How To Use CoinTracking

In July 2021, the Tax Fraud Prevention Law or anti-fraud law was approved in Spain, which increased the Treasury’s vigilance concerning cryptocurrencies and other crypto assets. According to a study by ING Direct, in Spain, more than four million people have decided to invest in cryptocurrencies; this is why the Treasury has wanted to regulate the declaration of cryptocurrencies.

To be able to pay taxes for cryptocurrencies correctly, it is essential to keep an adequate cryptocurrency accounting, in which all the operations that are carried out are recorded. In this article, we are going to talk about CoinTracking, a fundamental tool for cryptocurrency accounting. We will explain what it consists of, what functions it has and how it is used.

Novelties of the Anti-Fraud Law in Relation to Cryptocurrencies

The new anti-fraud law has established a series of control measures on virtual currencies. Further information obligations are regulated to the Tax Agency about the possession and operation of digital currencies. On the other hand, the need to include cryptocurrencies in the declaration of assets and rights abroad through Form 720 is established.

The information that must be provided will be the following:

• The list of the people involved in the operations, indicating their address and tax identification number.
• Class and number of digital currencies transmitted.
• Price and date of each operation.

On the other hand, in the declaration of assets and rights abroad, information must be provided on virtual currencies located abroad and guarded by persons or entities that provide services to safeguard private cryptographic keys on behalf of third parties and maintain, store and transfer digital currencies. Suppose cryptocurrencies are not reported through Form 720. In that case, a fixed penalty of 5,000 euros may be imposed for each piece of data or data set referring to each virtual currency according to its class, which should have been included in the declaration or that it has been included in an incomplete, inaccurate or false way, with a minimum of 10,000 euros. In addition, a fine of 100 euros will be imposed for each piece of information or data set with respect to each virtual currency with a minimum of 1,500 euros when the declaration is presented after the deadline without the Treasury having required it, or when the declaration is presented by different means to the electronic ones when it is obligatory to use them.

How are cryptocurrencies accounted for?

As we saw in the article on cryptocurrency accounting, they can be considered an asset since they coincide with the definition of assets such as goods and rights and other resources economically controlled by the company, resulting from past events of which the company is expected to obtain a profit or economic performance in the future.

From an accounting point of view, we also saw that cryptocurrencies could be classified as financial instruments, cash or other equivalent liquids, intangible fixed assets or inventories, depending on the circumstances in each case.

What is CoinTracking?

CoinTracking is a web application with a version in a mobile application used to control and keep the accounting of cryptocurrencies so that the Treasury is correctly declared and inspections and sanctions are avoided.

CoinTracking connects via an API with almost all digital currency trading exchanges and allows you to manually import data or enter it automatically, depending on the version used (free or premium). It is essential to consider that it is only a reading tool and cannot operate with your cryptocurrencies.

What functions does CoinTracking have?

CoinTracking has several functions that are the following:

• Cryptocurrency analysis. The tool analyses, through interactive graphs, the profits and losses that have occurred in each cryptocurrency, the balances and the gains that have been obtained.
• List of operations. Another of the application’s actions is to give you detailed information on all the operations you have carried out with the cryptocurrencies grouped by each provider. In addition, you can enter comments about each operation.
• Tax return. The application facilitates the accounting of cryptocurrencies so that the tax returns can be presented with all the necessary information and in compliance with the law.
• Import operations. Through an API, all operations carried out with cryptocurrencies can be imported.
• Updated data of cryptocurrencies. The tool also allows you to have charts with the history of more than 5,000 digital currencies and an update of the current value of each one, as well as a classification of the currencies by the number and volume of operations.

How to use CoinTracking?

To maximise the performance of CoinTracking, it is very important that you perform the steps explained below as precisely as possible:

• Registration: you have to enter a username, an email address and a password.
• Data import: in this section, it should be noted that from CoinTracking, we can import data from the most popular exchanges or any wallet.

For both, you must go to the “Enter Coins” section, where different tabs will open. To import your movements, you must use:

• • Import from an exchange, where you can import your movements from your exchange in two ways:
    • By CSV*: Excel document that you will find on the exchange platform. It is important that when exporting the CSV, you are in the “CSV Complete Import” section.
    • By API*: you will need to extract the API key and the “secret” from your exchange and copy them directly where they indicate you in CoinTracking.

*CoinTracking explains how to extract the CSV from your exchange.

From ETL ILIA, we recommend importing all the information from the CSV due to its greater speed and ease in extracting said document.

• • Import from a wallet:
    • Wallet import (by CSV): in this case, you will have only specific wallets with which you can import transactions through the CSV document.
    • Automatic Blockchain imports: in this tab, you will have a much more variety of wallets, where each of them will ask you for the wallet address that, once copied in the section that they indicate, will link you to CoinTracking.
• More relevant tabs: it is possible that if you have made many operations both from an exchange and from a wallet, you have to adjust some movements to make it fit perfectly manually.
  • Summary and manual import: in this tab, you will see all the movements ordered by date.
  • Lost transactions: In this tab, you will have the operations that CoinTracking considers verified marked in colour and those you should manipulate so that the movements without colour match.
• Documents necessary for the respective self-assessments: Once you have corrected all the errors and have everything square, you must go to the “Tax Report” section, create a new tax report and click on “Load Report”.

When you enter “Load Report”, you will get the following documents:

• • Capital Gains Report.
  • Gifts and Donations Report.
  • Commission Report.
  • Loss and Theft Report.
  • Position Closing Report.

Important: CoinTracking is free up to a certain number of trades made. From there, the user has different subscription plans available.

At ETL ILIA, we are specialists in advising concerning the taxation of cryptocurrencies and accounting for virtual currencies. In addition, we offer you advice on using the CoinTracking tool to correct the different errors that you may encounter and get the most out of it.