All the taxes you must pay for investing in Bitcoin and other cryptos

Cryptocurrencies have been one of the sensations in the markets this year. The main cryptocurrencies have reached their trading ceiling in 2021. It is the case of Bitcoin, the most popular digital currency, than in November exceeded a value of 56,000 euros.

The people who are encouraged to buy cryptocurrencies they are more and more. Thus, around 14% of Spanish investors have money in cryptocurrencies such as bitcoin or ethereum, a percentage that has skyrocketed in the last year, according to the third edition of the Savings and Investment Observatory of Bestinver and IESE. Specifically, more people have bought ‘crypto’ in Spain than those who have money in corporate bonds or public debt.

Now, it is convenient to know how this new reality is taxed before the Treasury. Finect has a Bitcoin and cryptocurrency showcase where you can check information about these digital currencies. The National Securities and Markets Commission (CNMV) recalls that crypto assets can be elements that revitalize and modernize the financial system in the coming years, but at the same time they are a complex and risky investment at the moment.

The cryptocurrencies and their taxation are being one of the focuses of the Tax Agency, which in 2021 has redoubled its efforts to collect and control all operations with crypto assets.

Bitcoin in the income statement

People who at some point in the year have bought Bitcoin or another digital currency should reflect it in 2022 when they prepare the Income. For practical purposes, investing in cryptocurrencies hardly varies from the way of buying or selling currencies, especially through a broker. Cryptocurrencies are declared in box 389, destined to “other capital gains to be included in the tax base of savings.”

For the Treasury, the money you obtain -or lose- with cryptocurrencies is considered a capital gain or loss. That is, a Bitcoin owner you will pay between 19% and 26% in personal income tax in the next return. Until this year the cap was 23%, but the Government has included a fourth tranche this year that will be reflected in Income 2021.

The Tax Agency establishes that 19% is applied to the first 6,000 euros of capital gain, which rises to 21% for the next 44,000 euros (section 6,000 to 50,000 euros). When a declarant claims to have earned more than 50,000 euros, but less than 200,000 euros during the year thanks to cryptocurrencies, the rate goes up to 23%. The last tranche, a novelty this year, taxes 26% of the earnings of more than 200,000 euros.

But what happens in the opposite scenario, when there are losses? The declarant can compensate the losses with gains in concept of transfer of other patrimonial elements. You will have the following four years of Income to carry out this compensation.

How is the capital gain calculated with a cryptocurrency? Suppose that a person has bought Bitcoins throughout the year and has taken advantage of them, since he bought Bitcoin at 6,000 euros and sold it months later at 30,000 euros. During the income statement, it must reflect that you had a profit of 24,000 euros, to which a tax rate of 21% would be applied (except for the first 6,000 euros, which are taxed at 19%).

Other taxes on cryptocurrencies

Since 2017, the Treasury has warned that bitcoin and other cryptocurrencies are subject to wealth tax. In other words, the value of these bitcoins are added to the calculation of your wealth as do the shares or the investment funds.

In addition, digital currencies pay 25% in Corporation Tax, depending on the difference in how much the cryptocurrency cost to buy and the profit from the sale. Likewise, a 10% depreciation for impairment may be added.

Are taxes paid for switching from ‘cryptos’?

The answer is yes. A very common mistake is to think that it is not necessary to pay taxes on the money earned by exchanging some cryptocurrencies for others. Nothing is further from reality. In these cases, the Treasury understands that there is an alteration in the composition of the patrimony for which to pay taxes, since there is also a change in the valuation.

The logic of the Treasury is that if you invest 1,000 euros in bitcoiny after a month you decide invest in Ethereum That money, which now equals 2,000 euros, you are earning that money. In addition, in theory you should be taxed individually for each and every one of these changes in Income.

Beware of fines

The Government approved this year the new tax fraud law, which makes a hole for fines for not declaring cryptocurrencies in a timely manner. The text includes the obligation to inform the holders of cryptocurrencies stored abroad. It extends the obligation to its beneficiaries, authorized and anyone who may dispose of them.

“Virtual currencies located abroad of which they are the owner, or with respect to which they have the status of beneficiary or authorized or in any other way they hold power of disposal. Custodial by people or service entities to safeguard cryptographic keys private third parties. To maintain, store and transfer virtual currencies, “warns the new legislation, which adds:” Not submitting on time and submitting information returns in an incomplete, inaccurate or false manner constitute tax offenses. “

The regulation imposes very high penalties, specifically “5,000 euros for each piece of information or data set referring to each virtual currency individually considered according to its class, which should have been included in the declaration, or had been provided incompletely, inaccurately or falsely, with a minimum of 10,000 euros “.

It will be mandatory to inform in form 720 of declarations of assets and rights abroad on the possession of cryptocurrencies abroad. The translation is that you will have to include your crypto assets in this famous model.

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All the taxes you must pay for investing in Bitcoin and other cryptos

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