Bitcoins—and cryptocurrencies in general—have experienced a meteoric rise in 2017 of close to 1,300 percent, reaching historic highs on December 17 when its price was just 100 dollars short of reaching the barrier of $20,000.
Notwithstanding the above-mentioned, one thing is clear: tax authorities are always on the lookout. In this sense, the tax treatment applicable to these cryptocurrencies
VAT: Bitcoins as a means of payment are exempt from
The European Union considers cryptocurrencies to be a means of payment, especially after several rulings of the European Court of Justice. This is particularly relevant since VAT is a Europe-wide harmonized tax, which led the Spanish tax authorities to also adopt this conception of cryptocurrencies. They did so in 2015 when the Spanish General Directorate of Taxes issued various binding consultations stating that cryptocurrencies shall be treated as a legal means of payment in terms of
This means, for instance, that if someone bought goods in a physical shop and paid with Bitcoins, the product would include its corresponding VAT as usual and that would be all in terms of
Another example could be a simple Bitcoin trading activity where the cryptocurrencies are acquired and sold in exchange for euros. In this case, as in the previous case, since Bitcoins are considered a means of payment for VAT purposes, it will not be necessary to apply VAT to this sale.
Spanish Personal Income Tax: Bitcoins as foreign currency, generating capital gains and losses.
In terms of Spanish Personal Income Tax (SPIT), Bitcoins are treated like any other foreign currency. The consequence of this is that each time a Bitcoin is transferred by the taxpayer (e.g., because the taxpayer sells Bitcoins or buys another asset paying with Bitcoins), a capital gain or loss will be generated in terms of SPIT. Note that capital gains or losses shall be calculated as the difference between the transfer price and the acquisition cost. If a transfer of Bitcoins derives in a capital gain, it will be taxed at a progressive tax rate ranging from 19 percent to 23 percent, depending on the total amount of savings income subject to taxation.
In any case, this matter is very recent, and there are still some minor points to be clarified—not to mention other more complex scenarios not analyzed yet—so we cannot rule out further consultations of the Spanish tax authorities delving into the tax treatment applicable to Bitcoins.
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Mariano Roca is a tax and private client practitioner focused
