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Spain appears to be getting serious in collecting taxes from Bitcoin and other cryptos. The country’s tax agency recently sent letters to thousands of crypto holders warning them of a possible fine should they fail to declare their cryptocurrency holdings.
Spain’s tax agency is now making it clear that crypto-related income is taxable. The agency has already issued 14,800 residents who are reportedly under watch for their failure to declare their cryptocurrency holdings, according to Bitcoin.com.
In the notices, the tax authority warned that it could impose a hefty fine for crypto holders who fail to declare earnings in their tax filings. The agency said that violators could incur of over 5,000 euros in fines, which is around $5,900.
The tax authority clarified that crypto holders are only accountable for profitable sales of crypto and not for their crypto buying operations. “We must declare the sales that we have made during 2020,” according to tax experts Jesús Gascón, Marta Rayaces, and Enrique García, who were quoted by the local media outlet Telemadrid. “Either because we have changed them to euros to another cryptocurrency or because we have used them to buy a good, a flat, or a car,” the experts added.
The experts explained that if a crypto investor acquired 10 Bitcoins in 2017 worth 10,000 euros ($11,880), which were later sold the 10 BTC’s for 200,000 (around $237,000)euros last year, then the investor will need to ”declare a capital gain of 190,000 euros ($225,800).” The amount represents the net gain, which is the difference between the selling and buying prices.
While sending 14,800 letters to crypto holders might appear shocking, the number of notices sent by the Spanish tax agency this year is just a fraction of the total number of letters it sent in 2021. Last year, the tax authority sent notices to 66,000 crypto holders in a similar campaign. Back in 2019, it only sent 14,700 letters to crypto owners.
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