Spain takes a giant step towards cryptocurrency regulation with a major tax reform. The Ministry of Finance, under the leadership of María Jesús Montero, plans to extend its oversight capabilities over cryptocurrencies. This initiative aims to enable the seizure of digital assets to settle outstanding tax debts, marking a turning point in the management of tax obligations linked to digital assets in the country.
Cryptocurrencies in Spain: In-depth tax reform
The planned reform targets Article 162 of the General Tax Law to grant the Spanish Tax Agency the power to identify and seize the cryptocurrencies of taxpayers in arrears. This measure is part of a Royal Decree that came into force on February 1, widening the circle of entities authorized to collect taxes, which until now has been limited to banks, savings banks and credit unions.
The Spanish government is not stopping there, and plans to step up the fight against tax evasion. Banks and electronic money institutions could be forced to disclose all card transactions, signifying a significant strengthening of fiscal control over financial movements.
Regulatory challenges and the European framework
The rapid adoption of these reforms raises regulatory challenges, particularly in a context where Spain is looking to take the lead with various regulations to govern the crypto space. In October 2023, the Ministry of Economy and Digital Transformation announced that the European Union's first comprehensive cryptocurrency framework, the Crypto Asset Markets Regulation (MiCA), will be implemented at national level in December 2025, six months ahead of the official deadline.
Spanish residents holding cryptocurrencies on non-Spanish platforms have until the end of next month to declare them to the tax authorities. The submission period for a declaration via Form 721 began on January 1, 2024 and ends on the last day of March. Only individuals whose balance sheet exceeds €50,000 in crypto assets are required to declare their foreign holdings, while those who store their assets in self-managed portfolios must declare them via the standard wealth tax form, Form 714.
Conclusion
This initiative by Spain marks an important step in the evolution of financial and tax regulation of cryptocurrencies. By strengthening control measures and expanding the collection capabilities of the Tax Agency, Spain is positioning itself as a leader in adapting its tax laws to the realities of the digital economy. This reform, while posing challenges, reflects the country's commitment to combating tax evasion and ensuring fair management of tax obligations in the booming cryptocurrency sector.
