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Cryptocurrencies Abroad: You Must Submit This Declaration in 2024

Tax formsTax Agency (Hacienda)

cryptocurrencies abroad

In this article, I will talk about the taxation in Spain of cryptocurrencies abroad, specifically trading and mining. It is important to understand how the Economic Activities Tax (IAE) and the Personal Income Tax (IRPF) affect these activities.

Additionally, I will explain details about the new obligation to declare cryptocurrencies abroad that has been recently established.

Taxation in the Economic Activities Tax (IAE) for cryptocurrency operations: Buying and mining

If you conduct cryptocurrency buying and selling operations with your own capital for yourself, you must consider whether these activities are subject to taxation under the IAE.

According to articles 78 and 79 of the Law Regulating Local Taxes (LHL), for an activity to be considered an economic activity and subject to the IAE, it must meet certain requirements:

  • The activity must be carried out within national territory.
  • It must involve the organization of means of production and/or human resources for a specific purpose.
  • The purpose must be intervention in the production or distribution of goods and services.
  • This organization must be carried out on one’s own behalf.

Therefore, in the case of buying and selling cryptocurrencies for oneself, as an individual, it does not constitute an economic, business, or professional activity. Therefore, you do not have to pay IAE tax on these operations, as they are not intended to intervene in the market.

However, if you provide cryptocurrency buying or mining services to third parties, these activities are subject to the IAE, as they constitute an economic activity.

Here, you must register under Section 1 of the IAE Rates, heading 831.9, which corresponds to “Other financial services”.

Taxation in the Personal Income Tax (IRPF) for acquisition and sale of cryptocurrencies

When you acquire or sell virtual currencies, such as “bitcoin,” you must consider whether these transactions generate capital gains or losses and whether they are subject to taxation under the Personal Income Tax (IRPF).

To calculate the capital gain or loss, the commissions paid to exchanges in relation to the acquisition and sale of cryptocurrencies are taken into account. In the event of a partial sale of coins acquired on different dates, the FIFO (First In-First Out) criterion is applied to identify the coins transmitted.

Each type of cryptocurrency is considered a different asset due to its unique characteristics, such as origin, liquidity, value, and denomination. Therefore, the exchange of one virtual currency for another is treated as an exchange that also generates a capital gain or loss.

Therefore, it is essential to determine the capital gain or loss for each sale of each type of cryptocurrency. This can be calculated by the difference between the sale amount in euros and the acquisition amount in euros. And this value must be applied to the exchange rate to euros of the currency in force on the date of acquisition of the cryptocurrency.

Cryptocurrencies abroad: informative declaration

Starting from the fiscal year 2023, it was established by law the obligation to declare virtual currencies held abroad, similar to Form 720 applied to other assets.

This means that if on December 31, 2023, you are the owner, authorized person, or beneficiary of cryptocurrencies abroad worth over 50,000 euros, you will be required to submit the informative declaration on virtual currencies abroad (Form 721) between January 1 and March 31, 2024.

In subsequent years, you must submit this declaration only if the balance of your cryptocurrencies abroad increases by over 20,000 euros.

To summarize…

In summary, cryptocurrency operations are subject to various tax obligations in Spain. Buying and mining for oneself are not subject to IAE tax, while providing services to third parties is. 

Additionally, acquisitions and sales of cryptocurrencies may generate capital gains or losses that must be considered for the IRPF. It is essential to stay informed about laws and regulations related to cryptocurrencies to comply with your tax obligations. 

Remember that, starting from the fiscal year 2023, you must also pay attention to the new obligation to submit informative declarations about virtual currencies abroad.

Form 720: What is and who submits it?

Form 347: Operations With Third Parties In Spain

Personal Income Tax (IRPF) in Spain

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