Cryptocurrencies: how to declare them with the new regulation?

The new ‘Fraud Act‘ of the government was published in the BOE on July 10. In addition to a number of measures to combat tax crime, the text includes a list of obligations for cryptocurrency holders who must report their balances and the digital currency holders who hold them in their portfolio.

Thus, the new regulation aims to increase tax control over cryptocurrencies, which has been the Treasury’s target for some time. In this sense, all persons and entities residing in Spain, as well as foreign companies operating in the country, must be committed provide the tax authority with information about the digital currencies they have in their portfolio.

Additionally, the regulations lay out another major obligation in the cryptocurrency section. That Exchange -the platforms through which the currency exchange is carried out- they must inform about the addresses, the fiscal identification, the price and the date of the operations. Individuals and entities residing in Spain are also required to provide this data.

This information must be given to the tax office, even if the currencies are abroad. Otherwise, the sanctions can suffice 5,000 euros for any data that is not correctly declared.

How are cryptocurrencies taxed?

Cryptocurrency transactions must be included in the Field 389 of the income tax return. The gains or losses made from the sale of these assets are declared, so TaxScouts recommends having a list of operations performed with cryptocurrencies to know what the amount to declare. They must be entered under the section “Other capital gains to be included in the tax base of savings”.

There are also losses when selling cryptocurrencies can be compensated up to 25%. If the sale of cryptocurrencies involves a loss, these are offset against the profits from other transfers, and if the overall result is a loss, up to 25% can be offset against the capital gains gains (if no profits were made, could offset ).

Finally, and in the case of the obligation to declare wealth tax, the value of the cryptocurrencies at the time of the tax declaration must be included and paid according to the applicable tax rate. This tax has Minimum exemption from 500,000 euros (changes by the autonomous community) which means you don’t have to present it unless you have a higher heir.

On the other hand, the Cryptocurrency Mining requires registration as a self-employed person. Cryptocurrency mining means providing the computing power of the computer and helping to perform calculations and verify digital currency transactions. Since it is an economic activity, assimilated to any other work for others, even if paid in cryptocurrencies, it is mandatory to register as a self-employed person and to comply with the obligations applicable to this type of worker.