Despite its risks and high volatility, cryptos continue to attract many investors, who should know that they are subject to tax reporting.

For tax purposes, virtual currencies or cryptocurrencies are considered intangible assets, and are computed by units or fractions of units, which are not legal tender, and have economic content, since they are used as a means of payment as they can be exchanged for goods, rights, services and other virtual currencies, which the counterparties – those delivering the goods,   or providing the services- want to accept. Thus, like the other assets and rights that are part of the owner's assets, they must be declared.

The Spanish Tax Agency has tightened controls on cryptocurrencies, and so cryptos held and gains from cryptocurrencies must be declared to the Tax Agency.

Crypto reporting must be submitted through the following forms:

Form 172: to report balances at the end of each calendar year, to be filed in the month of January of the following year.

Form 173: to report transactions with cryptos of each calendar year, to be filed in the month of January of the following year.

Form 721: to report virtual currencies held abroad each calendar year, to filed between January 1 and March 31 of the following year. This form must contain among other data:

(i) Identification data and tax id. number of the of the person or entity that provides services to safeguard private cryptographic keys on behalf of third parties, to hold, store and transfer virtual currencies, as well as their domicile or website address.

(ii) The complete identification of each type of virtual currency.

(iii) The balances of each type of virtual currency as of December 31 expressed in units of virtual currency and their valuation in euros.

Likewise, in the Personal Income Tax-2024 campaign that has just begun, taxpayers must include these data:

• Wealth Tax (WT):

The holder must declare the balance of each different virtual currency at its market value - in euros - as of December 31, 2024 (however, having digital currencies in the wallet without making operations (trading) does not require a declaration):

• Personal Income Tax (PIT):

The positive results of the transactions carried out must be declared in euros, as capital gains derived from transfers – purchase and sale or swaps; the airdrops as non-transfer gains on a general basis, and staking as passive income.

The gains obtained shall be taxed at the following rates:

Belo 6.000 €: 19% PIT.

From 6.000 up to 50.000 €: 21% PIT

From 50.000 up to 200.000 €: 23% PIT.

Over 200.000 €: 26% PIT

From 50.000 € and above they must be reported through form 721 failing which may imply fines up to 200.000 €.

Capital losses may offset capital gains thus reducing tax payable throughout 4 calendar years, at 25% each year.

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© amber legal & business advisors This document is a compilation of legal information for general use and should not be considered legal advice. For specific information and advice you can contact us at info@amberbas.com and www.amberbas.com .

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