How are collections and payments with cryptocurrencies taxed?

The use of cryptocurrencies is increasingly widespread among companies. In previous articles, we commented that there are three ways to use cryptocurrencies currently: as a means of payment, as an investment and as mining. A few months ago Elon Musk, owner of Tesla, announced that his company would once again accept the payment in cryptocurrencies to buy their vehicles. This news shows how the use of cryptocurrencies in collections and payments will gradually become widespread.

The regulations regarding cryptocurrencies vary significantly from one State to another. For example, their use has been accepted and regulated in the United States or Germany. However, in Spain, although there is no specific regulation regarding cryptocurrencies, a series of obligations have been controlled through the anti-fraud law and other rules for those people and entities that carry out transactions with cryptocurrencies.

Is it possible for a company to accept cryptocurrencies as a payment method?

From a legal point of view, it can be said that companies may accept cryptocurrencies as a payment method. In this sense, it is important to keep in mind that it is not a charge from a legal point of view, but rather it is a commercial exchange as defined in the Civil Code, which establishes the following in its article 1538:

The exchange is a contract by which each of the contracting parties undertakes to give one thing to receive another.

Therefore, when you pay for something with bitcoins or another virtual currency, you are carrying out an exchange of goods through the figure of exchange.

On the contrary, companies are not obliged to accept cryptocurrencies with virtual currencies as a payment method since the obligation only refers to legal tender currencies, which in our country is the euro.

How do I make an invoice to pay with cryptocurrencies?

Once it has been clarified that a company can accept payment for a product or service with cryptocurrencies, it is important to know how to create an invoice. These are the aspects to consider:

• Besides including the value of the product or service in the virtual currency, that value must be added in the legal currency, in our case, the euro.
• VAT and personal income tax withholding must be included, if applicable.

What do you have to do to have cryptocurrencies accepted in your business?

Currently, there are many companies that accept payments in virtual currencies; for example, Expedia, one of the most important travel websites, allows the payment of products and services with bitcoins; Fotocasa has published several properties for sale in which the price can be paid with cryptocurrencies.

Accepting payment for products and services by companies in cryptocurrencies means that transactions are carried out more quickly, with lower expenses than when credit cards or services such as PayPal are used, and new customers are attracted. More digital customers.

The most important question that entrepreneurs have, especially in cases of small businesses, is how to establish payment in cryptocurrencies. In general, these are the steps to follow:

• First of all, we must create a virtual wallet of the cryptocurrency we want to use. Payments made by customers for our products and services will reach that wallet.
• Another issue we must consider is how to make payments. Generally, payment is made by scanning a QR code with a smartphone, adding the amount to pay and clicking send.
• Once you have received payments throughout the day, you have the option of transferring those cryptocurrencies to a hardware wallet that is disconnected from the internet most of the time.
• If your company carries out numerous transactions per day, you can use a payment processor that charges you a small commission, but which will always be lower than that charged by banks for the use of credit cards.

On the other hand, when configuring the payment method through cryptocurrencies, it is also important to inform your clients that this means of payment is accepted in virtual currency, specifying what type of currencies you accept: bitcoin, Ethereum, etc.

Control in cryptocurrency operations

As we said previously, in July of this year, the law on measures to prevent and combat tax fraud (anti-fraud law) was approved, establishing a series of obligations concerning cryptocurrency transactions. Specifically, two obligations are regulated:

• The obligation refers to companies that manage cryptocurrencies, which must provide information on the balances and the identity of the holders of each cryptocurrency balance.
• On the other hand, Exchanges (platforms dedicated to cryptocurrencies on the internet) that are dedicated to the management of cryptocurrencies will have an obligation to provide information on the address and tax identification of the people who carry out operations, as well as the price and date of each operation.

In addition to the above, if the virtual currencies are located abroad, that is, in international wallets, there will be an obligation to present the Modelo 721 (analogous to Model 720 of the informative declaration on assets and rights abroad, but focused exclusively on cryptocurrencies).

Consequently, entrepreneurs can accept payments for their products or services in virtual currencies. Still, they must consider the tax significance of these transactions. Therefore, the advice of tax experts will be essential in the < substantial>taxation of cryptocurrencies , who can analyze the case and establish the tax returns that must be submitted, as well as manage their preparation and submission on time, so that Treasury inspections and sanctions are avoided.