A new proposal from Spain’s Sumar parliamentary group seeks to overhaul how cryptocurrency profits are taxed, potentially raising the top rate for individuals to 47%. The controversial amendments also aim to classify all digital assets as seizable and introduce a new risk-assessment system for investors.

A Major Shift in Crypto Taxation

The proposed changes would dramatically alter the tax landscape for digital asset holders. Currently, crypto profits are taxed under a savings rate that tops out at 30%. Sumar’s plan would move these gains into the general income tax bracket, where the highest rate is 47%. The proposal also suggests a flat 30% tax rate for corporate entities holding cryptocurrencies.

These amendments target three key pieces of legislation: the General Tax Law, the Income Tax Law, and the Inheritance and Gift Tax Law. If passed, they would represent one of the most significant regulatory shifts for the crypto industry in Spain.

Critics Condemn the Move

The proposal was met with immediate criticism from industry experts. Economist and tax adviser José Antonio Bravo Mateu described the amendments as “useless attacks against Bitcoin,” arguing that the measures misunderstand the nature of decentralized assets. He pointed out that Bitcoin held in self-custody wallets can’t be seized or monitored in the same way as traditional financial assets.

Mateu warned that the only likely outcome of such policies would be capital flight, stating that they would “make its holders residing in Spain think about fleeing.” In contrast, tax inspectors Juan Faus and José María Gentil recently suggested creating a more favorable tax regime specifically for Bitcoin, which would allow for more flexible accounting methods and prevent tax gaming.

An International Contrast

Spain’s tax agency has steadily increased its focus on crypto investors, sending 328,000 warning notices in 2023 for the 2022 fiscal year and another 620,000 notices a year later. While Spain considers tightening its rules, other countries are moving in the opposite direction. Japan’s Financial Services Agency (FSA) is pushing for a tax reform that would apply a flat 20% capital gains tax to crypto earnings, down from a potential high of 55%. This would align digital assets with equities and aims to make Japan a more attractive hub for traders and crypto businesses.