The Spanish tax authorities have clarified how the country's existing tax laws should be applied to losses incurred by the collapse of a bitcoin exchange, the result of a scam or a situation of insolvency.
Spain's Dirección General de Tributos (DGT) received a question from a bitcoin enthusiast who claimed to have lost a large part of their savings after investing in bitcoin.
According to the question, the person deposited their bitcoin in a third party loan service in 2013. At the end of the year, the website's administrator – identified only by nickname and a public key – announced the bitcoin had been stolen and, as such, customer deposits could not be returned.
The bitcoin enthusiast was then offered a refund amounting to 5% of their deposited bitcoin, in exchange for dropping claims for a full refund and not proceeding with legal action.
Suspicious that the website had been running a pyramid scheme, the bitcoin aficionado refused the offer and presented his case to the Spanish police and the relevant authorities of the country where the website is thought to have been registered. These, however, were unable to help because the claimant was Spanish and fell under Spanish jurisdiction.
In response to the question, the DGT noted these kind of situations were covered by the existing Personal Income Tax Law and that, in order for the losses to be considered a capital loss for tax purposes, one of the following conditions must apply:
- The reduction of the debt has been approved by a judge.
- The debtor is in bankruptcy and there is a reduction of the debt during the procedure; or the credit is not recovered after the bankruptcy procedure.
- The non-recovered credit is still outstanding a year after formal proceedings have began.
Alejandro Gomez de la Cruz, lawyer and founder of Law and Bitcoin, told CoinDesk:
"I think the current law has been interpreted correctly. Whether it is positive or not, I think that these kind of interpretations will be welcomed by the community."
When asked about the wider implications of the DGT's clarifications, the lawyer said it could help bitcoin companies see the Spanish state was bitcoin friendly, by clarifying doubts and guaranteeing a certain amount of judicial security.
More from Spain
This is not the first time the Spanish authorities have spoken out about bitcoin.
Earlier this year, the country's bitcoin community celebrated confirmation by Spain's Ministerio de Hacienda that the digital currency was exempt from Value Added Tax.
Hat tip: Law and Bitcoin.
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Spain’s Dirección General de Tributos (DGT) received a question from a bitcoin enthusiast who claimed to have lost a large part of their savings after investing in bitcoin.
According to the question , […]