Earlier this year, Spain’s tax collection department launched an investigation - which aimed to identify cryptocurrency-related businesses that would have to pay taxes on their capital gains on the investments and revenue they generated from crypto-related activities.
According to local news outlet, El Pais, Spain’s treasury department had requested in April that digital currency and blockchain-focused firms report their earnings and cryptoassets holdings to the nation’s tax authorities.
There were over 60 different institutions that the Spanish treasury had contacted - in order to obtain information regarding how much the institutions had earned from cryptoassets. These organizations included 40 companies that accepted crypto payments, 16 large banks, and several firms that served as intermediaries for crypto transactions (ATM operators, payment technology providers, exchanges).
15,000 Businesses To Pay Taxes On Crypto-related Revenue
El Pais has now reported that Spain’s treasury department has received financial information from local crypto-related companies - which includes about 15,000 firms that owe taxes on their digital currency earnings.
As detailed by local news outlets, any capital gains Spanish firms have made on cryptoassets are subject to a 19 to 23% tax rate. The exact rate is calculated by taking into account the size of a company’s capital gains from its cryptocurrency-related business.
At present, it’s unclear how Spain’s authorities will be collecting taxes as digital currency traders and companies that provide crypto-related products and services claim that filing taxes on their earnings can be a very complicated process.
As CryptoGlobe reported in early October, cryptoasset investors have to gather and sift through their digital currency transaction logs (when filing taxes) - which can be quite challenging as they may have used multiple exchanges or platforms.
Not So Simple To File Taxes On Crypto Earnings
Moreover, crypto investors have to identify trades and separate them from non-taxable transactions such as those that only involve transferring funds from one wallet to another.
It is also difficult for a country’s tax collection department to hold people accountable and make them accurately report and pay taxes they might owe on their crypto-related earnings. Unlike traditional stocks, which pay dividends to their holders, most cryptoasset investments do not offer such returns. So, it may be more challenging for tax authorities to accurately determine how to collect taxes on digital assets.
Additionally, it’s not clear whether Spain’s tax department is willing to accept cryptocurrency as payment from people filing taxes on their earnings from digital assets. Even if authorities accept crypto as tax payment, it may be quite difficult to determine the exact amount that somenone would pay - as digital currency prices have begun to fluctuate wildly again.