Spanish Crypto Holders Under Scrutiny as Authorities Seek to Prevent Tax Fraud

The Spanish Ministry of Finance will inspect the holdings and operations of 15,000 taxpayers as part of its efforts to prevent tax evasion and fraud.

After launching an investigation into a number of cryptocurrency-related firms earlier this year, the Spanish Ministry of Finance is now bolstering its efforts to prevent tax evasion and fraud, inspecting 15,000 taxpayers who have made digital asset transactions over the last year, local news outlet El Pais reported on Monday.

Iin April, as part of its annual tax control plan, Spain’s tax collection department, the Agencia Estatal de Administracion Tributaria (AEAT), requested information regarding cryptocurrency holdings from more than 60 digital currency and blockchain-related firms, including banks, payment service providers, exchange platforms and ATM operators. As a result of the inquiry, the agency has identified 15,000 taxpayers whose crypto holdings and operations require further review. It remains unclear whether that list consists of companies, individuals, or both.

The AEAT will now investigate if these taxpayers use digital currency to launder money, and whether they declare the capital gains or benefits of their operations. Any capital gains made on cryptocurrencies by Spanish taxpayers are subject to a tax rate of between 19% and 23%, depending on the individual’s profit.

“The use of internet for trafficking and trading of illegal goods, as well as the use of cryptocurrencies, such as Bitcoin [BTC], as payment means, is one of the most demanding challenges today. In order to face this threat, the use by the tax agency’s research units of the new information collection and analysis technologies in all types of networks will be enhanced,” the AEAT outlined in its annual tax control plan.

In May, the Spanish congress supported draft legislation calling for a review of crypto and blockchain-related regulations. The initiative involved a proposal to introduce the technology to the local market through “controlled testing environments,” commonly referred to as “regulatory sandboxes.” Furthering its efforts to formalize the nascent industry, last month the Spanish government approved a draft law, which will oblige investors to declare their crypto asset holdings specifically for tax purposes.

While the Spanish authorities remain cautious of the potential use of cryptocurrencies for illegal activities, the country is hosting the world’s first regulated national blockchain network. The Alastria consortium, launched last month, unites major players in Spain’s key industries by offering distributed ledger technology (DLT) solutions, as well as the possibility to develop tokens representing digital equivalents of their assets.

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