The bill called the “Law on Measures to Prevent Tax Avoidance” was approved on October 13 by the Spanish Council of Ministers and will now be submitted to Parliament for final approval.
Through a release In a report issued by the Spanish Ministry of Finance, Minister María Jesús Montero detailed the new measures implemented in Spain with the approval of the draft Law on Measures to Prevent Tax Avoidance. The new Spanish law seeks to establish strict controls on the use of cash, cryptocurrencies, and digital payment systems as a measure to prevent tax fraud. Now citizens, companies and traditional financial services or cryptocurrency companies operating in or from Spain must submit constant reports on any type of commercial activity related to cash payments or digital assets, whether acquisitions, exchanges, transfers, collections, payments or remittances.
With the approval of this new bill, Spanish citizens are required to report any activity they carry out with Bitcoin and other cryptocurrencies, just as if they use cash payments. Likewise, citizens must report any type of financial transaction they make within or outside the country.
As Minister Montero reported in her presentation, the Spanish government “will not give up or look for shortcuts in its fight against tax fraud”, indicating that existing policies and legislation will be strengthened to ensure compliance with this law. Montero also reported that one of the main objectives of this bill is to guarantee the collection of 800 million euros for each fiscal year, so this law also aims to strengthen tax collection practices in Spain.
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New limitations on daily payments
In addition to requiring citizens to report their financial activities and movements and ensuring tax collection in the country, the new law also imposes new limitations on the amount of money citizens can use on a daily basis.
As a way to increase control over transactions involving cash, cryptocurrencies and digital assets in Spain, this bill establishes limits on daily payments, going from an amount of 2.500 euros to just 1.000 euros between professionals and businesspeople. Daily cash payments between individuals remain at 2.500 euros, and payments between individuals with tax domicile outside the country are reduced to 10.000 euros, as the government considers that these are more difficult to trace and, therefore, may encourage tax fraud. Previously, the limit on cash payments for individuals with tax domicile outside Spain was set at 15.000 euros.
Expansion of the list of tax debtors
The bill also extends the list of state tax debtors, including all those with debts of more than 600.000 euros, whereas previously it only included those with debts of more than one million euros.
The Law on Measures to Prevent Tax Avoidance also eliminates tax amnesties, as a way of ending the privilege that benefits large fortunes, and prohibits the use of software for the preparation of double accounting between companies and businesses that provide services in or from the country. Companies that are dedicated to the design and creation of this software will also be sanctioned. All these measures are imposed as a way of ensuring that the state generates 800 million euros in annual tax revenue.
Special attention to cryptocurrencies and digital systems in Spain
In her statements, Montero also highlighted that this new law puts the spotlight on digital services companies, paying special attention to those who work with these services and any other technological sector, which shows that the state's intentions are not only to control financial services companies, but also FinTech and others. In addition, all Spanish citizens are obliged to inform the State about their cryptocurrency holdings and the operations and transactions they carry out with them, regardless of whether they keep their holdings inside or outside Spain.
The Law on Measures to Prevent Tax Avoidance has been under discussion since 2018. Until now, Spain has adopted a fairly strict regulatory environment regarding cryptocurrencies and digital assets.
However, the nation recently approved A new bill seeks the digital transformation of the current financial system and a decentralized services company submitted 1 euro in Bitcoin to each member of the Spanish Congress, as a way to raise awareness among legislators about the potential of this cryptocurrency and technology blockchain. The Bank of Spain, for its part, presented a report where he outlines the pros and cons of issuing a central bank digital currency (CBDC) and pilot tests on the project will begin in the country cryptoeuro together with banking giants such as BBVA, Santander, Caixa Bank or Bankia, among others.
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