Efforts by Spanish tax authorities to identify those with cryptocurrency holdings appear to be paying off. After launching an investigation into a number of firms earlier this year, the country’s treasury appears to be looking at how it can now implement a form of cryptocurrency tax.
As reported by El Pais, in April of this year, the Spanish treasury requested information regarding cryptocurrency holdings from more than 60 different institutions. Amongst them were 16 large banks, 40 firms that allow individuals to make payments in cryptocurrency and a number of different intermediaries, such as payment service providers, cryptocurrency exchanges and ATM operators.
The results of those requests are now in, and it seems the country’s treasury will be able to implement some sort of cryptocurrency tax.
According to El Pais, the Treasury’s request for information from those firms yielded a list of 15,000 taxpayers that hold cryptocurrency. It is unclear from the newspaper’s reporting whether that includes both individuals and companies or just individuals.
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Cryptocurrency Tax on Capital Gains
Any capital gains made on cryptocurrencies by Spanish taxpayers are subject to a tax rate of between 19 to 23 percent. The rate is determined by the size of the capital gains made by an individual’s investment.
It is hard to see quite how the country’s authorities will go about implementing this cryptocurrency tax.
Even if authorities are aware of an individual’s holdings, it’s hard to see how they would make them pay. After all, most cryptocurrencies are not stocks, and you receive no dividends for holding them.
On top of that, it seems unlikely that a tax authority would accept payment in a cryptocurrency. But then it is difficult to gauge how you would calculate the amount of fiat currency a taxpayer owes to the government – especially with a currency that can lose a third of its value in a week.
As such, it may be the case that Spanish authorities have formulated a cryptocurrency tax, less as a means of filling up their coffers and more as a way by which to prevent fraudulent activity from taking place in the cryptocurrency industry.