Spanish Tax Authority Issues Warning Letters to Domestic Cryptocurrency Investors

Spanish Tax Authority Issues Warning Letters to Domestic Cryptocurrency Investors

The Spanish government has begun enforcing its tough cryptocurrency stance, as the national tax agency has swung into action. Reports show that the Hacienda just issued 14,800 warning letters to citizens who have failed or are yet to declare their crypto holdings. The warning noted that defaulters would incur fines of over 5,000 euros ($5,900).

According to a recent report by Telemadrid, a Spanish media house, Spain’s tax agency plans to tax cryptocurrency and has already forwarded a memo to all their correspondent receivers.

The Hacienda clarified that concerned with domestic crypto holders’ purchase activities, only profitable sales.

That said, traders who purchased say 10,000 euros ($11,880) worth of BTC in 2017 and sold them at 200,000 euros ($237,700) in 2020 are liable to “declare a capital gain of 190,000 euros ($225,800).”

Domestic Crypto Holders are Complying
The total number of letters dispersed by the Hacienda is significantly lower than that of 2020, indicating that many citizens are complying. The Spanish tax authority launched a similar targeted effort in 2020 but sent out about 66,000 warning letters to cryptocurrency holders.

The 66k figure represents a massive increase from the 14,700 warning tax letters sent in 2019.

The Spanish Secretary of State for the Economy, Ana de la Cueva, stated that cryptocurrencies like Bitcoin (BTC) embody “a risk of default, given that the user does not have the protection offered by traditional payment systems against a default by the counterparty.”

Meanwhile, in the same month, the State Agency for Tax Administration of Spain published guidelines on how to deplete tax evasion for cryptocurrencies.

 

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Azeez Mustapha is an experienced author, trader, markets analyst, signals strategist, and funds-manager.