The Ministry of Finance has made public a first eraser for a new regulation, in collaboration with the Ministry of Economy, which will force cryptocurrency holders to file an annual cryptocurrency transaction return starting January 1, 2023.
If approved, in addition to having to declare all profits over 1.000 euros obtained from cryptocurrencies, balances will also have to be reported, even when no profit has been made.
This draft is the first step towards the new Form 721, which replaces the defunct Form 720 and will add new obligations for taxpayers.
The Ministry of Finance says that this is a necessary measure, which seeks to anticipate the regulations that the European Union intends to apply. According to the Minister of Finance, María Jesús Montero, other countries in the Eurozone are already applying similar measures.
How will the new Treasury regulation affect?
The measure is part of a draft anti-fraud law and will require cryptocurrency holders to report their cryptocurrency balances, purchases and exchanges, as well as their valuation, by the end of the year.
If it comes into force, individuals and companies will be required to report the amount of cryptocurrencies they hold and their value in euros. To report the value of holdings, the following information will be used: Average price as of December 31 on the main exchange platforms.
If this valuation system is not used, commonly used valuation mechanisms will be used that provide a reasonable estimate of the market value in euros of the cryptocurrency.
The new measure will also affect cryptocurrencies that are deposited in other countries. A cryptocurrency will be deemed to be in another country when “the person or entity or permanent establishment that holds it provides services to safeguard private cryptographic keys on behalf of third parties.”
There will also be the obligation to report fiat currency intended to provide safeguard services, storage or transfer of cryptocurrencies, as well as their valuation in euros, when the currency used is not the euro.
On the other hand, the Administration will have to be informed of the type of movement, the date of the operation, as well as the source and destination public keys associated with the operation. The type and number of cryptocurrency units purchased, sold, exchanged or transferred, the value of the transaction in euros and the commissions (if any) must also be reported.
Finally, it should be noted that "there will be no obligation to report any virtual currency when the balances as of December 31 valued in euros do not jointly exceed 50.000 euros. That is, we will not be obliged to inform the Treasury if the complete balance of all our cryptocurrencies does not exceed 50.000 euros.
The deadline for filing the income tax return is over
On the other hand, we remind you that the deadline for filing your Income Tax return is about to end. You have until June 30 to file your return, checking the new box for cryptocurrencies, If you have earned more than 1.000 euros in profits when buying or exchanging crypto.
If you have questions about how to include cryptocurrencies in your income tax return, we invite you to consult the Bitcoin and other cryptocurrencies taxation and taxation course, where you will find all the information you need on this topic.
