· 3 min read

'Exponential' Rise in Crypto Tax Inquiries in Spain as Monitoring Intensifies

The accounting giant PwC says it has seen an “exponential” increase in recent months in inquiries about tax declarations from crypto holders in Spain – where new crypto regulations have come into force.

Source: iStock/Zerbor

Spain’s Treasury department has already sent out thousands of warning letters to citizens it suspects of trading in crypto, warning them that if they fail to declare their earnings correctly, they could face fines. And a controversial new law has also come into force, obliging owners of crypto in platforms located overseas to declare tokens.

Per El Pais, this has all led to widespread worry among crypto traders in the country, particularly exacerbated by the fact that earlier this month, the nation’s passed a sweeping new anti-fraud law that will have a direct impact on crypto traders.

The anti-fraud law, which was published in the Boletín Oficial del Estado, the government’s official gazette, on July 10, obliges Spanish crypto exchanges to provide the government and its agencies with information on the bank activities and balances of cryptoasset holders, as well as transactions conducted in crypto.

The media outlet quoted “sources from the Tax Agency” as stating that while agents previously had to do the majority of the legwork themselves when it came down to hunting down crypto-owning tax evaders, now they will be provided with “a permanent and homogeneous supply of information.”

Yet more information could be put at agents’ disposal if the EU gets its way. The sources added that the new Spanish laws were “unrelated to” other regulators’ plans that are “now under discussion in the EU.”

PwC was quoted as stating that a rise in crypto-related inquiries had been “exponential,” hinting that crypto investment is on the rise in Spain. María Sanchiz, a partner at the firm, said that they advise clients with capital gains of more than USD 118,000.

Sanchiz added that the firm’s clients included many who had “invested a long time ago and have accrued very sizeable profits,” as well as many who had turned to “cryptocurrencies as an alternative way to diversify their portfolios.”

She concluded:

“We advise our clients to provide as much evidence as possible to show that the funds are not derived from illicit activities and to justify the capital gains.”

Another PwC expert, meanwhile, was quoted as stating that many of the company’s clients with “very large” crypto holdings were primarily concerned with finding ways to ensure their tokens would be passed on safely to their next of kin after their own deaths.

Elsewhere, South Korean tax agencies are also looking to close the net on crypto tax evaders: Reuters reported that Seoul “will look to tighten a crackdown on tax evasion by cryptocurrency investors and high-income earners” in a bid to fund “rising welfare costs.”

Finance chiefs said they would ask parliament to amend the tax code to let tax authorities “seize crypto assets held by tax dodgers even if their cryptocurrencies are stored in digital wallets” from 2022.
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