How To Declare Cryptocurrencies In 2022

Do you know that if you invested in cryptocurrencies in 2021, you must include them in the Income Statement? This article tells you in what cases you must declare cryptocurrencies, how to do it, what happens if you carry out a cryptocurrency mining activity, and if losses can be offset with profits.

Questions and answers on how to declare cryptocurrencies

Digital currencies have become a form of investment for many people, but they raise various questions regarding their taxation. Below, we propose several frequently asked questions and their answers regarding how to declare cryptocurrencies in 2022.

In what cases do cryptocurrencies have to be declared in Personal Income Tax?

Article 33.1 of the IRPF Law establishes that:

Capital gains and losses are changes in the value of the taxpayer’s assets that become apparent on the occasion of any alteration in the composition of the former, unless they are classified as income by this Law.

If you have bought cryptocurrencies, but it is only an investment, it is not declared. What is included in the income statement is the profit obtained with the transmission. However, if what you have invested in cryptocurrencies is a large amount, you should consider that you may have to file the Wealth Tax, as we will see below.

The operations that you will have to declare in the IRPF are the following:

• Swaps, that is an exchange of one cryptocurrency for another.
• Buy and sell.
• Mining.
• Staking, which involves keeping crypto assets locked in a wallet to obtain a return also in cryptocurrencies, for example. It is an operation very similar to Farming or Minting.
• Free distribution of cryptocurrencies in exchange for personal data. It is necessary to reflect in the income statement the profit received.
• Loan of cryptocurrencies to a person in exchange for interest.

Do I have to pay Wealth Tax?

Suppose the total of your assets (including the cryptocurrencies you own) as of December 31 is greater than the limit established in the autonomous community where you declare. In that case, you must include them in the Wealth Tax.

It is essential to see the limit established by each autonomous community for the Wealth Tax declaration. For example, in Madrid, the limit has been set at two million euros.

Should I include cryptocurrencies in Form 720?

On March 31, the deadline for submitting Form 720 (informative declaration of goods and rights abroad) ended, and the Treasury indicated that virtual currencies abroad should not be included in the said form concerning the year corresponding to 2021. For subsequent years, it will be necessary to see the indications of the Treasury.

What do I do if my cryptocurrencies have increased in value but I haven’t sold them?

If you have bought cryptocurrencies and they have increased in value, but you have not sold them or made any trades with them, you will not have to declare cryptocurrencies in 2022.

What percentage applies to cryptocurrency earnings?

If you have sold cryptocurrencies in 2021 and have obtained a capital gain, you must include it in the savings base, and the rate to be applied will be between 19% and 25%.

Can I offset losses with gains?

The answer is that it is possible to offset losses with profits, but to do it correctly, it is essential to prove all the information on the dates of acquisition and sale, as well as the values at those times.

If you only had losses in 2021, it is recommended that you reflect them in your Personal Income Tax Return to compensate them in later years.

What happens if I am self-employed and mine cryptocurrencies?

If you dedicate yourself to mining cryptocurrencies, it is considered that you carry out an economic activity, and you will have obligations with Social Security such as registering as self-employed.

Cryptocurrency mining operations are not subject to VAT, so the miner cannot deduct any expenses derived from the activity, such as renting premises or purchasing software.

Steps to declare cryptocurrencies in the Income Statement in 2022

If you want to declare cryptocurrencies in 2022 you can follow these steps:

• Download the history of the exchange. The history will give you information about all the movements you have made and see the losses and profits you have obtained. Generally, it is usually downloaded by clicking on: profile-tools-reports.
• Calculate the unit value, the acquisition value and the transmission value. In an Excel table, you can include several columns to clearly see all the data: transaction, date, purchase or sale, cryptocurrency, amount, commissions, the value paid or received, unit value, transmission value, acquisition value and profit and loss.
• Include the data in the Income Statement. Finally, you must include the data in the income statement. From this year, you will find in the 2021 income tax return a box to include cryptocurrencies in the section “Other gains and losses derived from the transfer of assets”, under the title “Balances of virtual currencies”.

Cryptocurrency and Treasury in Spain

If you have cryptocurrencies, you must declare them before the Spanish Treasury. If you do not do so, you run a tax risk that it will be considered a tax infraction, and they will impose a penalty on you. Suppose you voluntarily declare the cryptocurrencies, after the deadline, without being required by the Treasury. In that case, they may charge a surcharge that will be between 5% and 20% depending on the time that has elapsed since you had to make the statement.

As you have seen, it is essential that, before declaring cryptocurrencies in income or other taxes, you inform yourself with a tax advisor about the tax obligations to be fulfilled so that they can study your case, and indicate the declarations to be presented and carry out all procedures promptly.