Reporting cryptocurrencies will be mandatory from 2024.

Persons who hold virtual currencies and carry out transactions with them must report those transactions to the Spanish tax authorities from January 1, 2024.

Who will be required to report cryptocurrencies in 2024 The following will be required to report cryptocurrencies in their income tax return: – Individuals and entities resident in Spain. – Permanent establishments in Spanish territory of individuals or entities resident abroad that provide exchange services between virtual currencies and fiat currency or between different virtual currencies, act in any way as intermediaries in such transactions, or provide services to safeguard private cryptographic keys on behalf of third parties in order to hold, store, and transfer virtual currencies. In these cases, they will be required to file the annual cryptocurrency return in respect of acquisitions, disposals, swaps, and transfers of virtual currencies. Collections and payments made with cryptocurrencies must also be reported. The information on balances must include, for each virtual currency, the type of virtual currency, the number of units of virtual currency as of December 31, and their value in euros. The first cryptocurrency returns will be filed from January 1, 2024, and will cover transactions carried out since April 25, 2023. Will it be necessary to report transactions in virtual currencies? The following will be required to file an annual informative return on acquisitions, disposals, swaps, and transfers of virtual currencies: – Individuals and entities resident in Spain. – Permanent establishments in Spanish territory of individuals or entities resident abroad that provide exchange services between virtual currencies and fiat currency or between different virtual currencies, act in any way as intermediaries in such transactions, or provide services to safeguard private cryptographic keys on behalf of third parties in order to hold, store, and transfer virtual currencies. They must provide the following information: – Full name, or corporate name or full company name. – Address and tax identification number (NIF) of the individuals or entities to whom the virtual currencies belong at any time during the year, whether as holders, authorized persons, or beneficiaries. – Type of virtual currency and transaction date. – Type of units of virtual currency acquired, disposed of, swapped, or transferred. – Value in euros at which the transaction is carried out. Individuals or entities whose activity is limited to advising on virtual currencies or to merely processing individuals’ collection and payment orders in fiat currency will not be required to report transactions in virtual currencies. Nor will entities that provide exchange services between virtual currencies and fiat currency. Obligation to report virtual currencies held abroad. Individuals and legal entities resident in Spanish territory and the permanent establishments of persons in that territory will be required to file an annual informative return covering all virtual currencies held abroad. This obligation extends to those who have been holders, authorized persons, or beneficiaries of those virtual currencies, or who have had powers of disposal over them. It also extends to those who were beneficial owners at any time during the year to which the return relates and had ceased to be so as of December 31 of that year. The information to be provided in the return on currencies held abroad will be: – Full name, or corporate name or full company name. – Where applicable, the tax identification number in the country of tax residence of the individual or entity that provides services to safeguard private cryptographic keys on behalf of third parties in order to hold, store, and transfer the virtual currencies. – Address or website address. – Full identification of each type of virtual currency. – Balances of each type of virtual currency as of December 31, expressed in units of virtual currency, and their value in euros. In subsequent years, filing the return will only be mandatory where the aggregate balance has increased by more than €20,000 compared with the balance that gave rise to the filing of the last return. Which form must be filed to report cryptocurrencies and other virtual currencies? The following forms will be used to report cryptocurrencies and virtual currencies: – Form 172: balances of virtual currencies. – Form 173: transactions carried out. – Form 721: cryptocurrencies held abroad. Forms 172 and 173 will focus on companies that are tax resident in Spain and participate in the cryptocurrency market. They may participate as exchanges or as virtual wallets. Form 172 must be filed where a profit of more than €1,000 has been obtained as a balance of virtual currencies. Form 173 will gather details on the individual or entity that carried out the transactions, the type of currency used, and the amount obtained or sold. In addition, the Spanish Tax Agency (AEAT) has added a new section to the income tax return devoted exclusively to reporting cryptocurrencies. The following must be detailed in the new boxes: – Transactions carried out. – Acquisition value of the cryptocurrencies. – Date on which they were carried out. In this way, losses or gains will be calculated in the draft income tax return. Who is required to file Form 721? From 2024, the AEAT will require information to be provided on the balance of virtual currencies located abroad. Form 721 will need to include personal data such as the name, the NIF, or the entity that holds the keys in custody, the identification and balances of each cryptocurrency, and their value in euros. Royal Decree 249/2023 provides that it will not be mandatory to report cryptocurrencies held abroad if the total balance of all cryptocurrencies as of December 31 (measured by their value in euros) does not exceed €50,000. In addition, it will be necessary to report all activities related to cryptocurrencies, such as mining. Fines for failing to report cryptocurrencies The fines for each unreported cryptocurrency will be around €5,000. This amount may rise to at least €10,000 if you provide incomplete, false, or inaccurate information. If you omit your income from cryptocurrencies from your income tax return, the fine could be 26% of the amount you have not paid.