invest in ICOs,” said Teodoro Garcia Egea, the lawmaker who prepared the draft bills.
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Alex has been putting words on paper since he was old enough to hold a pen; when he bought his first bitcoin in January 2017, those words discovered their place within crypto as well. He holds a master’s degree in international relations from Leiden University in the Netherlands, and his special expertise lies in European cryptocurrency regulation.