A Spanish decentralized finance (DeFi) investor received a €9 million tax bill linked to a crypto-backed loan.
Scale of the Penalty
The Spanish tax agency issued a €9 million ($10.5 million) tax bill to the DeFi investor for taking out a crypto-backed loan. According to local media, the investor had already declared all cryptocurrency operations and paid $5.84 million in taxes.
Tax Interpretation
A tax adviser quoted in the report stated that the local tax agency taxed something that is not considered income from any economic or legal perspective. The adviser noted that the movement of assets in the DeFi protocol was treated as realized gains, which lacks legal basis in Spanish or European legislation.
Issues with Tax Legislation
The report indicated that the Spanish tax agency classified a stablecoin loan as a capital gain, and token transfers to protocols like Beefy or Tarot as taxable events. Critics argue that this classification contradicts Article 33 of Spain’s Personal Income Tax Law, which defines capital gains as requiring an actual economic benefit.
The situation with tax enforcement in Spain highlights issues in the local tax audit system and the challenges faced by crypto investors in meeting tax obligations.
