MiCA does not reflect the desire to regulate cryptoassets, but it does reflect the markets.
Sumar’s proposal aims to increase the tax burden among Spaniards.
This article was written by Cristina Carrascosa. Graduated in Law, she developed her professional career in international law firms such as Cuatrecasas or Pinsent Masons. In 2021 he founded ATH21a legal firm specialized in high-tech projects and was therefore included in the FORBES list of the most creative people in the business world in Spain. He works in the group formed by the European Commission “Blockchain Observatory” and was part of the experts who reported on the content of the new Securities Market Law, regarding cryptoassets.
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The Sumar Parliamentary Group has presented three amendments to the bill that, among others, transposes the Directive that approves DAC 8 and which, if approved, would be bad news for Spain as a country.
The analysis I published on Twitter in the form of a thread this Tuesday, November 25 and it had more than 150,000 interactions, so I have turned it into a post that can help those who have to participate in this process, to understand the significance of what proposes this parliamentary group.
The amendment includes the following proposals:
1. Modification of the embargo regime to include cryptoassets as seizable assets.
2. Modification of 720 and 721 to include MiCA and non-MiCA assets.
3. Introduction of a fixed rate in IS (corporate tax) of 30% for crypto assets that are not financial instruments.
4. Creation of a risk traffic light prepared by the National Securities Market Commission (CNMV) to organize cryptoassets based on a series of criteria.
5. Modification of CASP information obligations to include non-MiCA cryptoassets.
6. Modification of the taxation of investments in cryptoassets, to the general basis instead of that of savings.
I will now explain why technically these modifications either lack sufficient technical justification, or directly imply pejorative treatment based solely on the type of assetwhich represents unjustified discriminatory treatment:
Point 1 – “Non-MiCA” Cryptocurrency Embargo
The modification of the article of seizure of assets was already reformed in its day by people with much more rigor. In fact, a section j) was established in which The cryptocurrencies covered by MiCA were already included precisely in the intended order. Sumar wants to add the tagline «and those not covered by MiCA«.
Now, ignoring this proposal, cryptocurrencies not regulated by MiCA cannot be held in custody by a centralized, licensed provider. Therefore, they will never be able to be seized. For example, Tether. It is not covered in MiCA and therefore, it is not an asset that a CASP can legally custody. For this reason, it was placed almost last on the embargo list when the article was modified.
This modification is meaningless, unexecutable and adds no value. On the contrary, it complicates the lives of the CASPs who are the ones who ultimately have to execute the seizure orders.
Point 2 – Modification of 720 and 721
The Sumar Group proposes to include “non-MiCA” assets within 720 and 721.
It must be remembered that the MiCA Regulation, in its article 1 (object), does NOT include the desire to regulate cryptoassets, so it does NOT regulate the nature of cryptoassets. YES regulate the markets, which is something very different. It does not touch the asset, but the market in which it is issuednegotiate and offer.
Thus, MiCA establishes rules for: the issuance, public offering, admission to trading and provision of services related to cryptoassets in the Union and the issuance of tokens backed by money and assets.
The MiCA cryptoasset concept therefore has NO restrictive intent to be able to create two categories of tokens. I understand this to be an erroneous conception of the Sumar Group about this concept, which also goes against the spirit of the Regulation and also does not even have the means of justifying it on a practical level.
And of course, good luck with the enforceability of control over decentralized assets in 721.
Point 3 – Introduce a new tax rate in the IS of 30% for all returns derived from cryptoassets
The justification for his own amendment says that “Law 27/2014, on Corporate Tax, does not establish a specific treatment for capital gains derived from the transfer of these assets, which can generate regulatory gaps, legal uncertainty and heterogeneous tax treatment with respect to other figures with similar taxable capacity.«.
Any amendment proposal that seeks something as critical as modifying the tax system in Spain should take into account things such as that in the IS there is up to a 95% exemption applicable to capital gains on transfers of securities. Or that they are integrated into the corresponding tax base depending on the type of company, because only credit and financial institutions are taxed at 30%.
