Even though it is mandatory to declare BTC holdings abroad, the penalties are less severe. The Court of Justice of the EU annulled the Model 720 sanctions regime last month.
The Ministry of Finance of Spain recently amended the law requiring citizens to declare their holdings of Bitcoin (BTC) and other cryptocurrencies on foreign exchanges. That rule imposed strict sanctions that the Court of Justice of the European Union (CJEU) made illegal last month.
The socialist caucus in the Spanish Senate introduced a couple of minor changes that eliminated the sanctions against those not declaring their assets abroad. According to local media, Model 720 and the later Model 721 established those penalties.
Although the Minister of Finance, María Jesús Montero, said they annulled the sentences, the declaration was still in force. In addition, she announced that the government department would rewrite the legislation before March 31st. The CJEU had given them that deadline to edit the ordinance.
The Treasury of Spain advanced the procedures before the Senate, based on the Bill that modifies the Corporation Tax. Montero announced that they would change the sanctions against those not declaring their assets abroad, which date back a decade. However, the truth is that they eliminated that issue from the Spanish legal system.
The information return is still mandatory, and the sanctions in force will draw on the General Tax Law (LGT). For example, that rule imposes fines of up to 200 EUR for not declaring holdings of cryptocurrencies abroad. Besides, citizens have to pay up to 150 EUR for not doing it in the established period.
Tax economist José Antonio Bravo explained that the LGT would govern the penalties after the CJEU annuls the Model 720 and Model 721 sanctions regime.
The Treasury representative explained that the sentence would be four to five years for the tax crime and up to 10 for the aggravated tax crime.
A Clear Difference in the Changes in the Law and the Sanctions
There is a clear difference in the changes in the law and its respective sanctions with the previous version. Model 720, introduced by former Minister of Finance Cristóbal Montoro in 2012, imposed severe sanctions against those not declaring their holdings of assets abroad. That government department later copied that to Model 721, an identical piece of legislation, which added cryptocurrencies like Bitcoin.
Those who did not declare their goods automatically in the established period received sanctions ranging from EUR 100 for each asset. There were also fines going from EUR 5,000 to EUR 10,000 for each item undeclared or erroneously declared.
The allocation of assets not declared by Spanish citizens added to that situation. Besides, the law imposed taxes of 150% on the taxes resulting from the imputation.
That led the CJEU to state that those penalties were too repressive. The fines could even cause the total amount to exceed 100% of the total value of the assets abroad. The organization considers that the sanctions regime infringed the principles of the European Union.
By Alexander Salazar
