It took a few years for fiscal authorities all over the world to realise the existence of cryptocurrencies which led to individual EU governments adopting different national legislation to regulate the trading, exchange and mining of cryptocurrencies. This resulted in very different approaches and legislation.
On the 6 July 2016, the European Commission adopted a new proposal for the 5th Anti-Money Laundering Directive (5AMLD).
In short, Cryptocurrency Wallet providers and Exchanges will be compelled to carry out customer due diligence (also known as KYC: Know Your Customer), monitor transactions and alert authorities of suspicious transactions. This will affect only transactions between Fiat currencies (Fiduciary currencies like EUR, USD, GBP…) and Cryptocurrencies. Virtual currency to virtual currency exchanges are not covered. So, for example, Bitcoin-to-Ether exchanges will not be regulated.
This directive is planned to be included in the national legislations by the 1st January 2018.
Cryptocurrencies regulations in Spain
Spain took the approach to tax cryptocurrencies in a way similar to financial products.
With the current Spanish legislation, a physical or juridical person, who “mines” cryptocurrencies must register their activity at the tax office, and although it is exempt from VAT payment, it must declare all its operations. It will have to fill form 347 with the declaration of the identity of customers or suppliers whose transactions exceed 3,005.06 euros. Not to mention the obligation to declare foreign transactions that must be made to the Bank of Spain.
Registration at the tax office will imply registration in the social security as self-employed.
Any profit from the sale of the mined cryptocurrencies will have to be declared, and will be taxed accordingly following company taxation or physical person taxation.
The profits generated by trading cryptocurrencies will have to be declared and will be taxed is a way similar to the trading of financial products, except within the difference that profits and losses will only be accounted for when we buy or sell a cryptocurrency with a Fiat currency (trading between cryptocurrencies will not be affected, but will have to be declared).
In 2017 this will correspond to 19% for profits in the bracket below 6000€, 21% till 44.000€ and 23% above 44.000€
Legislation in Europe
While Spain was one of the first countries in Europe to accept and include cryptocurrencies in their legal framework, other European countries decided to wait. Nevertheless, the EU is encouraging countries to adopt a clear legislation on the subject by January 2018.