Every year the Spanish tax authority (AEAT) launches a plan to organise a tax investigation and collection campaign to increase revenue. The outstanding characteristic of such annual plans consists in the priority to be given to certain sectors of the Spanish economy. During several years real estate was very much the target of such efforts. During the years 2018-2019, it has been the turn of professionals such as lawyers, doctors, and business consultants. This year will be crypto currency transactions, much to the general surprise.
In essence, holders of crypto currencies who are resident in Spain will have to comply with Tax form 720.
Tax form 720 must be completed before the 1st of April of each year by residents in Spain having bank accounts, shares, bonds and other financial products deposited in foreign banks. The European Commission has challenged this Spanish Tax requirement on basis that it is a hidden barrier to the free movement of capital within the European Union.
It is obvious that form 720 cannot be applied as such to cryptocurrencies which circulate and are traded in the cyberspace and are not kept in a vaulted room of a bank located in a certain country other than Spain.
In the current climate the Spanish tax authority believe that there is a lot of tax fraud surrounding crypto currencies transactions, particularly in relation to the avoidance of capital gains taxation, which could be true although they are no reliable figures. But more deeply the current tax plan may be also an indication of regulatory discrepancies inside the Government of Spain. The stock market regulator (CNMV) and the Ministry of Finance are broadly supportive of cryptocurrency ventures in as much as they may modernise the Spanish financial sector, whereas the central bank and the tax department believe that crypto currencies involve significant money laundering and tax fraud.
Alfonso López-Ibor / Olivia López-Ibor Jaume / Alejandro Sosa Rohl