The holders of bitcoin (BTC) and other cryptocurrencies, residing in Spain, are preparing for what is to come, now that the local Tax Agency is determined to know in detail the operations they carry out. As part of this, many will present arguments with the idea of stopping the bitcoin proposal, which has inconsistencies.
The Ministry of Finance already issued last week, in a public hearing, a draft Royal Decree that is open to allegations. Is about a whole framework of obligations to report on the holding of cryptocurrencies in Spain, and includes the informative models 172, 173 and 721 for companies and individuals to report data to the Treasury.
The model is designed so that tax resident companies in Spain, that have, provide, operate, intermediate and custody cryptocurrencies, such as bitcoin, declare their balances. The idea is that, based on this, they detail each operation carried out by their users with numerous parameters, at the risk of being sanctioned.
With model 173, the Treasury intends to create the obligation that companies report on all the operations they carry out with bitcoin and other cryptocurrencies, both in Spain and abroad. This obligation will only affect taxpayers who operate with cryptocurrencies for balances greater than 50,000 euros.
As support, taxpayers must present a whole series of data, such as the identification of the exchange in which they operate, as well as the indication of their address and tax identification number.
As such, these informative models require precise data on the type of operationthe date and the public keys of the cryptocurrency wallets that were used for the transfer of funds.
In addition, the informative formats they ask to specify the types of cryptocurrencies that were used, its value in euros and the commissions and expenses associated with each transaction.
The same obligation will have those who make initial offers for the launch of future crypto assets.
On the other hand, the 721 model will be used every year, from now on, to track the cryptocurrencies held abroad.
Once the Royal Decree has been approved, the informative model will have to be delivered electronically to the Tax Agency between January 1 and March 31 of the year following the year in question.
In other words, the balance available in the purses must be reported as of December 31 of each year, or another date in the event that all the cryptocurrencies held have been sold previously.
Cryptocurrencies under the magnifying glass in Spain
Although the informed declaration of the possession of cryptocurrencies is expected to begin next year, the Spanish Tax Agency is taking steps that lead there. And recently, with the income statement, he began to put the magnifying glass by including a specific box to report the holding of cryptocurrencies.
So taxpayers used the box to declare the amount of cryptocurrencies they sold or exchanged to fiat money during the past year. This, regardless of whether they have made profits or losses in the process.
Those who bought bitcoin or other cryptocurrencies, but did not carry out movements with them and held them in a self-custodial digital wallet, did not have to fill in the declaration box.
In any case, with this first report Treasury activated the inspections to locate future irregularities in the declarations of people who own bitcoin and other cryptocurrencies residing in Spain.
However, the inclusion of a specific box for cryptocurrencies in the Income Statement generated doubts among taxpayers. And now, with the proposed informative models, there are many more questions about holding cryptocurrencies in Spain, as previously reported by CriptoNoticias.
Income statement as a prelude to supervision
Prior to the period scheduled to present the income tax return that ended on June 30, The Tax Agency sent almost 8,000 notices to the owners of cryptocurrenciesaccording to published local media.
However, the number of people who hold bitcoin or other crypto assets exceeds 4 million.
It means that 24% of all Spanish taxpayers will have to submit their reports to the treasury. And the number grows every year, since the adoption of cryptocurrencies increases annually in Spainjust as revealed a study published in 2020.
With this, the transfer of data to technology companies and government institutions is not something well seen by the population, since there are fewer and fewer people willing to do so.
However, all the data obtained in the recent income tax declaration campaign will serve for the public body to start doing inspections to identify possible errors or irregularities among those who own and use cryptocurrencies.
On the other hand, the Tax Agency can sanction taxpayers who decide not to declare their holdings. In the Personal Income Tax (IRPF), The possible sanction for not declaring the operations carried out with cryptocurrencies ranges from 50% to 150% of the undeclared fee.
Who owns cryptocurrencies and lives in Spain must be clear that there are three main taxes that must be taken into account, When preparing reports to present to the Tax Agency:
- In the first place, there is the IRPF, which for tax purposes counts the profits or losses that the user has in the reporting period.
- The second is the Wealth Tax, which must be submitted by any natural person who has cryptocurrencies as part of their assets.
- Finally, there is the Inheritance and Donation Tax, for which all crypto assets that have been received through donation or acquisition of goods by inheritance or legacy must be considered.
The informed declaration: a path full of doubts
The Spanish lawyer Cristina Carrascosa, a specialist in the area of cryptocurrencies, said that she has several questions regarding the proposal to pay taxes for holding bitcoin.
One of these doubts is “how am I going to know, a taxpayer, if the exchange in which I have deposited my cryptocurrencies complies with the regulations of the regulator, and therefore excludes me from presenting form 721?” wrote On twitter.
The lawyer’s doubt points to the gaps left by the bill. This in the sense that every taxpayer is required to declare the cryptocurrencies they own. But when your crypto assets are in the custody of an exchange, it will be the exchange that delivers the information to the treasury, freeing the user from the responsibility of submitting their information letter.
In any case, when the exchange is responsible for issuing information on the holding of crypto assets, the proposed tax on bitcoin does not clarify how the user will find out that he has been released from the obligation.
Another question that the lawyer has is: “If I lose the status of holder of one part of my assets in crypto assets, but not the other, will I have to submit two 721 reports, or will the model already have this possibility enabled?”
Twitter users have also expressed their doubts about the proposal and many of them they wonder what to do in the section where they are asked to provide the public key of their cryptocurrency wallets. What public key can we report if we store the crypto assets in an exchange?
About the public key request opined the tax attorney Emilio Pérez Pombo, who thinks that The data reveals the lack of knowledge that the regulatory body has about the ecosystem of cryptocurrencies.
“Public keys are mere identifiers. In other words, instead of clarity, we will have to make an additional effort to understand what the legislator is requiring of us,” said the specialist.
He doesn’t look kindly on it either. model 721 must be presented, apart from the holder or owner of cryptocurrencies, as well as by the beneficiaries, authorized or all those persons who have power of disposal.
“That opens the way for us to situations as bizarre as all the members of a family being called to their presentation if it turns out that the access codes to the service platform are kept in the home safe,” Pérez explained. Pombo.
For his part, the tax advisor specializing in crypto assets José Antonio Abreu Mateu directed a tweet to the Tax Agency recommending know the ecosystem before legislating.
“A piece of advice should be followed: don’t try to create rules for something you don’t know about because you can create rules that are impossible to meet. Know it first and then legislate. Models 172, 173 and 721, in their current form, are impossible to comply with, both by users and exchanges,” he noted.
In fact, there are so many unanswered questions surrounding the bill that carrascosa invited the holders of bitcoin and other cryptocurrencies to express their doubts. All with the idea of presenting allegations before July 19, which is when the deadline for the public hearing of the Royal Decree expires.