Personal Income Tax and Cryptocurrencies

If you invested in Bitcoins last year, for example, you might wonder how cryptocurrencies are taxed on your income tax return and how they are included. We solve your doubts.

Cryptocurrencies or virtual currencies were born as an alternative to traditional currencies such as euros, dollars and pounds. However, over time they have also become a way of investing.

Therefore, since it can be used as an investment vehicle, the purchase and sale of cryptocurrencies can generate taxable equity variations and that you will have to include in the income statement.

How are cryptocurrencies taxed in the Personal Income Tax?

If you bought cryptocurrencies and sell them last year or exchange them for others, obtaining a different price than the one you paid when you bought them, you will have to include the transaction in the income statement as a capital gain or loss, and it will be added to the rest of gains or losses. That is, they work in a similar way to when an investment is made in the stock market.

If you do not declare the profit or loss obtained from the sale of the cryptocurrencies and are required by the Tax Agency to do so, they could demand the income tax corresponding to that undeclared profit, plus interest on late payment and, in addition, impose a penalty.

To know what to declare in the income, you will have to calculate the difference between the value with which you bought the cryptocurrencies and the value with which you sold them, subtracting the expenses (commissions, for example).

If you lose money with cryptocurrencies, you can compensate the amount you have lost from the rest of the capital gains you have obtained.

An example of cryptocurrencies in the Personal Income Tax

To make it more transparent, we give you a straightforward example. Suppose you buy cryptocurrencies for an amount of 2,000 euros and sell them for 3,000. In that case, you will have obtained a capital gain of 1,000 euros that you will have to add to the rest of the capital gains that you have received during the year (for example, gains in the sale of securities) and apply the rate corresponding to savings income.

Cryptocurrencies and Wealth Tax

In the case of Wealth Tax, the value of the Bitcoins or cryptocurrencies that we have must be included in said statement, as well as the rest of our investments and assets.