The 2023 Income campaign has already begun. And once again, the declaration of cryptocurrencies is one of the most difficult points. The Treasury has been applying changes for several years and on this occasion it was not until the last minute that we learned of all the new obligations for income 2022.
On April 5, the BOE published the Royal Decree 249/2023, the ministerial order with all the details on the taxation of cryptocurrencies. All those who have one of these assets should pay special attention this year (and next), as some new features have been introduced. We will try to summarize what are the main aspects to take into account.
The boxes of cryptocurrencies. To facilitate the declaration of the sale of cryptocurrencies, the Tax Agency has added a new dedicated section, boxes 1800-1814. In these boxes it is necessary to detail all the dates and values of acquisition, as long as the draft of the Income can calculate the profits and losses obtained.
The novelty is not that these purchases or sales have to be declared, since they are considered capital gains or losses. The novelty is that a specific section dedicated to “Virtual Currencies” has been added.
Boxes 1800-1814 dedicated to the declaration of virtual currencies.
Breakdown one by one of all operations. In this section 1800 of ‘Patrimonial gains and losses derived from the transmission or exchange of virtual currencies by individuals’, all purchase and sale operations must be broken down one by one, although experts advise grouping equivalent movements, among other reasons because the program limits to a maximum of 25 capital gains and losses. And those users who make a lot of operations with cryptocurrencies could have more than 25 movements.
Specialized tax advisors point out that this individualized breakdown will cause them a greater workload.
The Model 721 arrives (in 2024). In the summer of last year it was revealed the obligation to report virtual currencies abroad, but for the 2023 Income Tax return it is not yet active. This is the new Model 721, which replaces the previous Model 720. However, although it has already been officially announced, it has been decided to delay its mandatory nature until January 1, 2024.
Starting next year, the Treasury will require reporting on the balance of virtual currencies located abroad (mainly located in exchanges outside of Spain), although this year it is already active in what is described as a transitional period.
They will be obliged to present the “persons and entities residing in Spain who have the status of owner, beneficiary, authorized or has power of disposal over the crypto”.
As points out Cris Carrascosaa specialized lawyer for ATH21Cripto: “even if the holder’s status is lost during the year, the 721 must also be submitted with the date on which such status was lost”, to which he warns that “it is better not to be too clever by passing the crypto to another wallet before the end of the year, because the Treasury has already stepped on it”.
Among the data to include in the 721 are personal data such as the name, the NIF or the entity that is guarding the keys, the identification of each crypto and the balances of each cryptocurrency, as well as its valuation in euros.
The sanctions for not presenting the 721 Form are equivalent to those with the 720. A fine of €200 will be imposed for not presenting it.
There will be no obligation below 50,000 euros in crypto. The Treasury’s obligation to report cryptocurrencies abroad will not apply in the case of small amounts. As described in Royal Decree 249/2023 in section 5d of its article 42:
“There will be no obligation to report any virtual currency when the balances as of December 31 referred to in section 3.c) valued in euros do not jointly exceed 50,000 euros. In the event that said joint limit is exceeded, information on all virtual currencies”.
Staking and mining are also taxed. In addition to the purchase and sale, there are other formulas related to cryptocurrencies that must also be declared. We talk about ‘staking’ and mining. These activities are considered income from movable capital and must be taxed in an equivalent manner. Regarding personal income tax, the percentage must be analyzed individually for each specific case, point from the Cuatrecasas law firm.
Treasury gets serious with crypto. For the 2023 campaign, the Tax Agency intends to send 328,000 notices to taxpayers who have operated with cryptocurrencies, which is 40% more than last year.
For this 2022 income, all operations will have to be described one by one and in 2024 there will also be an obligation to report on those located abroad. Soledad Fernández, director of the Tax Agency, has explained during the start of the 2023 Income campaign that “normal” is that there are more and more announcements about cryptocurrencies, since they are “growing exponentially.”
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