If we are going to dedicate ourselves to trading and investing in cryptocurrencies, we have to know everything related to their taxes on cryptocurrencies in Spain. This way the Administration won't give us a scare.
With the incursion of cryptocurrencies as an investment good and a substitute for traditional currencies, the Government of Spain has begun to regularize them to prevent abuse. If you have investments or savings in cryptocurrencies, be it Bitcoin, Chia, Ethereum, Dogecoin or any other, you are interested in knowing your obligations with the Spanish Treasury and if you have to pay personal income tax for them. The basis is that although they are digital, they represent our heritage and that is why cryptocurrencies must be declared to the Treasury.
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How to declare cryptocurrencies to the Treasury in Spain
Depending on the use we give to cryptocurrencies as part of our assets, we will have to declare them. We will have to declare them in different ways depending on whether we are traders, whether we obtain returns from interest paid by online platforms, if we obtain returns from mining, if we obtain them through referrals. Below are the types of declarations you have to make depending on how you use them.
Declare cryptocurrencies as traders
This case is for those who with their money, buy cryptocurrencies to sell them at higher prices and make a profit through the exchange. It is not declared when it is bought, but when it is sold and the difference between what was spent and what was recovered is applied as it is a capital gain. Said profit will be integrated into the IRPA savings base and a percentage between 19% and 16% will be applied.
If we lose money with them, it is considered a capital loss that can be compensated with profits. If there are no earnings throughout the year, it will be offset in the returns for the next four years. In any case, cryptocurrencies must be included in the income tax return.
Declare cryptocurrencies for interest income paid by online platforms
This is only applicable when an exchange platform gives us profits through the interests of purchased cryptocurrencies. These interests must be declared in the personal income tax return as a return on movable capital within the tax base of savings. A percentage between 19% and 16% will be applied
Declare income from cryptocurrency mining in Spain
If instead of investors we are miners, we must know that cryptocurrency mining is considered an economic activity. The income we obtain from it must be included in the general tax base. We must fill in the economic activity model that best suits us, and that we put at the bottom of this page.
Any of the aforementioned options is valid for us, and each one will have its own benefits and requirements, so we will have to look at which one best fits the volume of economic activity that we will have. Several of them will allow us to deduct VAT from products and services that we need to carry out our cryptocurrency mining activity in Spain.
Declaration of obtaining returns from cryptocurrency referrals
Many exchanges, wallets and traders cannot benefit if we get more people to trade cryptocurrencies on their platforms. Without having anything fully signed, there are resolutions that regulate the taxation of cryptocurrency referrals in Spain according to the General Directorate of Taxes.
In the first place, there is a difference if there is an employment relationship between client and platform, or if it is a commercial relationship. If it is declared that there is an employment relationship, the performance obtained is classified as work performance. If the relationship is commercial, it will be included in the general tax base and related expenses may be deducted.
Regarding VAT, the country of residence of the recipient of the service must be taxed if they are an entrepreneur or professional based in the EU. If the platform is in another EU country, the recipient must self-charge VAT. Yes In the event that you are outside the European Union, the rule of effective use of the services that are considered used or exploited in Spain will be applied.
If any of the aforementioned assumptions is met, the economic activity model that we need according to our volume of activity must be completed. But if it is not met, it will be considered a capital gain within the general base.
Obtaining returns for acting as a broker or investment fund
This case will be considered if a natural person receives money from companies or third parties to invest, and earn a commission for their investments. There is no specific regulation yet, but there are similar assumptions. It can be classified as an economic activity and therefore, the income must be taxed in personal income tax as performance of the activity.
Regarding VAT, it may be considered that it may be exempt because it is part of financial services mediation. But for this, the mediator must put investors in contact with the entity to sign contracts, have the ability to negotiate and advise on behalf of the investor or that the acquisition of clients by the mediator must be active. Any of these three assumptions will allow the application of the exemption. Along with the usual declaration models, you will have to present VAT Models 303 and 390.
Tax cryptocurrencies in the Wealth Tax
If we have cryptocurrencies in our possession, they must be declared when determining the value of our heritage, If they exceed the exempt minimums for the declaration in our Autonomous Community, we must present the Wealth Tax.
Other concepts to take into account
Given that cryptocurrencies are widely used to produce tax fraud, in October 2020 the Draft Law on Measures to Prevent and Combat Tax Fraud was passed, which will take effect this year. Therefore, exchange platforms will be obliged to report the balances that holders maintain and their operations.
Natural persons must also declare the cryptocurrencies in the declaration of assets abroad through form 720 if their valuation exceeds 50. If we do not present it, we will be sanctioned with fines of 000 euros and 10% of personal income tax in the case of not having declared it.
Models to present to the Treasury related to our activity with cryptocurrencies
Once we know what type of activity, we have to know what models to present to declare our activity with cryptocurrencies to the Treasury.
- Registration in the IAE with Form 036 or 037: It is used to register us in Economic Activities and to be able to declare our income and benefits and to be able to deduct VAT if we purchase goods and services that are justified as part of our work.
- Registration in the RETA: Model to be able to pay taxes in our Social Security regime, being mandatory if we exceed benefits higher than the SMI.
- Presentation of Form 130 for personal income tax payments on account, and annual summary using form 190. It will only be necessary if we are registered in the IAE with form 036 or 037, previously mentioned.
- Registration in the Register of Intra-Community Operators (ROI)
- Presentation of Model 347: Model for the informative declaration of operations with third parties.
