It is not at all surprising that governments around the world have turned to see the digital world as a place without regulations or taxes. That is why more and more countries have decided to develop legislation focused on the tax issue on digital platforms.
Here we will talk about taxes on cryptocurrencies in Europe, in this case, in Spain, one of the countries that already have tax regulations in this regard. Thus, you will avoid falling into tax incidents which can lead to severe fines from the tax authorities of Spain or your country.
➡How are cryptocurrencies taxed? ✨
The first thing you should know is that cryptocurrencies such as Bitcoin or Ethereum, among others, do pay taxes . These are processed under the income declaration regime, although there are special cases for miners and exceptions. Here we will talk about each of these.
Income Statement (IRPF)
This regime is aimed at those people who have invested, bought or sold cryptocurrencies regardless of the amount of them. Here the obtained gains are declared while the losses are offset with other capital gains in accordance with the legal and tax framework.
To declare them, the first thing you should do is calculate the losses or gains generated by your cryptocurrencies. Then, in the capital gains or losses section, you will have to add them, this within your income statement. Once added, the calculation of the tax to be paid will be made, which goes according to the following list:
- Profits between 0 to 6 thousand euros = 19% taxes.
- Earnings between 6 thousand and one euros and 50 thousand euros = 21% tax.
- Earnings over 50 thousand euros = 23% tax.
In case of losses if the same concept as Forex applies, you will not have to pay taxes if you closed the year with a loss.
Wealth tax is a type of tax that is set on people's wealth or wealth. In the case of cryptocurrencies, this only applies if you keep them stored.
When you keep your virtual coins inside your Wallet it is interpreted as that you are accumulating them, as well as if you kept gold or money in the bank. This must be declared as a wealth tax, of course, as long as you exceed the fixed limit. For the federation it is 700 thousand euros, although this depends on each autonomous community.
We recommend that you check what is the limit of assets in your autonomous community. In case of overcoming it, you will have to make your declaration so that the corresponding calculation is made and the wealth tax is paid.
They do not declare taxes
For many, this is the point that we all want to hear or read in an email from the tax administration office. Believe it or not, Yes, it is possible to be exempt from paying taxes for your virtual currencies as long as you meet a condition.
And it is that as long as you do not exceed the limit established by law (case tax on wealth) you will not have to pay taxes. In the same way, it does not matter that you accumulate them in your Wallet, as long as it does not reach the limit there will be no problems, although there are exceptions to take into account.
For example, if you exchange cryptocurrencies for money, this can be considered as a transaction and therefore it is necessary to pay taxes. Another transaction in which you will be charged taxes is if you exchange digital currencies, for example, Bitcoin to Ethereum, and this generates profit. In that case it will be necessary to declare the profit and pay your tax rate.
Cryptocurrency mining is considered an economic activity which is taxed . For purposes of the law, a miner is receiving financial compensation (cryptocurrency) for his services, in this case, data mining for which he is receiving a salary.
In this case, the declaration you must make is the one corresponding to the Economic Activities Tax, as well as the "Economic Activities" section in your income statement. If you exceed the interprofessional salary you must register as a self-employed worker because the tax regime changes.
You should know that the profits generated from this economic activity are only declared in fiat currency, that is, in real money. Similarly, You must subtract your invoiced operating expenses from the profits generated . In addition, you must add them to the tax base corresponding to income tax for the year.
➡Other taxes on cryptocurrencies✨
Although cryptocurrencies were subject to an additional tax, the value added tax or VAT, this since 2015 has been eliminated from them. This is because a change in the legislation modified the concept of cryptocurrencies for the purpose of the law.
That's right, since that year cryptocurrencies are accepted as a payment method, so they are no longer a product or an asset. This meant that the VAT could be eliminated from them, thus reducing the tax burden that the operation of these has.
There is a model known as Model 720 which declares your assets and rights located abroad. Although many do it as an information process, in reality it has nothing to do with taxes. This is because both Wallets and cryptocurrencies do not have a physical state per se.
➡The importance of paying taxes✨
Regardless of the perception that many have about taxes, since many times they are not as exploited as they should be, there is a great reason to pay taxes. And it is that the fines are usually very high, in addition to the fact that non-payment can legally affect.
If you do not want to have problems with the law, Al capone himself fell for tax evasion, it is better that you comply with the required procedures. Make your declaration in a timely manner and pay your corresponding taxes in order to avoid falling into non-compliance or tax evasion.
Financial analyst and economist with a master's degree in finance.