In the latest episode of the podcast 'Las Voces de Satoshi', cryptocurrency tax expert Jesús Lorente, from Seico Asesores, clarified many doubts about income tax returns and cryptocurrencies. Do I have to declare my cryptocurrencies? What exactly do I have to declare?
Well, whatever we have in our portfolio, “we must declare the profits obtained from the sale of cryptocurrencies: staking, yield farming, or any type of return.”
“People who only hold tokens do not have to declare anything in their income tax returns,” so if we simply have several tokens in our portfolio, and at that moment we are not obtaining any capital gains, we can rest easy.
On the other hand, in the case of “the sale for fiat money or exchange for another cryptocurrency, both are taxed, the Treasury made this very clear,” he explained.
That is to say, “the Income Law says that there is a capital gain if there are two things: an alteration in the composition of your assets (from satoshis to ethers, for example) and in the valuation (investing 200 euros and now having a value of 1000).”
Decentralization: advantages and disadvantages
Decentralization has many advantages and is a fundamental part of this industry, but it also means that, since there are no intermediaries, it is the users themselves who have to take care of the management tasks with the Treasury.
Therefore, Jesus stated that “we, the users, have to generate this information, give it to the Treasury, and then defend it.”
Decentralization means that “we are our own bank, our own broker and our own tax advisor, in which we must generate, for each one, his certificate, taking charge and being responsible for what we must declare and what we must not.”
Information requirements from the Treasury
What can happen if a user does not declare this capital gain obtained from cryptocurrencies?
The answer to this question will depend on several factors, but above all on the amounts involved: the larger they are, the more interest they will cause in the Tax Agency. In fact, Lorente stated that "for large amounts, Estate, has even contacted the foreign exchange of origin to confirm that it is real."
“More than inspections, almost everything is a request for information, a tool for the Treasury to review data and if something doesn't fit, proceed with the inspection,” he said.
What they will ask for is: “CSV, tax report and proof of origin of the cryptocurrencies, something very important, since they want to make sure that the origin is real.”
“If we were to be required to do so,” the expert continued, “we would have to file a supplementary Income Tax Return and submit it late. In addition, we would have to pay a small surcharge, up to 20% of what we have not paid.”
And if we don't comply? “If we don't respond to the request, we would be subject to an inspection that would mean paying a fine of up to 50% or even more. Mainly in cases of larger amounts and in the case of non-cooperation.”
According to Lorente, “if you, as an accounting manager in a company, need help with the company's crypto declaration, it is best to contact experts on the subject, since companies, unlike individuals, must declare each of their crypto transactions.”
