Cryptocurrency accounting

The use of cryptocurrencies like Bitcoin is a fact. More and more businesses and people are opting for cryptocurrencies as a means of payment and, on the other hand, are being used as a form of investment by companies and individuals. Given this situation, several questions arise: How is cryptocurrency accounting done? What does the ICAC say about Bitcoin?

What uses can be given to cryptocurrencies?

To be clear about what cryptocurrencies are, it is essential to know the uses that can be given to them:

• Cryptocurrency can be the company’s main activity, i.e. the business consists of buying and selling cryptocurrencies.
• Another use may be investment, as would be the case with the purchase of shares on the stock exchange.
• Finally, cryptocurrencies can be used to pay for products and services in the business environment of a company.

What do official agencies say about cryptocurrency accounting?

The European Parliament considers cryptocurrencies as a means of payment to the bearer and not as legal tender currencies and understands that they are subject to tax and accounting regulations, in addition to the law on the prevention of money laundering.

The Institute of Accounting and Auditing (ICAC) considers cryptocurrencies as stocks, subgroup 30 if the company is engaged in the sale and purchase of cryptocurrencies. When the use is that of investment, the treatment will be intangible fixed assets, subgroup 20.

The Tax Agency established through a binding consultation (V1029-15 of March 30, 2015) that cryptocurrencies are considered “other commercial effects” and are subject to and exempt from VAT.

Concerning Personal Income Tax (IRPF), we must start from the fact that cryptocurrencies have a value that varies, so it can be understood that there are losses and gains in our assets.

The bitcoin or cryptocurrency in question will be accounted for when purchased at the acquisition price. Over time, deterioration will be taken into account, as in the case of any other existence.

What about a company that sells products and services and pays them with cryptocurrencies?

In the case of commercial use of cryptocurrencies, two events occur:

• When a company wants to pay for products and services to another through cryptocurrencies, it will have to buy them in the market.
• Once you have them, you will pay for those products or services with those cryptocurrencies.

When cryptocurrencies are purchased with legal tender money, a commercial effect is triggered on current assets or non-current assets.

The moment we pay for the product or service with the cryptocurrencies, it can be understood that we are dealing with an exchange of assets and, therefore, that there is a commercial exchange, which means that the asset we deliver will have to be cancelled and the asset we receive. The transaction will therefore result in a loss or a gain.