Questions and answers about the new cryptocurrency tax regulations in Spain

As expected, the Treasury has begun to put the magnifying glass on virtual currencies with the aim of taxing them and creating new taxes to obtain profits that currently escape tax control. This has caused the ordinary citizen to still have doubts about the management of crypto assets in relation to the Treasury, as they continue to have no specific regulations. The phenomenon of cryptocurrencies and their impact on the financial industry has pushed Europe to take the initiative with the MiCA Proposal (Crypto Asset Market). Despite this, this regulation is still being drafted and implementation not expected to start before 2024.

The main questions most investors are concerned about range from when cryptocurrencies must be declared, to taxes to be paid and, if not, what kind of penalties someone who does not comply with the requirements set by the Treasury should she incur.

But then, What taxes do I have to pay if I have cryptocurrencies and I am a tax resident in Spain?. From now on, these digital assets will be considered part of the holder’s assets. This means that citizens must declare their wealth tax possession (IP) as long as a certain threshold is exceeded. According to the regulations governing this tax, it would be when the value of their property (or rights) exceeds 2,000,000 eurosalways as a general rule. Cryptocurrencies would be considered part of the taxpayer’s estate in intellectual property and a profit obtained through their transmission or their tax returns.

Do not forget this we will also have to declare its transmissioneither through personal income tax (IRPF) or inheritance and gift tax, respectively.

Which brings us to the next question, When do we start declaring? On the website of the Tax Agency, we can consult the taxpayer’s calendar for the year 2022. The new IRPF and IP campaign starts on April 6. They will be able to submit their declarations from this date and until June 30, taxpayers who will have to enter their tax quota. In case of having to register by direct debit, the deadline will be June 27th.

Receiving cryptocurrencies like the inheritance or gift will also be subject to tax. Therefore, according to the state regulatory framework, they will be taxed with rate ranging from 7.65% to 34%. The amount that the heirs or donees will have to pay will depend on the autonomous community where they reside and the degree of kinship.

What happens if I buy cryptocurrencies but decide not to sell them? Are they also declared? In this case, it depends on the type of tax. Only benefits declared for obtaining, transmitting or selling cryptocurrencies are declared in the IRPF.

This includes interest remaining on deposits and bank accounts, as well as positive balances from gains and losses on the disposal of assets and equity items, such as shares, real estate or Investment Funds.

We will also have to declare their possession if we have acquired cryptocurrencies that are abroad for a value greater than 50,000 euros.. Once we have declared it, if during successive years the variation in its value exceeds 20,000 euros, it must also be declared. Likewise, in accordance with article 24 of Law 19/1991, if you have assets of more than 2,000,000 euros the taxpayer must indicate the price of the crypto-currencies he owns.

Will we have to pay VAT every time we buy cryptocurrencies? Since they are not goods or services, cryptocurrencies will be exempt from VAT. The law that regulates VAT in Spain exempts financial transactions linked to foreign currency from having to make this payment.

It should be emphasized that there will be no difference in the taxation of the sale of crypto assets and shares.

What percentage of the profits obtained should we pay? It will fluctuate between 19% and 26%, depending on the profit obtained. This is because income tax in Spain is progressive, so when an increase in wealth is taxed, it is paid according to the profit obtained. As the capital gain increases, the tax rate also increases. The taxation will be done according to the sections. In the first tranche, 19% will be applied, reaching up to 6,000 euros; in the second tranche, the percentage reaches 21%, ranging between 6,000 and 50,000 euros; between 50,000 and 200,000 it will rise to 23%; and, finally, if the winnings exceed 200,000 euros, the figure will skyrocket to 26%.

Despite this general rule, it must be considered that the last installment to be paid will be influenced by other variables. Variables such as real estate transactions, other types of income and the particular situation of the assets of each taxpayer will be taken into account.

If I have income from cryptocurrencies in the first quarter of 2022 but move to another country for the rest of the year, can the Treasury penalize me?

Only if tax obligations with Spain are not fulfilled. the The Spanish Treasury cannot penalize anyone for simply moving to another country. However, it is possible that a person changes address and does not comply with the legal obligations of declaration of income or that it is for common tax fraud, that is to say in the event of change of residence in the sole purpose of evading taxes. .

In this way, Income obtained in Spain must be declared via IRPF form 100 if you are still tax resident in the country. Anyone who has resided in Spain for more than 183 days, that is, more than six months, is considered a tax resident. Non-residents should declare via another model, 210.

So, The Treasury may sanction the taxpayer if it is shown that he has not declared certain declarations due to a malicious act or negligence, or when the change of residence is proved for reasons of tax evasion, i.e. to reduce or eliminate the taxes which the taxpayer should have paid if he had declared the income as a resident in Spain.

What happens if you move to another country for more than 6 months but have a home or business in Spain? Will you have problems with the Treasury if you withdraw from the Spanish Treasury?

Usually not. Owning a home or a business does not in itself make you a tax resident in Spain. To unsubscribe, you must reside for a period of more than 6 months in a foreign country., request a certificate of tax residence and subsequently notify this change to the Public Treasury. What happens is that after unsubscribing, if you continue to have a home or business in Spain, this could be an indication that the person still has personal or professional interests in the country.

To understand this, it is necessary to specify that the condition of residing in the foreign country for at least 183 days a year it is something that is mandatory, but which in itself is not enough to prove that you are indeed residing in a country other than Spain.

Notification of cancellation must be made via form 030. The time limit set for this purpose is one month from the date on which the taxpayer changed address.

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