How does the Spanish Tax Agency deal with the use of cryptocurrencies for tax fraud?

Cryptocurrencies and tax fraud in Spain

In recent years, the use of cryptocurrencies such as Bitcoin or Ethereum has grown exponentially in Spain, especially in areas with high economic activity such as Mallorca. This growth has raised serious concerns about cryptocurrency tax evasion and how authorities are responding. However, this boom has also aroused the interest of the Tax Agency, which has intensified its efforts to prevent tax fraud related to crypto-assets.

At Resitax, tax advisors in Mallorca, we keep up to date with the latest legislative and fiscal developments. Below, we explain how this issue is being addressed in Spain and what implications it may have for individuals and companies. Also read our article on how cryptocurrencies are taxed in Spain.

Tax Agency concerns about the use of cryptocurrencies

The Spanish Tax Agency (AEAT) has identified several risks related to the use of cryptocurrencies:

Anonymity of transactions: Although operations are recorded on the blockchain, identifying the real owners remains a major challenge.
Tax avoidance: Some taxpayers may not declare the profits obtained with cryptocurrencies or the origin of the funds used to acquire them.
Lack of clear regulation: Although important steps are being taken, there are still grey areas in the taxation of cryptocurrencies.
Risk of money laundering and financing of illicit activities, taking advantage of the decentralized nature of these digital assets.

Current measures of the Tax Agency to combat fraud with cryptocurrencies

Inclusion in inspection plans

The Tax Agency has included in its inspection plans the control of new internet business models and electronic payment methods, including cryptocurrencies.

Requirements for information from third parties

The Tax Agency has requested information from financial institutions, trading companies and currency exchange offices about the owners and amounts of cryptocurrency transactions.

Sending information letters

Letters have been sent to taxpayers who have traded in cryptocurrencies to remind them of their obligation to declare the profits obtained in their income tax returns.

Form 720 and assets abroad

Taxpayers are required to report virtual currencies held abroad on form 720.

International collaboration

International cooperation is sought to combat the use of cryptocurrencies in money laundering and terrorist financing.

Adaptation of systems

The Tax Agency is reinforcing the adaptation of its information systems to prevent fraud in electronic commerce and through the use of electronic wallets.

Investigation of operators

The Tax Agency investigates operators who carry out illicit or opaque transactions with cryptocurrencies.

Obligation to report

Work is underway to oblige intermediaries and exchange offices to register and declare suspicious transactions.

Analysis of de-anonymization techniques

Analysis methods are being used to identify cryptocurrency account holders, such as “de-anonymization” techniques.

What is expected in the immediate future?

The trend indicates that fiscal control over cryptocurrencies will become increasingly exhaustive. These are some of the initiatives underway:

Obligation of registration and reporting for exchanges and wallet custodians.
Creation of a centralized database with wallet addresses and holders.
Enhancement of voluntary self-declaration to regularize previous situations.
New regulations promoted by the Commission of Finance and Public Function to regulate the role of intermediaries.

These new measures confirm that Spain is moving towards stricter oversight of cryptocurrency tax evasion, making compliance more important than ever.

How does this affect taxpayers in Spain?

If you live in Spain and have traded or are thinking of trading cryptocurrencies, it is essential that you get the right advice. The Spanish Tax Agency (AEAT) is taking decisive action and not declaring correctly can have serious consequences: