Spanish authorities investigate cryptocurrencies investors in tax probe

A major Spanish government department has launched an investigation into thousands of crypto traders as part of a crackdown on tax evasion.

The Ministry of Finance is believed to be looking at the records of 15,000 taxpayers with a history of digital asset transactions, industry news media is reporting.

The development came after a government agency, the Agencia Estatal de Administracion Tributaria (AEAT), put in a request to gather information on over 60 digital currency firms. This list is believed to include everyone from coin exchanges to banks and payment facilitators.

Once these records were analysed, the affairs of 15,000 taxpayers were then flagged as requiring further review.

It is understood that the AEAT is searching for two different possible types of behaviour.

One type of taxpayer the AEAT is looking to identify are those who have not declared any capital gains on their digital currency trading. Those who have not done this could be evading a tax rate as low as 19% and as high as 23%, although the exact amount varies based on how much profit is made.

Another practice the AEAT is looking to target is the use of cryptocurrencies for money laundering purposes.

According to a statement from the AEAT, cryptocurrencies pose what appear to be a “demanding” challenge to the agencies involved.

“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”, it said.“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”, it added.

Spain has had a number of problems with cryptocurrency-related fraud in recent years.

As a result of the problems, the Spanish legislative body gave the green light to early draft laws suggesting that blockchain and cryptocurrency regulations were in need of review.

It took significant steps to ensure that investors would have to declare how much they own in cryptocurrencies in the future in order to pay the correct band of tax – although the recent activity of the AEAT suggests that this has not yet been a success.

When this development was announced back in October of this year, finance minister María Jesús Montero said that it would become “mandatory”.

“The identification of the holders and the balances contributed by these virtual currencies” is an aim of the legislation, she said.

“It is stated as mandatory that people and companies inform the Tax Agency about this operation”, she added.

Currently, any gains made on crypto trades are subject to income tax – but they are excluded from value-added tax, or VAT.

The new rules will also affect those who live in Spain but who keep their cryptocurrencies abroad. If the proposed new legislation goes ahead, these investors will have to write down how much crypto they hold on their 720 tax form.

The laws also proposed an innovative market introduction for blockchain technology, carried out through what are known as regulatory sandboxes.

Nigel Frith

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