A new law approved by Spain’s Council of Ministers will oblige private citizens to declare their cryptocurrency holdings, in a landmark development for crypto regulation.
As part of new anti-fraud measures presented by Finance Minister María Jesús Montero, the bill requires an annual disclosure of crypto holdings, as well as any offshore fiat holdings, to tax authorities, Spanish news outlet ABC.es reported.
The law aims to claw back an additional €850 million ($966.43 million) in tax, at a time of severe budgetary pressures in Spain. With youth unemployment as high as 33.8%, the Spanish government has been investigating existing loopholes to deliver the extra revenue it needs.
Previously, cryptocurrency activity has been largely unregulated in Spain, with the suggestion that there could be significant private holdings of crypto presently undisclosed to tax authorities.
With the need for revenue more pressing than ever, the Spanish model could eventually inspire similar moves from other governments.
Earlier this year, the United Kingdom, United States, Australia, Canada and the Netherlands joined forces under the banner of the J5 Joint Chiefs of Global Tax Enforcement partnership—an transnational body for tackling tax evasion, which could ultimately adopt similar proposals.
The bill also institutes a 0.2% transaction tax on listed shares worth over €1 billion ($1.14 billion), with some commentators speculating this could ultimately extend to cryptocurrency transactions.
“Tobin Tax” provisions within the law seek to apply taxes on the difference between opening and closing positions on the day, in what could potentially deal a significant blow to crypto traders deploying intraday strategies.
According to press reports, the Spanish government is also stepping up its enforcement efforts, with an additional 200 officials assigned to a new taskforce. As well as expanding the list of countries deemed to be tax havens, the bill will also introduce new infrastructure for instant VAT reporting.
The news confirms the increasing interest paid by governments and tax authorities to the crypto holdings of their private citizens. As regulatory oversight steps up in cryptocurrency markets, and now on cryptocurrency investors, these developments leave investors open to potentially significant liabilities to domestic tax authorities.
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