Cryptocurrencies under the scrutiny of the Spanish tax authorities

by Lorraine Williamson
Spanish tax authorities

MADRID – Having crypto coins and working with them will entail new information obligations towards the Spanish tax authorities. It presents crypto as the major challenge for the Treasury in 2023. 

Anyone who has or works with cryptocurrencies will have to submit an annual statement of an informative nature about the virtual currencies that are held abroad. This is evident from a publication of a royal decree in the Spanish state bulletin (BOE) on 5 April. The declarations must be submitted from 1 January 2024. 

Who should present the virtual currency information declaration? 

The measure was approved in the Council of Ministers on Tuesday 4 April. This includes the cases where it will be necessary to present the declaration of cryptocurrencies from 2024. 

Cryptographic Key Services 

The new obligations also affect the people and entities that provide services to “protect private cryptographic keys on behalf of third parties” to store and transfer these currencies. They will therefore have to declare all virtual currencies they have in their custody. 

Exchange services between virtual currencies and fiat currencies 

Both people and entities providing exchange services between virtual currencies and fiat currencies are also required to provide information to Spain’s tax authorities. This concerns information related to operations (acquisition, shipment, collections, payments, etc.). It does not include those who merely advise on virtual currencies or connect interested parties. 

Virtual currency abroad 

Whether you are the owner or the beneficiary, it is necessary to notify the tax authorities. This also applies to people or entities who have held crypto coins at some point during the year. Even if they no longer hold them. 

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The Royal Decree indicates that cryptocurrency owners or managers must declare the type, number of units and their value in euros in the declaration for each currency. 

The text in the BOE states: “To carry out the valuation in euros, the relevant persons and entities will take the price offered by the main trading venues or price monitoring websites on 31 December”. It added, however, if that fails, “a reasonable” estimate of the market value of these virtual currencies as of December 31 will be provided in the statement. And “the price or value used to make such valuation will be specified.” 

Focus on cryptocurrencies in the fight against tax fraud 

It is one of the measures in the new annual tax audit plan that the Ministry of Finance and Public Function is taking to prevent tax fraud. The prosecution of cryptocurrencies and virtual currencies is a new priority in this. The focus of the Spanish tax authorities, Agencia Tribuatira on “virtual payments” through foreign entities will be strengthened. The aim is to detect possible tax fraud and, if necessary, to seize the assets. 

To achieve this, the agency can request intermediaries to freeze the keys of a digital wallet or transfer money to the agency. The agency will also investigate the transfer of virtual currencies between countries. The new regulation prohibits the use of sales concealment software. 

Also read: Beware of crypto currencies scammers

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