The General Tax Directorate, abbreviated as DGT, in its response to query V0018-23, provides an answer to one of the questions posed by a taxpayer regarding the tax treatment of cryptocurrencies. More precisely, the question raised is:
What is the procedure for reporting gains and losses generated when you cannot access transaction details?
According to the consultation document, in the year 2022, the taxpayer made a deposit of a specific amount of stable digital coins, technically known as “stablecoins,” on a foreign platform. After making the deposit on the platform, they carried out various transactions, including purchases, sales, and exchanges of digital coins, as well as receiving digital coins through an “airdrop” operation. The “airdrop” operation involves the free distribution of new cryptographic assets for promotional purposes. Finally, the taxpayer withdrew their entire investment from the platform by transferring a specific amount of another cryptocurrency to their personal electronic wallet.
The General Tax Directorate (DGT), considering that the taxpayer does not have access to transaction data, refers to Article 104.1 of Law 35/2006, of November 28, on Personal Income Tax (LIRPF). This article establishes the obligation of taxpayers to retain, during the prescription period, the documentation and evidence supporting the operations that must be reported in their tax declarations.
Regarding the Personal Income Tax (IRPF), the General Tax Directorate (DGT) has indicated in several binding consultations that cryptocurrencies are classified as intangible assets and has provided the following guidelines:
- The exchange of one cryptocurrency for another is considered a swap, resulting in a capital gain or loss. The gain or loss is calculated by the difference between the market value of the asset given and the market value of the asset received, in accordance with Article 37.1 of the Personal Income Tax Law (IRPF), which establishes specific valuation rules.
- The exchange of cryptocurrencies for euros, if carried out outside of an economic activity, will result in a capital gain or loss based on the disparities between the corresponding purchase and sale prices.
- Regarding cryptocurrencies acquired through an “airdrop,” the DGT suggests that if obtained outside a business or professional activity, they will be considered an in-kind capital gain.
- Whether the capital gain or loss arises from the exchange of cryptocurrencies for other cryptocurrencies or for euros, the calculation is performed separately, identifying each type of cryptocurrency.
The determination of capital gains
Article 37.2 of the Personal Income Tax Law establishes that, in the case of similar assets, the ones acquired first should be sold first. In the context of cryptocurrencies, if partial sales of cryptocurrencies of the same type acquired at different times are made, and there is no specific rule in the law, it can be interpreted that the cryptocurrencies bought first should be considered.
When should I report capital gains?
According to sections 46.b) and 49 of the Personal Income Tax Law (IRPF), the profit or economic disadvantage resulting from the modification of your assets should be included in the fiscal year in which the modification of assets occurs.
General Base or Savings Base?
As per the provisions of articles 45, 46, and 48 of the Personal Income Tax Law (LIRPF), and in line with the regulations in section I) of article 37.1 of LIRPF, the value in the official currency of the received cryptocurrencies should be included in the fiscal year in which they are received. This approach applies to the taxpayer’s general taxable base in the case of an “airdrop,” as it pertains to increases in assets that do not arise from a buying or selling operation. In situations where one cryptocurrency is exchanged for another or a sale is made in exchange for official currency, the capital gains are declared in the savings base of the tax.
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