The tax return campaign for the year 2022 (IRPF) has started since April 11th.

On April 5th, the BOE published Royal Decree 249/2023, which includes relevant information on cryptocurrency taxation. It is important to note that those who own these assets should pay special attention this year and next, as some changes have been introduced.

Through a modification in legislation, the Tax Agency has increased warnings regarding cryptocurrencies in the tax return, especially in box 1626, analyzing, for example, rental operations or those abroad. These measures will be applicable in the tax return for the year 2024.

The cryptocurrency boxes

The Tax Agency has simplified the declaration of cryptocurrency transactions by including a new specific section, boxes 1800-1814. In these boxes, all the details about the dates and acquisition values must be included, so that the draft of the tax return can calculate the gains and losses obtained.

It is worth noting that the obligation to declare these purchases or sales as gains or losses already existed. The news lies in the inclusion of a section specifically dedicated to “Virtual currencies”.

Breakdown of each operation

In section 1800 of the regulations on “Gains and losses derived from the transmission or exchange of virtual currencies by individuals”, it is required that all buying and selling operations be detailed individually, although it is suggested that equivalent movements be grouped together. This is partly due to the program allowing only a maximum of 25 gains and losses. If a user has made numerous cryptocurrency transactions, they could exceed this limit of 25 movements.

Model 721 arrives (in 2024)

Last year it was made public that it would be mandatory to report on virtual currencies located abroad, but for the 2023 Income Tax declaration it is not yet available. The new form, known as Model 721, replaces the previous Model 720. Although it has been officially announced, its obligation has been postponed until January 1, 2024.

Starting in 2024, the Tax Agency will require reporting on the balance of virtual currencies located abroad, especially in exchanges outside of Spain. Currently, it is in a transitional phase this year, and holders, beneficiaries, authorized persons, or those who have disposal power over cryptocurrencies residing in Spain will be required to submit Model 721.

Among the data that must be included in Form 721 are personal data such as name, NIF, or the entity that holds the keys, identification and balances of each cryptocurrency, as well as their value in euros.

If Model 721 is not submitted, penalties equivalent to those applied with Model 720 will be applied. The fine for not submitting it will be €200.

There will be no obligation below €50,000 in crypto

Royal Decree 249/2023 establishes in its article 42 that the obligation of the Treasury to report on cryptocurrencies abroad will not apply to small amounts.

If the total balance of all cryptocurrencies as of December 31, valued in euros, does not exceed €50,000, there will be no obligation to report. However, if this joint limit is exceeded, all virtual currencies must be reported.

‘Staking’ and mining are also taxable

In addition to buying and selling, activities related to cryptocurrencies, such as ‘staking’ and mining, must also be declared. These activities are considered income from movable capital and must be taxed equivalently. As for taxation in the IRPF, the percentage of taxes to be paid must be analyzed on a case-by-case basis.

For the 2022 tax year, each of the operations carried out with cryptocurrencies must be described. In addition, starting in 2024, there will be an obligation to report on cryptocurrencies located abroad.

Finally, it must be remembered that in cases where the exempt limits are exceeded, virtual currencies must also be declared in both the Wealth Tax and the new Temporary Solidarity Tax on Large Fortunes.

At addwill, we will be happy to help you with any questions or concerns you may have, or if you want to expand the information or require advice on this topic by our experts in the tax department.

You can contact us by phone +34 934 875 200 or by email info@addwill.eu.