For the first time, cryptocurrencies must be included in the income statement in Spain.
Virtual currencies in Spain have been authorized as a legal means of payment since 2015. However, there is no obligation to present the Income Statement if the income obtained does not exceed 1,000 euros.
However, if the total income is higher than this amount, it is mandatory to file the tax return, including earnings. In the case of losses, the Tax Agency raises it optionally; although he recommends doing it to balance the losses and gains in the future.
“There is no specific section for cryptocurrencies. We have a generic section called ‘Other goods’. What we have to make clear there is that we are transmitting cryptocurrencies,” explained José Antonio Bravo Mateo, head of taxation of crypto assets at Àgora SA.
“People must declare any amount destined for cryptocurrencies and do the same if it is in a ‘wallet’ or an ‘exchange’, such as Binance or Coinbase. Although, until the assets are sold, it is not necessary to include them in the Income. If the user sells, to fiat money, exchanges his cryptocurrency for another, donates it or exchanges it for goods or services, then he must include these changes in the declaration. That is to say, it declares when there is an effective transmission”, points out Bravo.
In this sense, the person in charge of taxation in crypto assets, mentions that at the time of filling out the declaration it can “happen that there are multiple operations” of buying and selling these digital currencies, so, in this case, he recommends “adding movements”.
Another aspect to take into account is that those people with digital assets, such as Bitcoin or other cryptocurrencies abroad, will have the obligation to report on the virtual currencies of which they are holders.
Failure to do so, with the current regulations, generates a penalty of up to 5,000 euros for each data referred to each virtual currency individually considered, according to its class, which must be included in the income statement.
TaxDown Tax Specialists Share their Thoughts
TaxDown tax specialists point out that there is currently no direct regulatory framework for cryptocurrencies and that the conventional system of capital gains and losses governed them.
Currently, the regulation around cryptocurrencies and NFTs is extremely green. We must point out that the genesis block of the Bitcoin network began on January 3, 2009. Cryptocurrencies in just over a decade have seen great adoption and expansion.
TaxDown highlights that the income campaign in Spain will start on April 6. This means that a large part of the 4 million people holding cryptocurrencies must report it. These cryptocurrencies must be included in the income tax return.
Only those who have sold any of the acquired cryptocurrencies should report it, regardless of whether they made profits or losses. If this process does not take place, the penalty for the tax debt could reach up to 150%.
Declaration of Cryptocurrencies in Spain
For the declaration of cryptocurrencies, the method recommended is FIFO, a system of accounting for gains on the sale of shares of assets purchased at different times.
Such system establishes that the first purchases are the first to take into account when we make a sale of cryptocurrencies. The capital gain results from subtracting the value of the transmission, the value of the acquisition, and the expenses of the operation. The user must face a complex process, including certain variables. To overcome this challenge, TaxDown has created a systematic guide, available on its site, on how to declare cryptocurrencies.
Additionally, the mining of cryptocurrencies and the buying and selling of NFTs have generated controversy. Mining, according to tax specialists at TaxDown, is, by all counts, an economic activity. This means that the cryptocurrencies obtained in the process are income.
Regarding NFTs, there is still no regulation in this regard. The companies that manage these digital assets must report on them.
By Audy Castaneda
