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  • Writer's pictureTeresa Pace

The Spanish Tax Agency to confiscate cryptocurrency for settling tax liabilities.

The Ministry of Finance in Spain has unveiled tax reforms granting financial institutions the authority to collect taxes on behalf of the government. To strengthen control over cryptocurrency monitoring, the ministry, headed by María Jesús Montero, is working on legislative changes to Article 162 of the General Tax Law. This would empower the Spanish Tax Agency to identify and confiscate crypto assets owned by taxpayers with outstanding debts.

A recent royal decree, effective from Feb. 1, extends tax collection powers to a broader range of entities. Previously, only banks, savings banks, and credit cooperatives could report to the Treasury. The Treasury is also intensifying efforts against tax evasion, contemplating mandatory reporting on all card transactions by banks and electronic money institutions.

The rapid implementation of these changes presents regulatory challenges as Spain proactively addresses various crypto governance issues. In October 2023, the Ministry of Economy and Digital Transformation announced that the European Union's comprehensive crypto framework, the Markets in Crypto-Assets Regulation (MiCA), will be enacted nationally by December 2025—six months ahead of the official deadline. Spanish residents holding crypto assets on non-Spanish platforms must declare them to tax authorities by the end of the following month.

The declaration period for Form 721 started on Jan. 1, 2024, and concludes on the last day of March. Individuals and corporate taxpayers must disclose the funds in their overseas crypto accounts as of Dec. 31, 2023. However, only individuals with crypto assets exceeding 50,000 euros (approximately $54,000) on their balance sheets are obligated to report foreign holdings. Those using self-custodied wallets must declare their holdings through the standard wealth tax Form 714.

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