- The Spanish government has signed off on a new law that requires cryptocurrency holders to declare their assets
- Spaniards with cryptocurrency abroad might also have to declare
- This comes after the Spanish Central bank declared that cryptocurrency isn’t a legal tender
The issue of cryptocurrency and taxes is a complicated one. As cryptocurrency becomes more commonly used as a medium of exchange, there will be the need for concrete tax laws regarding the issue.
The IRS has been criticized for not creating definite laws on how holders of cryptocurrency income can pay tax on it. This has led to a number of people either misfiling their cryptocurrency income when doing their taxes or simply being at a loss for what to do.
The Spanish government has recognized this and is now drafting a law that will require holders of cryptocurrency to not only identify themselves but also to disclose just how much cryptocurrency they hold.
With the current situation, income derived from cryptocurrency is filed under income tax. However, funds gotten from bitcoin transactions are exempt from Value Added Tax (VAT).
A draft for a law was put forward to the government that would require holders of cryptocurrency to identify themselves and state the amount of currency they own. The draft was approved and the law is now in place.
“It is stated as mandatory,” said Minister of Finance, María Jesús Montero, “that people and companies inform the Tax Agency about this.”
Another interesting aspect of Spanish tax laws that will affect Cryptocurrency holders is the ‘720 declaration’.
The ‘720 declaration’ requires Spaniards to declare whatever assets they hold abroad to the government.
However, this law will not apply to all Spaniards as only those with assets exceeding €50,000 ($57,000) in value are required to declare.
Coins in Spain
Spain as a country has been quite favorable towards cryptocurrency.
Earlier this year, the Comisión Nacional del Mercado de Valores, along with its central bank, Banco de España, stated that cryptocurrency would not be subject to regulation the way fiat currency is because it is not a legal tender.
They also seem to be making attempts to attract more cryptocurrency-based business.
“The level of the digitalization for companies will be key,” Garcia Egea, a member of the ruling Popular Party, told Bloomberg earlier this year. “We hope to get the legislation ready this year. We want to set up Europe’s safest framework to invest in ICOs.”