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Spain changes its laws on cryptocurrency holdings: what you need to know

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Spain changes its laws on cryptocurrency holdings: what you need to know
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The Spanish government has changed the rules on cryptocurrencies, here's what you need to know if you hold any and the tax implications it will have.


The Spanish government has changed its rules on declaring cryptocurrency. Previously holders of cryptocurrencies such as Bitcoin would only have to declare their profits made when they sold their currency, but this is all about to change. 

What will change?

The rules now state that you must declare any cryptocurrencies you're holding on your annual tax return. 

The change, made by Royal Decree 249/2023 issued on Tuesday, April 4th at the Council of Ministers meeting, alters obligations not only for taxpayers, but crypto service companies, including exchanges and wallet providers too, and is part of a broader government sweep to try and make virtual assets such as cryptocurrencies more taxable. 

According to the government, the aim is that these new rules will "improve the tax control" of the possession and operation of cryptocurrencies, 

Looking at the official government BOE, the stated aim is clear: to crack down on tax evasion, and any role that cryptocurrencies could play in it.

"The basic purpose of this decree is the incorporation into law of a series of regulatory amendments as a result of various changes made at the legal level by Law 11/2021 of 9 July on measures to prevent and combat tax fraud."

When will it come into force?

This was due to come into force this year in 2023, but it has now been delayed until 2024. This means crypto money must be declared from January 1st, 2024.


How do I declare my cryptocurrencies on my tax return?

Spanish taxpayers, that is to say, individuals who hold funds in a foreign exchange or wallet must now declare them to the Spanish tax office as a form of income.

According to a document from the Spanish treasury, all legal persons residing in Spain who have funds under custody in an international cryptocurrency service will be obliged to declare their virtual holdings at home and abroad: "The aim is to improve tax control of the taxable events that may arise from such holdings or transactions. Likewise, the obligation to report on virtual currencies located abroad is developed in the regulations.

In order to do this, anyone with cryptocurrencies over €50,000 will need to fill out the modelo 721. On this, you will need to declare the details of your electronic wallet, as well as the existing cryptocurrency you hold at the beginning and end of the year.


Crypto companies

The Spanish government will also require companies who provide 'crypto wallet' services to declare "all the virtual currencies that they keep in custody," including customer balances, types of cryptocurrency, and the equivalent value in euros, as well as their users' identification information.

The same goes for crypto exchanges. Companies in Spain that offer cryptocurrency exchange services, as well as to mediate operations between other exchanges, must now make a declaration to the Spanish tax office.

There are at least 65 crypto service companies in Spain that will now have to share their holdings and operations, and these types of companies are growing quickly in number in Spain. In October 2022, the cryptocurrency news website CriptoNoticias reported that there were only around 40.

Sanctions for non-compliance will be a fine of up to €20,000, depending on the severity.


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