Spanish tax authorities warn of new digital currency related fines

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Tax authorities in Spain have issued a warning to digital currency holders in the country, highlighting the application of substantial fines for failures in disclosing the nature of their holdings.

The Ministerio de Hacienda said digital holdings were considered taxable income by the authorities, and that there were sizable penalties for those who failed to disclose their holdings in full, local media outlets reported.

The Spanish authorities made the move at the outset of the new tax year, reminding digital currency users in the country of their reporting obligations for digital currencies and other forms of income.

According to the law in Spain, tax is paid on any sale of digital currency, not at the point of purchase. Local tax lawyers Jesús Gascón, Marta Rayaces and Enrique García agreed this would catch a number of scenarios for those using and selling digital currency in the country.

“Either because we have changed them to euros, to another cryptocurrency, or because we have used them to buy goods, a flat, or a car.

The warnings come as Spain is in the midst of a new digital currency boom, particularly in Madrid, where over 100 establishments already routinely accept payments in digital currency.

However, the growth in the domestic cryptocurrency sector has been met with strong opposition from regulators and government agencies, intent on enforcing strict regulation of digital currency usage.

The National Securities Market Commission has also proposed tight rules for regulating advertising of digital currency products, as well as publishing a joint statement with the Bank of Spain highlighting the investment risks in an asset class they described as “volatile, complex, and lacking in transparency.”

The latest round of enforcement from the tax authorities serves as a further reminder of the rigorous approach being taken to digital currency regulation within Spain, for individuals as well as companies operating in the sector.

See also: CoinGeek Live panel, Digital Currency & Global Compliance: Tools & Tips for Exchanges, Wallets & Other Service Providers