Spain's sweeping changes to cryptocurrency taxation ignite concerns over mass departures and create regulatory turmoil

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Spain's sweeping changes to cryptocurrency taxation ignite concerns over mass departures and create regulatory turmoil

Bitget-RWA2025/11/26 10:14

By:Bitget-RWA

- Spain's left-wing Sumar group proposes reclassifying crypto gains as ordinary income, raising top tax rates to 47% and introducing a "crypto traffic light" risk system. - Critics warn the reforms could drive investors offshore, mirroring India's 2022 experience, and create compliance chaos for self-custodied assets and non-EU tokens. - Legal experts challenge enforceability of asset seizure rules for non-local custodied tokens like USDT , while tax agencies highlight existing legislative ambiguities. - C

Spain’s leftist Sumar bloc in parliament has introduced a comprehensive proposal to revamp the nation’s crypto tax laws, potentially positioning Spain among the EU’s strictest regulators. The initiative, currently being considered by the Congress of Deputies, aims to move crypto earnings from the category of non-financial assets into the general income tax base,

increasing the highest tax rate to 47%

up from the present 30% rate applied to savings. For businesses, profits from crypto activities would be taxed at a flat 30%

as reported

. The plan also introduces a “crypto traffic light” risk assessment, obliging the National Securities Market Commission (CNMV) to provide color-coded alerts on investment platforms, reflecting factors such as regulatory coverage, liquidity, and asset backing

according to experts

Spain's sweeping changes to cryptocurrency taxation ignite concerns over mass departures and create regulatory turmoil image 0

These proposed changes represent a major departure from Spain’s current approach to digital currencies. At present, individuals declare crypto profits under the savings tax regime, which is capped at 30%, mirroring the treatment of traditional assets like equities.

By moving crypto into the general income tax category

, the reform would treat digital assets as regular income rather than investment returns. The proposal has drawn criticism from economists and legal professionals,

who argue it is “clearly hostile to Bitcoin, Ethereum, and other digital currencies”

. Tax consultant José Antonio Bravo Mateu cautioned that these changes could prompt investors to relocate abroad, similar to what happened in India after a 30% crypto tax was introduced in 2022, which

caused trading to migrate

to overseas platforms.

The proposal also presents practical obstacles. One provision would classify all cryptocurrencies as assets that can be seized, extending rules that currently only apply to EU-regulated tokens under the Markets in Crypto-Assets (MiCA) regulation. However, legal experts contend this is not feasible for tokens like Tether’s USDT, which are not stored with Spanish custodians.

Attorney Chris Carrascosa pointed out

that such requirements could create unworkable compliance demands for Spain’s crypto businesses. Detractors further note the challenge of confiscating self-custodied assets, which are only accessible with private keys.

Spain’s tax agency (AEAT) has stepped up scrutiny of crypto investors, issuing 620,000 warning letters in 2024 alone. Nevertheless, the suggested changes could worsen the current uncertainty. Spanish tax advisory firm Lullius Partners observed that the existing laws do not clearly define taxable events, making compliance more difficult. Meanwhile, an alternative plan from tax inspectors Juan Faus and José María Gentil

proposes a distinct, more lenient tax system

for

Bitcoin

, potentially separating it from other digital assets.

If these reforms are implemented, they could dramatically alter Spain’s crypto environment, possibly discouraging both investors and service providers. Critics caution that the changes could create “total disorder in the crypto tax system” and prompt a significant outflow of wealthy investors. As lawmakers debate the proposals, Spain’s crypto industry remains in limbo, unsure whether the reforms will bring much-needed clarity or further complicate the nation’s approach to taxing digital assets.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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