Bitcoin [BTC] and other cryptocurrencies’ profits monitored closely in Spain to prevent tax fraud and money laundering

The Spanish Government is looking closely at the income statements of 15,000 taxpayers to ensure that no tax evasion or money laundering occurs, according to El Pais, the Spanish daily newspaper.

The Spanish Tax Agency had identified, earlier this year, that the emergence of “blockchain, and especially cryptocurrencies”, were a potential opportunity for committing tax fraud. In April, the taxpayers who used cryptocurrencies were identified after the government sent requests to major banks in Spain and also exchange platforms, pay platforms, and businesses that accept Bitcoin or other cryptocurrencies. 16 major banks, 40 businesses and a dozen intermediaries, reports El Pais.

Using this information, 15,000 taxpayers were found to use cryptocurrencies. They have to report the profits made off of cryptocurrencies, and their tax returns will be checked by the National Fraud Investigation Office [ONIF]. Inspections will also be carried out by selecting certain high-risk profiles from the list.

The Spanish Cabinet is looking to tighten control on the new digital economy. A new anti-fraud bill that mandates taxpayers to file three more forms on the ownership and declaration of digital currencies. Financial platforms operating in Spain must inform the Tax agency of any holders and beneficiaries of cryptocurrencies, and the amount held. Any digital currencies held abroad must also be declared, and failure to comply with these laws will lead to hefty fines, upto 150%, says El Pais.

The intention behind increased scrutiny of cryptocurrencies is to cut unregulated, non-transparent financial activities. Because digital currency transactions occur on websites from outside Spain, it is very hard to track or otherwise obtain information on these transactions. This is why criminal organizations find cryptocurrencies viable for their illicit activities. Authorities will carry out close inspection of the prior identified taxpayers, and will be using new technologies to analyze data from such networks will combat illegal activities, included the report from the Spanish daily.

The Tax Agency is quoted by El Pais to have written in its annual report. It stated:

“Criminal organizations’ use of the deep web to traffic and trade in illicit goods, and the employment of cryptocurrencies such as bitcoin as a method of payment, is one of today’s greatest challenges.”

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