Are you one of those lucky ones who invested in a cryptocurrency when people began to talk about it and now it turns out that your money has increase its value so much that you don't know what to do with it?
It is usually the case if you find yourself in a situation like this. Questions like these can give you sleepless nights: what will happen with the tax office and cryptocurrencies? Do I have to show them my transactions? And if I exchange the money back to euros and enjoy the profits? What happens if I don't declare it? Would it be considered a tax evasion?
Are you ready to know what to do in a case like this?
Tax treatment of cryptocurrencies: How to act in this situation?
Financial product or money? For many people it is weird to think that one million euros in cryptocurrencies is not considered a financial product, but an intangible asset. In accordance with the opinion of the tax advisory Remo Domingo: "It is the same concept that is used to buy or sell a web domain, the rights of exploitation of a property or the transfer of a bar".
Cryptocurrencies are not coins as such, neither a financial asset, but rather it is a value exchanged in the form of cryptocurrencies. It can be confusing, but it is nothing more than the reason why they are not subject to the legislation that affects the banks.
But, could I facilitate the information of my cryptocurrencies to the tax department?
The blockchain of the cryptocurrencies with the tax department
We will talk about what we have left open two lines above. Throughout these months, we have been repeating repeatedly that the blockchain is a secure string. The technology of the moment, capable of providing a pseudo-anonymous character in its operations, which may be traceable. And so it is.
Now, there is no a clear ruling to treat the relationship between finance and the cryptocurrencies. And even if we had it, it wouldn’t be very clear how it would provide such information. Moreover, exchange places are not obliged to give this information. According to the law, "If you buy bitcoins and from there, you buy Ehereum without transferring it to euros, you have to declare the gains or losses you generate from that action."
Cryptocurrency trading and income tax declaration
Have you ever done any operation with cryptocurrencies? How are you going to declare it? The box 389 in the Spanish tax declaration is yours. It seems that if the income you have received by cryptocurrencies have been through the mining of a virtual currency or to receive part of your salary, you must include it in the declaration.
Experts believe that soon "the tax authorities judgment will tell how, when, where and in what concepts the bitcoin must be declared".
There is no doubt that it's a complex issue and that the obligation to declare is always of the taxpayer. If you find yourself on a case of revaluation of the cryptocurrency and with one million euros in your hands, they will surely begin to demand more criteria in the next income.
Finally, a last quote from the tax adviser: "think about someone who buys 1,000 euros in bitcoins in 2011 and sells them today. That person would have to put in the Bank almost five billion euros. If you order a transfer of that amount, the director of the Bank will ask you where is all that money coming from".
What can be expected from these regulations? How long will it take to define a clear policy? Is there an urgency?
We will inform you of all the latest news. For the moment, breath calmly. Until the next post!