International Tax Planning & Bitcoin

Tomorrow we have our first activity of the year: A meet up to talk about international tax planning, now that many people are wondering if they need to pay taxes, or not for their gains with trading or mining. You can register here

Many people are buying and selling cryptocurrencies and still do not know how if they should pay to the spanish tax office. The answer from the tax point of view is clear: Yes.

There are two types of operators: miners and traders The miners must always register with the Treasury, either as a company or as self -employed ( autónomo) and quarterly declare the mined cryptocurrencies, as subject but exempt from the Value Added Tax.

With respect to traders in the case of not being registered as a company or self-employed, they must take their earnings to the rate that saves the savings. If you obtain a profit in the purchase of cryptocurrencies, it is a profit or loss in equity. You pay as if you speculate with actions.

However, it is worth asking about the nature of the Token, since when participating in the equity of an entity, it can be understood as a return on capital investment. In this case, they also go to the savings base and can be compensated in the next 4 years if there are losses, but with limits: 10% -of the positive balance- in 2015, 15% in 2016, 20% in 2017 and 25% in 2018 and following. This information will be of special importance for those who lose money in the Initial Offers of Currencies (ICO’s)
Nevertheless, there is no oficial resolution about this, and I would not forecast waht the spanish tax office is doing, because most likely we would be mistaken.

In the case of traders, the tax treatment may be even worse than for physical persons, since the IRPF assumes the accrual principle (gains or losses occur when they actually occur) while in companies the principle is applied of prudential value, so at the end of the fiscal year you must calculate your potential gain or loss and take it to your Corporate Tax, discounting the necessary expenses and taxing the benefit at the general rate of 35%

However, there is a legal and legitimate possibility of planning these gains. In the case of companies with capital in cryptocurrencies that are undermining, they can incorporate said currencies into their reserves and not into the profit and loss account. In this way the payment of the tax is deferred until the dividend is distributed to the members. With respect to the speculative operations that are found in the balance sheet of the companies, unless the share capital increase in kind with cryptocurrencies has been approved at the General Shareholders’ Meeting, all these companies are exposed to huge profits that they will have to declare in Corporate Tax from next July 1.

Given the use of cryptocurrencies for evasion and money laundering, we see very possible and even recommended that the State Tax Administration Agency include the sector in the inspection plans this year.

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