Sumar’s Proposal: Spain to Tax Crypto Gains at Higher Rates for Individuals

TLDR

• Spain’s Sumar political group has introduced amendments to reform tax laws affecting cryptocurrencies.
• The proposed changes would shift crypto gains into the general income tax bracket, raising the top rate to 47%.
• Corporate holders of crypto would face a flat 30% tax rate under the new proposal.
• The National Securities Market Commission would create a “risk traffic light” system for cryptocurrencies.
• The proposal includes classifying all cryptocurrencies as attachable assets, allowing for potential seizures.

Spain’s left-wing political group, Sumar, has proposed amendments to reform three major tax laws affecting cryptocurrencies. The proposed changes focus on the General Tax Law, Income Tax Law, and Inheritance and Gift Tax Law. These amendments aim to alter how crypto profits are taxed in Spain, affecting individual and corporate holders alike.

New Tax Brackets for Crypto Gains

The new proposal suggests that crypto gains, previously taxed as non-financial-instrument assets, will now be taxed within the general income tax bracket. This shift would raise the top tax rate to 47%, up from the current 30% savings rate. For corporate holders, a flat 30% tax rate would apply. The tax change would significantly impact crypto investors, particularly those in high-income brackets.

Sumar, the political group behind the changes, holds 26 of the 350 seats in Spain’s Congress of Deputies. It is a junior partner in the ruling coalition with the Socialist Party. These amendments are part of a broader effort to regulate cryptocurrencies in Spain more tightly.

Risk Traffic Light and Asset Seizure Proposal

The proposal also requires the National Securities Market Commission (CNMV) to develop a visual “risk traffic light” system. This system would display cryptocurrency risk levels on investor platforms. Critics argue that the risk system could confuse investors, particularly in the highly volatile crypto market.

Another controversial aspect of the proposal is classifying all cryptocurrencies as attachable assets. This would allow the government to seize cryptocurrencies, even if they are held in decentralized wallets. Lawyer Cris Carrascosa questioned the feasibility of such a measure, especially for tokens like Tether (USDT), which regulated custodians do not hold.

Other Reactions to the Crypto Tax Proposal

Economist José Antonio Bravo Mateu criticized the amendments as misguided attacks on Bitcoin. He pointed out that decentralized assets like Bitcoin cannot be seized in the same way as traditional financial assets. “These measures will only encourage Bitcoin holders in Spain to consider moving elsewhere,” he said on X.

At the same time, some tax inspectors in Spain have suggested creating a more favorable tax regime for Bitcoin. They have proposed allowing taxpayers to use the FIFO (first-in, first-out) or weighted-average method when reporting crypto transactions.

In recent years, Spain’s tax agency has been vigilant about crypto taxes. It sent out over 900,000 warning notices to crypto holders for the 2022 and 2023 tax years. This highlights Spain’s continued efforts to enforce tax compliance among crypto investors.

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