Also, that it is not necessary to create a new category of “cryptoassets” in the IS. Some professionals, like ATH21 in this case, have been accounting for years for companies that invest in cryptocurrencies as part of their diversification strategy and we integrate them perfectly into the IS.
And of course, this proposal does a disservice to the country’s entrepreneurs who pay taxes at 15%, establishing a fixed 30% rate for these returns, doubling the tax burden for the simple fact of investing in an asset, based on the subjective consideration that it is speculative, something that on the other hand should not fit into tax regulations, but is rather the subject of opinions.
Point 4 – Creation of a cryptoasset traffic light
This initiative represents such a burden for the regulator, the CNMV, that the simple fact of considering it seems strange. Currently, more than 20,000 types of cryptoassets are listed, and what the amendment proposes is neither more nor less than placing the responsibility of classifying each of them by color (red, green or amber, we imagine).
It would undoubtedly be an unprecedented action, which could lead to liability for the regulator and is based on attempting to guide citizens in what they should or should not invest their money in.
Point 5 – Modification of the information obligation of cryptoasset service providers (CASPs)
The amendment proposes expanding the purpose of this information to “non-MiCA cryptoassets”, so what is included in the explanation of point 1 and 2 is valid to discard it.
He is unaware that the CASPs They can only custody or allow trading of cryptoassets that meet MiCA requirements. Therefore, they will have little knowledge of everyone else. Sometimes, the tagline of “and everything else not explicitly mentioned” doesn’t fit, and this is one of those cases.
Point 6 – Modification of personal income tax taxation of profits derived from investments in cryptoassets
The Sumar Group wants to modify the LIRPF (art. 46) so that profits derived from the transmission of cryptoassets that are not financial instruments (almost all those that are commonly used in the market), are taxed on the general basis and not on the savings basis.
It is surprising that the justification is literally that “it is essential from both a tax and economic perspective.” It should not be so necessary when we have lived perfectly throughout Europe without this distinction in personal income tax for a year and a half now.
It is therefore not strange to think that the purpose of the measure is rather revenue-raising, since it would mean bringing taxation to the base that has maximum rates much higher than those of the savings base.
Thus, transferring the taxation of tokens to the general base is increase taxation almost certainly for any taxpayer and, in addition, make it taxed at the same level as, for example, salary.
If we add to this the already known harmful effect of calculating swaps with “dry income” (having to pay taxes without having the liquidity in fiduciary money to do so), it would imply (which it already does) that many taxpayers literally would not have the money to pay the tax, but in much higher brackets.
The most serious thing, in my opinion, is that the justification ends up being that since they are speculative assets, we cannot allow them to be taxed on the savings base, because that base is for people who “save”, not people who “speculate.”
It goes without saying that amendments to a law that transposes a Directive should be, at a minimum, devoid of subjective judgments on already regulated assets. What would be required would be that they contain technical, legally sound arguments, especially if you want to alter something as critical in a country as taxation in the general base of the Personal Income Tax.
In conclusion, this proposal for amendments has caused a great stir in the ecosystem, but also alarm among professionals who dedicate themselves to working in the sector. Not because of the discrepancy of opinions, something normal and healthy, but because of the type of justifications that accompany the proposals made, in which technical reasoning is missed, and in addition, personal considerations or prejudices held by those who sign them.
We hope that the approval process, the Speaker will be willing to reject it in its report, and that it will not even reach Congress, since some of the measures that have been presented in this amendment would place Spain in a worse place at the tax level than the rest of the countries of the European Unionsomething that we currently may not be able to afford.
Disclaimer: The views and opinions expressed in this article belong to its author and do not necessarily reflect those of CriptoNoticias. The author’s opinion is for informational purposes and under no circumstances constitutes an investment recommendation or financial advice.