The Spanish platform TaxCripto issued a list of ten questions with their respective answers of the most common doubts that crypto investors usually have about the liquidation of cryptocurrencies in Spain.
TaxCripto is an application adapted to the national tax legislation of Spain that offers help to people who invest in digital currencies for the settlement of taxes on these cryptocurrencies.. The tools that it offers its users are: preparation and downloading of tax reports on Personal Income Tax and Wealth Tax and Model 720 (721), among others.
And the initiative to make this list came after the Ministry of Finance revealed that in Spain there are more than 8 million investors in the crypto industry. Therefore, since the percentage is so high, their knowledge of the regulations of the Tax Agency (AEAT) regarding crypto assets must be ensured.
Below are the ten questions with their answers that are most in demand:
Do I have to pay taxes on my cryptocurrencies?
When liquidating cryptocurrencies, three essential taxes must be taken into account. The first is the Personal Income Tax (IRPF), This is divided into categories depending on the type of income you have: Capital gains or losses from transfers, Gains or losses not from transfers, Income from movable capital and Income from economic activities.
The second tax is the Wealth Tax (IP), this is aimed at any individual who has cryptocurrencies in their possession and also a wealth whose amount is greater than the minimum established by their Autonomous Community.
And the third tax is the Inheritance and Donation Tax (ISD), this will have to be paid by those who have received crypto assets through donations or, failing that, through assets by inheritance or legacy.
How are operations carried out with cryptocurrencies taxed in the IRPF?
“There is an obligation to declare the profits obtained from the transmission of cryptocurrencies, the profits or losses obtained from operations other than the sale of assets, the returns on capital that may be generated by the platforms that have received the cryptocurrencies, as well as the profits obtained by economic activity, such as, for example, mining operations and sales negotiated for third parties.” TaxCrypto explained.
The taxation will depend on the type of operational activity carried out, that is, the sale of cryptocurrencies (or the exchange of them) or airdrops will be taxed through capital gains. If you have income from providing liquidity to a liquidity pool or from staking or farming, you will be taxed on the return on movable capital for the transfer of capital.
Do cryptocurrencies carry VAT?
The seller and buyer of cryptocurrencies are excluded from paying VAT when carrying out a purchase-sale operation of digital assets, the same happens with those who are immersed in mining them. Although, if administration or professional services are provided, VAT must be paid and must even be declared by billing.
Is there a minimum amount to declare cryptocurrencies?
If the capital gain does not exceed 1,000 euros and the losses are less than 500 euros, there is no obligation to declare the cryptocurrencies.. Even having digital assets does not imply having to declare them in personal income tax.
However, if the income is different from these amounts, it must be declared and it has to be done with benefits included and/or capital losses or income from capital generated, if this is the case, no type of amount of income should be left out. money no matter how insignificant they may seem and the amount will have to be declared 100%.
What sanctions can I face?
Each person will receive a top-up in interest that will depend on whether the person declares voluntarily or not and the time in which they do so. That is, if the declaration is made voluntarily and the time in which it is done is short, medium or long, you can receive a surcharge from 1% to 15%.
If, on the other hand, it is not done voluntarily, apart from paying the interest, it will be sanctioned with amounts from 50% to 150% of the fee that is not regularized.
What happens if I have assets or rights located abroad?
An informative declaration of the goods and rights that are abroad will have to be issued, which will be addressed to the “Administration of the state of the accounts that are available in financial entities located outside the national territory.” exposed TaxCrypto.
This statement responds to model 720, however, the current model does not have a section dedicated to cryptocurrencies, so it is expected that a new model (721) exclusive to digital currencies will be created.
What is a swap? Should this activity be declared before the Tax Agency (AEAT)?
It is the exchange of one cryptocurrency for another, for example, from Bitcoin (BTC) to Ethereum (ETH) or vice versa. This exchange operation must be declared and is usually used to receive benefits, although sometimes they can also be lost, which must also be declared in the AEAT.
Is trading the same as staking from the point of view of the AEAT?
In both the tax rates are the same but the Tax Agency (AEAT) takes it as different operations since trading is immersed in the categories of gains or losses of assets from asset transfers. For its part, staking is storing coins with the aim of receiving benefits/rewards from the blockchain network. And it is within the category of income from movable capital.
How does the AEAT regulate the mining of cryptocurrencies and what are the tax obligations of this activity?
Mining for the AEAT responds as an economic activity equal to the rest, therefore, as mentioned above, the Personal Income Tax (IRPF) must be paid and VAT is excluded.
“They must be declared in the category of income from economic activities, being the simplest way of taxation since it does not imply any difference with the taxation of any other economic activity. At this point it is important to know that the expenses directly affected by the activity will be deductible as long as they meet the requirements for it.” added TaxCrypto.
What is the FIFO method that governs in Spain for the management of cryptos?
FIFO stands for First In, First Out and is a method used by the Spanish Tax Agency to calculate the costs of cryptocurrencies exempt from the exchange or wallet in which they are stored.
What this method does is position the oldest unit that is in the wallet or in the exchange to be the first to be used when selling or transferring the asset. In order to do it correctly, it is recommended to make a spreadsheet in which all the operations with cryptocurrencies are shown in order to visually show which are the oldest and which are the newest and thus not to skip. no operation at the time of wanting to use this method or perform a transaction.
Disclaimer: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information set forth herein should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
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Investments in crypto assets are not regulated. They may not be suitable for retail investors and the full amount invested may be lost. The services or products offered are not aimed at or accessible to investors in Spain.