Last Saturday, July 10th, 2021, the Spanish National Gazette has published the Law 11/2021 on preventive measures to combat tax avoidance; a long-awaited transposition of the UE Council Directive 2016/1164 laying down rules against tax avoidance practices that directly affect the functioning of the internal market.
Hereunder we have gathered and highlighted some of the most relevant aspects of this new Law, which are to be taken into account by Cryptocurrency Service Providers and Crypto owners in Spain, since new obligations are now showing themselves from around the corner:
Modification to the Additional Provision number 13 of the personal income tax law (LIRPF)
1. Any entities or individuals, as well as permanent establishments, which provide cryptocurrency services within Spain on behalf of third parties, in order to keep, storage and transfer tokens, whether this is the main service or it is connected with another activity, will have to provide the administration with information regarding the cryptoassets they safeguard.
Specifically, they will have to “provide information on balances concerning every different virtual currency and, as the case may be, on fiat currency, as well as the identification of the owners, authorized persons and beneficiaries of such balances”.
2. Any entities or individuals, as well as permanent establishments, which provide exchange services between crypto-assets and legal tender or between different crypto-assets, or intermediate in any way in the performance of such operations, will have to inform the Spanish Tax Agency on acquisitions, transmissions and exchanges related to crypto-assets, as well as any payments and collections performed in cryptocurrencies in which they participate.
They must submit a list of the parties involved in the transaction, indicating their domicile, tax ID number, class and number of crypto-assets, as well as the price and date of the transaction.
3. In addition, residents, entities and permanent establishments of residents abroad that make initial offerings of new cryptocurrencies, will have the obligation to report their delivery in exchange of other crypto-assets or legal currency.
For these three obligations, there are still certain clarifications to be made, such as the quantities above which these obligations will be applicable, as well as the model, time period and form in which they will be required. All these parameters, nonetheless, will be determined by the Ministry of Treasury through regulatory dispositions.
Nonetheless, it is likely that the thresholds for reporting cryptocurrencies could be similar to those for bank transfers, which report from €10,000 per transfer and €3,000 for cash deposits.
4. Lastly, individuals and entities will have to report on crypto-assets (when custodied by entities or individuals located abroad that provide services to safeguard cryptographic keys) in case they are the owners, beneficiaries, authorized persons or have any power of disposition over such assets.
In other words, crypto-assets are added within the list of goods that are to be reported in the Informative Declaration on Assets and Rights located abroad (Form 720), which includes a sanctioning regime. This regime has been questioned by the European Commission and possibly soon by the CJUE.
In this case, the thresholds to report on crypto-assets located abroad could also be similar to the ones established by the Tax Authorities for other goods and rights located abroad, such as real estate acquired for more than 50,000 euros, bank accounts with more than 50,000 euros (average amount in the fourth quarter of the year), and shares, bonds, annuities or insurances of more than 50,000 euros per year.
In the event of non-compliance with the obligation to report on virtual currencies located abroad, the penalty will consist of a fixed fine of 5,000 euros for each item or set of data referring to each virtual currency individual, according to its type, that should have been included in the declaration, or that was provided incompletely, inaccurately, or falsely, with a minimum of 10,000 euros.
The penalty will be 100 euros for each piece of data or set of data referring to each virtual currency individually, considered according to its class, with a minimum of 1,500 euros, when the tax return has been filed after the deadline without prior request from the Tax Administration. Similarly, the filing of the tax return by other than electronic, computer and telematic means will be penalized when there is an obligation to do so by such means.