Crypto assets have radically transformed the global financial landscape, offering a decentralized and secure alternative to traditional trading systems. In Spain, as in many other countries, the rise of cryptocurrencies has generated a debate on how to deal with their taxation. As more people are getting involved in the world of cryptocurrencies, tax authorities are seeking to regulate the taxation of such assets. However, there is still no comprehensive body of rules regulating the taxation of this emerging asset. Rather, it is the accumulation of various provisions of the European Union, Spanish administrative dispositions and binding sentences of the Supreme Court that superficially address the fiscal aspects related to the use of crypto assets.
Here is a brief guide to help you understand the possible tax implications that you may face when carrying out transactions with these types of assets. Some key points to keep in mind are:
(i) Value Added Tax ("VAT")
The mining of cryptocurrencies and the use of cryptocurrencies as a means of payment are exempt from VAT. This means that no VAT should be invoiced or declared on such operations. However, it is important to note that profits may be subject to other taxes.
However, the exchange of "Non-Fungivle Tokens" or "NFTs", is subject to the generated VAT rate. Since they do not meet all the criteria to be considered as cryptocurrency.
(ii) Personal Income Tax (hereinafter, "IRPF")
Profits and losses from transactions of Cryptoassets are subject to taxation and must be declared in IRPF in Spain. It is important to properly record and calculate these gains and losses to comply with the corresponding tax obligations.
(iii) Corporate Income Tax
There are no particular considerations regarding the reporting of profits or losses in relation to corporate income tax. However, it is important to take into account that profits and losses obtained by companies on transactions of Crypto Assets could have implications in the calculation of the taxable base and in the determination of the accounting result.
(iv) Wealth Tax
Cryptoassets will have the same treatment for Wealth Tax purposes as a foreign currency asset, so they must be declared as their market value on the actual date.
(v) Business Tax
In case someone carries out commercial or professional activities involving cryptocurrencies on a regular basis, then they must be register and comply with the corresponding tax obligations related to this activity.
(vi) Declaration of Assets Abroad
Tax residents in Spain who hold Cryptoassets abroad must report them, in case they exceed certain thresholds. Having special relevance the residence of the company providing the storage services.
For additional information on the taxation of cryptocurrencies, we recommend seeking the help of experts. At Gentile Law, we have a team of professionals ready to provide you with advice on complying with our tax obligations.