The Anti-Fraud Law has recently established that, as from 1 January 2023, taxpayers (both businesses and individuals) who hold cryptocurrencies must declare both the quantity and their monetary value at the end of the previous tax period to the Spanish tax agency. Although this is a very novel subject, the tax agency has already established some criteria to be followed.
Firstly, there are 3 main informative models through which cryptocurrency holders must report the value of virtual currencies for the 2022 tax year to the Spanish Tax Agency.
- Form 721, through which cryptocurrency assets must be declared whenever they exceed the amount of 50,000 euros. It must be submitted before the end of the first quarter of 2023 (31 March 2023).
- Forms 172 and 173, through which the declarations of cryptocurrency service providers with tax residency in Spain will be made. Form 172 is intended for both individuals and businesses to declare their cryptocurrency balances (both their own and those of their clients). On the other hand, Form 173 is reserved for businesses with tax residency in Spain that participate in the cryptocurrency business regardless of where they provide their services and the location of the virtual currencies or their holders.
Regarding taxation, the new regulations consider that cryptocurrencies can give rise to capital gains or losses, and however small they may be, the obligation to declare them arises. This obligation will only affect those who hold cryptocurrencies with a combined value of over 50,000 euros at the end of the previous tax period. The new box 46 provided for this purpose only needs to be completed when there is a capital gain. There is no obligation to declare losses, but it is recommended that they be included because they can then be offset in the future against other gains (should these occur). The sale, exchange of cryptocurrencies and capital returns are taxed under the special part (savings tax base) of personal income tax (IRPF). On the other hand, mining operations are taxed under the general tax base.
Cryptocurrencies have the same treatment for Wealth Tax purposes as foreign currency capital, so they must be declared at their market value as of the accrual date (31st December). If the individual does not exceed the exempt minimum for this tax, they do not need to be declared.
We advise you to analyse the new obligations in detail as failure to comply with them will result in substantial penalties.