There may be diverse connotations about taxing the same investment in digital assets. An informed selection of investment in digital currencies might be helpful to alleviate tax pressure.
The Spanish tax authorities still do not offer cryptocurrency investors enough criteria to pay taxes correctly. According to the Spanish economist Juan Ramón Rallo, there is an uncertain atmosphere regarding some returns connected to the crypto sector.
Rallo expressed these views in a video released on his YouTube channel. He explained the tax issue with Paula Urcera, in charge of Tax Affairs at the TaxDown company, and Alberto Toribio, leader of Institutional Relations at CryptoPlaza. The specialists had different views on how some products linked to the cryptocurrency sector should get reported to the Treasury.
Spain has been consolidating moves to get residents who invest in digital assets to pay taxes on the performance of the different items. However, the immediate increase and the usefulness of these items for investment in the crypto sector might worsen the panorama.
According to Alberto Toribio, three years ago, 2 million Spaniards invested in digital currencies; today, there are at least 7.5 million investors, citing data from Statista in December 2021. Toribio also said considerable activity regarding the cryptocurrency and Defi segment in Spain.
Paula Urcera explained that essential obligations, like the tax known as IRPF, imply reporting the capital gains or losses on each sale transaction. This report can cause many complications on tax returns for traders, who execute a high volume of transactions each year.
On the other hand, the obligations can also fluctuate according to the place of residence. It depends on the community where users live, so they must declare some taxes or others according to their location.
Utility Tokens Pay VAT in Spain
Specialists coincided that an item like NFTs (non-fungible tokens) gets treated differently than digital assets. These items got tied to other taxes, such as VAT (Value Added Tax). However, according to Toribio, applying this same tax to utility tokens a few weeks ago seems to have caused a stir in Spain.
Utility tokens have a consumption-oriented purpose usually serve as a method of user loyalty with a specific project, granting discounts or other types of incentives.
Paula Urcera highlighted that the investment in utility tokens would not imply the purchaser declaring a tax, as in the case of assets. However, Toribio firmly thinks that there is still a lot of confusion on the subject.
Other Relevant Options
In a country such as Spain, both natural and legal persons must pay taxes on their profits on the capital invested in digital assets. The percentages of the Spanish state’s yield start from a minimum of 19% and can approach at least 50%. The experts revealed various methods that taxpayers are currently applying to refresh fiscal pressure.
Regarding utility tokens, which will now get charged with VAT, Alberto Toribio explained that the measure obliged the companies that manage these items to apply new procedures to avoid getting harmed.
By: Jenson Nuñez
