How to declare the money earned in cryptocurrencies in 2021

Don’t you know how to declare cryptocurrencies? Are you interested in knowing the taxes you have to pay? What are the latest changes in regulations?

New payment and investment methods such as cryptocurrencies have revolutionized the economic and technological market in recent years, which is why there is a lot of misinformation about this topic.

Last October, the Spanish Government approved the Bill for Measures to Prevent and Combat Tax Fraud, which from 2021 we will have to take into account. This new measure has one main goal, to avoid tax fraud, tax avoidance and fraudulent behavior associated with new technologies.

In short, the government wants to control the movements, and for this purpose it has included the following modifications:

The first of them, is that it is obliged to report the wealth held and the movements made with virtual currencies in Spanish territory as well as abroad, as long as it is a taxpayer in Spain.

In other words, the taxpayer is required to report on the balance and holder of the coins in possession, in addition to the operations of acquisition, transmission, collections and payments, carried out with cryptocurrency.

A new incorporation is the extension of the concept of tax amnesty, which covers non-cooperative jurisdictions, including, tax havens, territories where there is opacity and lack of transparency, where there is very low or no taxation, or those that facilitate fraud.

It is foreseen that the holding of cryptocurrencies will be included as a taxable event in the form 720 of declarations of assets and rights abroad. In which the possession of virtual currencies abroad for a value of more than €50,000 must be reported. This form must be filed between 01/JANUARY and 31/MARCH, although the deadline is extended by 4 more days if the documentation cannot be submitted electronically.

In Vicox we have verified that there are many doubts about the D6 model. This is used to declare the possession of investments that are listed on the stock exchange and that we are managing from a broker abroad, even if they are investments in Spanish companies. At present, cryptocurrencies are not included in the D6 form.

Declare money earned in cryptocurrencies

• IRPF: they will be included as capital gains or losses for the calculation of the savings taxable base, in box 389 “Other capital gains to be included in the savings taxable base”. The first 6,000 euros of gain are taxed at 19%. The following 44,000 euros are taxed at 21%. Gains obtained above 50,000 euros are taxed at 23%.

• Wealth tax: in the event that the taxpayer has to make the declaration of this tax (it is made from €600,000 of wealth in almost all the Autonomous Communities, with some exceptions), it must include in its wealth the value of cryptocurrency and be taxed according to the applicable tax rate.

Therefore, at the end of the year, the net worth will be counted, including cryptocurrency and, if applicable, the relevant taxation will be made.

• Inheritance and Gift Tax: if the cryptocurrencies have been received as a gift and inheritance, it is mandatory to include them and pay this tax.

• VAT: the purchase or sale of cryptocurrencies does not imply the accrual of VAT. This tax is levied on consumption to the final customer, and cryptocurrencies do not have a specific consumption, so they would be exempt from this tax.

If you are going to buy or sell any product or service that involves VAT, and the payment method is through cryptocurrency, this VAT can be paid with virtual coins or euros.

On Vicox we can help you to declare your cryptocurrencies in Spain and Portugal with our new service, CriptoTax. Visit this link for get more information.

www.vicoxlegal.com