June 15, 2021

Guide to declare cryptocurrencies in the Treasury: what taxes does it affect and what changes are coming


Guide to declare cryptocurrencies in the Treasury: what taxes does it affect and what changes are coming

Cryptocurrencies, crypto assets, Bitcoin or Ethereum are words that have been gaining prominence in recent months before the boom that the price of these financial assets had during the start of the year. This boom that investment in cryptocurrencies is having carries with it tax obligations that are not always known. Personal income tax, companies, or even wealth tax are some of the taxes whose calculation is affected by the use and investment in cryptocurrencies.

In the first place, it should be remembered that those who have had income from their work above 22,000 euros, if there has been a single payer, or 14,000 in the case of having several payers, are required to file an income tax return. . However, the yields for cryptocurrencies, as in the case of other investments, can cause that, without reaching this minimum, the taxpayer has to file the return. If your capital gains for cryptocurrencies exceed 1,000 euros (or losses of more than 500), added with other returns, you would have to file your return.

Both the sale and mining of these cryptocurrencies are activities that are subject to tax in Spain and affect different taxes. Regarding personal income tax, purchases that generate a profit or loss between the transmission price and the one for which it was acquired must be taxed as savings income. The Tax Agency has even contemplated the case in which there is a complaint for theft or the cryptocurrency trading platform has gone bankrupt, one of the risks that this activity has, recognized by the sector’s own actors. It will be considered a patrimonial loss of the rent at the moment in which it is judicially uncollectible. The same conditions as personal income tax apply to IRNR, which taxes income received in Spain by non-resident taxpayers.

In the case of companies that are engaged in mediating the sale of cryptocurrencies, the commissions charged to customers for these services must be part of the tax base of these companies in Corporation Tax. However, they are exempt from VAT, since cryptocurrencies are considered as means of payment, which exempts you from this tax. The Economic Activities Tax applies whether the sale is made through physical ATMs or if it is made on a website of the company in question. The mining of cryptocurrencies, when a consideration is received for it, also carries the obligation to pay taxes for it. It may be the case of leasing computer services to perform this mining or the use of servers in the cloud. In these cases, you must pay VAT and IAE.

Finally, the possession of cryptocurrencies can be counted for the wealth tax. The holding of the cryptocurrencies would be accounted for as the taxpayer’s equity. However, this would not affect anyone or any small amount of these assets in possession. In general terms in Spain, the minimum exempt to enter to pay the wealth tax is 700,000 euros. If this barrier is overcome, the value of the cryptocurrencies that will be taken as a reference will be the market price it had on December 31.

The sale and investment in cryptocurrencies is a very recent activity, as well as the controls carried out by the Tax Agency. Specifically, the Treasury began to carry out controls as of 2019, referring to the 2018 Income. At that time, the Tax Agency made requirements in 60 entities, including banks and intermediaries, that intervene in the acquisition or sale of cryptocurrencies , which gave him additional information to what he has been tracking about the cryptocurrency market. Since then, the Tax Agency obtained information on bank accounts that have been the origin or destination of transfers with cryptocurrency exchange houses.

Among the requirements were a dozen intermediary entities in these operations, such as exchange houses or payment gateways that allow the exchange of euros and cryptocurrencies. These companies were required information about their activity, the relationship of their cryptocurrency operations with identification of buyers and sellers, as well as amounts in euros of cryptocurrency transactions, exchange rate and commissions applied in euros. Additionally, in the case of ATMs, leasing and management contracts were requested, invoices related to the ATM’s operation, average monthly amounts of purchases and sales, distinguishing means of payment, and details of the operations carried out.

Information requests were also sent to more than 40 companies that offer their customers the possibility of making payments with cryptocurrencies on the internet. In this case, the Tax Agency asked about the percentage of surplus invoicing in cryptocurrencies, invoices and tickets for these transactions, as well as the identification of clients, the applied change or the identification of other operations of the company with cryptocurrencies.

The information that the Tax Agency has been collecting in these inspections includes messages in the declarations of certain taxpayers who are reminded of the obligation to report capital gains with the sale of cryptocurrencies and that they must be listed in the personal income tax return. With the data obtained through the requirements and those that arrive through the income statements, the agency carries out checks and inspections in return. The first inspections that have been opened after this exercise are still in progress, so the results are unknown at the moment.

Cryptocurrencies will experience some news in the coming months that affect taxation and the control that the Tax Agency has over them. The new law to combat tax fraud, which is currently in the Senate after being approved by Congress, will establish new obligations for taxpayers who invest in these assets. “The new Anti-Fraud Law is also adapted to the new circumstances in the markets. Thus, due to its proliferation and popularity among investors and savers, it is necessary to have greater control over cryptocurrencies”, defended the Government a few days ago after the procedure in the Lower House.

The best known of the modifications that the new regulation brings with it is the obligation that taxpayers have to report on the virtual currencies they have abroad, through form 720. When the law is definitively approved, the terms and wording will be known definitive of this new requirement. But two other regulatory changes are added. The first of them is the obligation to supply information on the balances maintained by virtual currency holders by those who provide services on behalf of third parties to save the private cryptographic keys that allow having and using these digital currencies, including those providers. exchange services for these coins if they also have a service to save them. Second, these same companies must report on the operations carried out with virtual currencies in which they intervene.

Due to the very nature of cryptocurrencies, it is difficult to have specific data on how many Spaniards have these assets and how much they have invested. As a reference, the statistics compiled by the consulting firm Chainalysis, an American center for data analysis and transfers in the world of cryptocurrencies and the blockchain that offers services to investors, media and governments. This consultancy makes a ranking in which it combines different data such as the volume of transactions carried out with cryptocurrencies with the size of each country’s own economy. With this crossing, Spain is in 37th position worldwide, while Ukraine, Russia and Venezuela lead the list. Among the neighboring countries, Spain is behind the United Kingdom, Germany, France and the Netherlands.

Faced with the cryptocurrency boom and the tax changes that are coming in the coming months, platforms have emerged that provide services to taxpayers to prepare tax reports for those who have this type of assets with all the information for the Tax Agency. This is the case of Blockpit, which this week launched its Cryptotax platform in Spain. “Currently, many traders crypto assets are unaware of their tax obligation and that, therefore, they are responsible for declaring and paying taxes associated with digital assets. In the worst case, they could be charged with tax evasion with heavy penalties, “said the company.

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