Regulatory Developments: Spain Proposes 47% Crypto Tax

Spain's Sumar parliamentary group has proposed significant amendments to three key tax laws affecting cryptocurrencies. This includes reforms to the General Tax Law, Income Tax Law, and Inheritance and Gift Tax Law, with the aim to alter how profits from cryptocurrency trading are taxed.

The proposal, reported by CriptoNoticias, would raise the top tax rate on crypto gains from the current 30% savings rate to 47%, categorizing these profits as non-financial-instrument assets under the general income tax bracket.

Corporate holders of cryptocurrencies would face a flat tax rate of 30%. Sumar is a left-wing political alliance holding 26 of the 350 seats in Spain's Congress of Deputies and serves as a junior partner in the coalition government with the Socialist Party.

As part of the plan, the National Securities Market Commission, known as CNMV, would be mandated to create a visual risk traffic light system for cryptocurrencies, which would be displayed on investor platforms.

Another controversial aspect of the proposal is the classification of all cryptocurrencies as attachable assets, making them subject to seizure. Lawyer Cris Carrascosa criticized the proposal on social media platform X, stating that the classification is unenforceable, particularly for tokens like Tether's USDt, which cannot be held by regulated custodians under the Markets in Crypto-Assets regulation.

Economist and tax adviser Jose Antonio Bravo Mateu also condemned the amendments as ineffective attacks on Bitcoin, asserting that they demonstrate a fundamental misunderstanding of decentralized assets.

He pointed out that Bitcoin stored in self-custody cannot be easily seized or monitored like traditional assets, warning that such measures might push crypto holders in Spain to consider relocating when Bitcoin prices rise significantly.

Furthermore, tax inspectors Juan Faus and Jose Maria Gentil have proposed a more favorable tax regime specifically for Bitcoin, allowing taxpayers to separate wallets and apply methods like FIFO or weighted average for tax calculations.

In the face of these proposed taxes, Spain's tax agency has issued warnings to crypto holders, sending out 328,000 tax notices for the fiscal year 2022 and an additional 620,000 notices a year later. While Spain is contemplating an increase in crypto taxes, Japan's Financial Services Agency is exploring tax reforms that would lower the tax burden on crypto investors, proposing a flat 20% capital gains tax instead of the current rates that can reach 55%.

This comparison highlights the contrasting regulatory approaches to cryptocurrencies in different countries.