A Spanish decentralized finance (DeFi) investor has been slapped with a $10.5 million tax bill after authorities classified a crypto-backed loan as taxable gains — a move that has sparked outrage among tax experts and crypto advocates.
The Case: Loan Treated as Profit
According to local reports, Spain’s tax agency (Agencia Estatal de Administración Tributaria, AEAT) issued a €9 million ($10.5M) back tax claim against the investor, despite the fact that:
- The assets were not sold,
- No profit was realized, and
- The investor had already declared all crypto operations and paid $5.84M in taxes.
The controversy centers on the investor’s decision to deposit assets into a DeFi protocol in exchange for a stablecoin loan. Authorities classified this movement of funds as a capital gain, effectively treating the loan as realized income.
Tax specialists argue that Spain’s decision lacks legal basis. Under Article 33 of Spain’s Personal Income Tax Law, capital gains require an actual economic benefit and a clear variation in net worth. In this case, neither condition was met since the investor did not liquidate assets.
A tax adviser noted:
“The agency has taxed something that, from any economic or legal perspective, is not income.”
This interpretation, critics warn, creates legal uncertainty for crypto users and undermines confidence in Spain’s tax enforcement system.
Spain’s Tough Stance on Crypto Taxes
Spain has been among the strictest European countries in crypto taxation:
- In 2023, AEAT sent 328,000 tax warning notices to crypto holders.
- In 2024, that number nearly doubled to 620,000 notices.
- Spanish citizens are also required to declare foreign crypto holdings.
- Authorities have the power to seize crypto assets if tax obligations are unmet.
Despite these aggressive measures, Spain’s first line of appeal — the Tribunal Económico-Administrativo Central (TEAC) — is not considered an independent court by the European Court of Justice. This limits the fairness of recourse for taxpayers facing questionable assessments.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.