Crypto Taxes and Personal Income Tax 2020

Surely names like Bitcoin or Ethereum are not unknown to you… What you may not be so clear about is how the taxation of cryptocurrencies is in our country. And it is not surprising, because until very recently there was no specific regulation. But now we have Decree-Law 7/2021, of April 27, which transposes European regulations on the prevention of money laundering and tax measures, among other things. Want to know more about it?

What is the taxation of cryptocurrencies in Spain?

Already in Personal Income Tax 2020 (IRPF), the benefits obtained from the transmission of electronic currencies that have been acquired as an investment must be included. And, as regards Personal Income Tax, they have the same consideration as any other capital gain.

For taxation of cryptocurrencies acquired as an investment, it does not matter if the transactions have been made in foreign markets or if the virtual wallet is located in Spain. When declaring cryptocurrencies, you must always review the earnings; It is not mandatory to record losses, but it can be interesting so that you can offset losses and gains.

In addition, these assets are subject to Wealth Tax and must be declared together with the rest of the assets. The same as you would declare capital in traditional currencies.

Form 720 Spain and crypto taxes

All those who have assets and rights abroad, including crypto assets, must declare them through Form 720 if the total amount exceeds €50,000. If this is your case, you should do it every year before March 31. Remember that today you can do the presentation of this informative form electronically. Failure to do so when you are obliged to do so can lead to penalties of up to €5,000, as well as submitting it with inaccurate or false information.

New custody services obligations

The new regulation imposes on exchanges and custody services the obligation to properly identify natural and legal persons who are holders of cryptocurrencies. Information regarding beneficial ownership must be kept and updated.

What is sought with this is to prevent money laundering, preventing virtual wallets from being used by people who have not declared their earnings and intend to use cryptocurrencies to introduce that money into the legal circuit.

Towards greater control

This year, not only have there been changes regarding the taxation of electronic currencies. The Annual Tax and Customs Control Plan for 2021 also establish measures aimed at obtaining more information on operations carried out with cryptocurrencies, systematizing and analyzing that information to control whether it is being taxed correctly, and enhancing international cooperation to continue advancing in the knowledge of the uses of virtual assets.

As different countries deepen the regulation of cryptocurrencies, the individual role of having a cryptocurrency tax advisory becomes more important. And is that the taxation of cryptocurrencies is a complex issue, which requires highly specialized knowledge to avoid penalties.