How to declare Cryptocurrencies in Spain (2022 Guide)

There is no doubt that last year was the great boom of cryptocurrencies. Not only because of the increase in their value and the number of investors, but also they had a great impact in the media. Few people remain who have not heard of cryptocurrencies and the blockchain.

Although Bitcoin is still the virtual currency par excellence, the appearance of new digital currencies such as Ethereum or Solana is making this industry take on a new dimension.

It is for this reason that the Spanish Ministry of Finance is already looking carefully the evolution of digital currencies. The tax reform commission is already seeking to surface tax bases that escape the treasury and update taxes to better tax digital currencies.

In this scenario, it is important that cryptocurrencies holders know what their taxation is and seek advice for a correct declaration process.

The key points that you must take into account for the declaration of cryptocurrencies are listed below:

The sale of cryptocurrencies is exempt from VAT payment

First of all, it is important to know that VAT is not paid for the purchase and sale of cryptocurrency. For the Spanish Tax Agency, for practical purposes, the cryptocurrency is considered as a currency. Therefore, it is under the current legislation on the exchange of traditional currencies, whose operations are subject to VAT, but exempt from paying it.

On the other hand, keep in mind that for the payment of purchase and sale of products or services with cryptocurrencies, you must pay VAT.

Registration in the Tax on Economic Activities (IAE) and in the Intracommunity Operations Tax (ROI)

People who are engaged to the sale of cryptocurrencies, trading, through their own platform, would be carrying out a business activity, for which they are obliged to register in the Tax on Economic Activities (IAE), as well as in the Registry of Intra-Community Operations (ROI).

The conversion between cryptocurrencies must be taxed

When a cryptocurrency exchange is made, such as the conversion of bitcoins into ethers, the investor will have to pay taxes for the profit or loss generated. To know what the tax should be, the higher of the following concepts must be subtracted from the acquisition value of the good delivered: market value of the good delivered or the good received.

This type of exchange, whether in another virtual currency or in FIAT money, must be declared in personal income tax including them in the capital gains and losses section of the savings tax base, which is taxed as follows:

• • 19% if the earnings are less than €6,000
  • 21% if the earnings range from €6,000 to €50,000
  • 23% if the winnings are greater than €50,000

The difference between the purchase price and the sale price must be considered.

Impuesto sobre el Patrimonio de las Criptomonedas

En el Impuesto sobre el Patrimonio de las Criptomonedas en la declaración de la renta, se debe mirar el valor de mercado a 31 de diciembre y sumar dicho valor al resto de bienes que tengamos. Si se superan los mínimos exentos para la declaración en cada comunidad autónoma (por ejemplo, en Cataluña, el mínimo exento para 2021 es de 500.000 euros), se deberá presentar el Impuesto sobre el Patrimonio.

Model 720

With regard to Model 720, it is important to note that the obligation to declare cryptocurrencies will arise whenever their value is greater than 50,000 euros.

From in January 2022, the CJEU has annulled the imposition of sanctions in Model 720. Now, the Treasury will have to rethink its mechanism.
Model 720 requires citizens to report their assets abroad. The regulations established high fines, which could reach 150%, for submitting the report after the deadline to the Tax Agency.

Corporate Tax

In the Corporate Tax, the cryptocurrency is taxed at 25%, according to the difference of how much it cost and the profit of the sale. In addition, a 10% depreciation amortization can be added.

Inheritance tax and donations

As with the Wealth Tax, the transfer of cryptocurrencies through a donation or inheritance will have to be taxed in accordance with the laws in force on this matter.

As you have seen, the taxation of cryptocurrencies is a complicated process since the applicable regulations are not yet 100% developed.

At inlea we always recommend having the help of a tax advisor to study the case and determine the best tax strategy to follow, considering the circumstances. At inlea we have a team of tax experts who will help you find the most suitable jurisdiction. By doing so, sanctions or errors that may affect the taxpayer’s assets will be avoided.