Author:
Marco Musumeci D'Agata
Economist and DeFi Specialist
5 minute read - March 21, 2024
Starting in 2024, the Tax Agency requires that you inform it about the balance of your cryptocurrencies and if you do not do so, it will fine you.
In this article we are going to discuss tax obligations within a centralized economy (our daily life) and their total absence within decentralized finance, providing the reader with the necessary information to avoid making mistakes.
We first begin by analyzing the Spanish tax regulations, and once we have everything clear, we will move on to the most important point: “how could you avoid them, without ever having any tax problems.”
We start with models 172, 173 and 721 (don't be afraid):
Models 172 and 173 focus on companies with tax residence in Spain that participate in the cryptocurrency market as exchange agencies or as virtual wallets.
Form 172 must be submitted if you have obtained a profit of more than 1,000 euros as a balance of virtual currencies.
With form 173, details will be collected about the person or entity that carried out the operations, the type of currency used and the amount obtained or sold.
The date on which the transaction was made and its value must also be included.
Now let's talk about model 721:
If your balance in cryptocurrencies, abroad, is greater than 50,000 euros, you must present Form 721 including personal data such as the name, the NIF of the entity that custody your cryptocurrencies and what its value is in euros.
RD 249/2023 also indicates that it will not be mandatory to report cryptocurrencies abroad if the total balance of all cryptocurrencies as of December 31 does not exceed 50,000 euros.
In addition, it will be necessary to declare all activities that are related to cryptocurrencies, such as mining.
So at this point, probably 95% of readers who own cryptocurrencies will start to feel a slight headache, understandable, but not necessary because the article is not over yet.
How to avoid so much control and in a completely legal way?
I'll explain it to you now:
In the world of cryptocurrencies there are 2 ways to operate. The first and simplest is to open an account on a centralized exchange such as Binance, CoinBase, Kucoin, LBank, etc. These large exchange companies ask you for a lot of personal information to create your user account, usually a photo of your ID and several selfie photos taken with your cell phone. They also ask you: where you live, what your checking account is, your credit or debit card and much more.
These are the data to which the Tax Agency has access and through which in certain cases it will track all your financial operations.
Also keep in mind that one thing is a balance of less than 50,000 euros, which frees you from submitting form 721, and another thing is the profits you generate by trading, which the Treasury wants you to declare and it is not worth telling them that what you earned was you invested in other cryptocurrencies and you could lose it again.
The Tax Agency does not understand risks, it only cares about assessing your benefits.
So how can you sleep peacefully having your cryptocurrencies safe?
The answer is called DeFi, this word means in English "Decentralized Finance" which in Spanish translates as "Decentralized Finance". Essentially your variable cryptocurrencies (Bitcoin, Ethereum, etc.) or stable cryptocurrencies (USDT, USDC, TUSD, etc.) are stored in an anonymous wallet, here is one of the most famous and secure in the world: Trust Wallet,
Why is a Trust Wallet anonymous?
When you download Trust Wallet to your mobile from the Google Play Store or the Apple Store, the only way to create your new electronic wallet is through 12 random words positioned in a specific order that you cannot change.
These 12 words are "the owner" of the electronic wallet, so you can never lose them. It is highly advisable to write them in the same order from 1 to 12 using a pen on a piece of paper, then laminate this paper with kitchen film and keep it in a secret place where no one will find it, except you.
These 12 words will also help you in case you lose your cell phone or delete the electronic wallet by mistake; Thanks to them you can restore it.
Clearly, if someone finds your 12 words they can keep your wallet and all your money, so pay close attention and never reveal your passwords to anyone.
Once you have activated your Trust Wallet you can anonymously buy, sell and store any cryptocurrency in the world, variable or stable (Trust Wallet supports all major blockchain networks).
If you are a beginner and do not have basic knowledge of how to start investing in DeFi tokens using TrustWallet, I suggest you search on Google for “Bitkoin” (like Bitcoin but with a K), it is a new, totally decentralized token that has gone on pre-sale in recent weeks. ; The team behind the project is anonymous and goes by Zhao Nakamoto as was Satoshi Nakamoto when he created Bitcoin in 2009.
The most original thing about Bitkoin, with only 21 million tokens, is that it distributes 5% daily rewards in Bitcoin (BTC) to its holders. His path is expected to be as successful as that of his predecessor.
You can participate in the Bitkoin pre-sale from only 2.5 euros (10 Bitkoin) and thanks to the tutorial videos you find on its official website (www.Bitkoin.finance) you can enter the world of decentralized finance in a simple and safe way , investing an amount of money equivalent to a good chocolate and churros.
Through the Trust Wallet you can connect to 2 large Decentralized Exchanges called: PancakeSwap and Uniswap. That is where you can buy and sell most of the existing cryptocurrencies.
Now it's time to talk about what interests the reader most:
How can I use my money? o How can I transfer money to my checking account?
Once you have generated profits you can do 2 things:
The first is to transfer your profits (for example, USDT dollars) to a centralized exchange (for example, Binance or Coinbase) and from there change them to euros to transfer them to your checking account in Spain, and finally declare them to the Tax Agency as capital gains by paying a tax that varies depending on the amount between 19% and 26%.
The second option is not to move your profits from the blockchain (DeFi), and go to web3 companies that offer debit cards for use in Europe.
One of the most famous and recognized companies is Monolith (DeFi debit card), their debit card has no opening costs, no annual cost, it can only be used in Europe, what they charge is 1% to add your cryptocurrencies to your portfolio electronic on their website and then charge 1.75% of all your purchases with a limit of 500 euros per day.
I would say, literally, that whoever uses this debit card becomes invisible, impossible to track and locate. A true ghost.
So buying, selling and storing your cryptocurrencies in Trust Wallet is an option to store your “galactic” holdings anonymously.
When it is your decision, you can send your cryptocurrencies to a centralized Exchange and from there finally declare them to the Tax Agency.
In this way, a digital asset remains anonymous, there is no identity, only a Trust Wallet with its 12 words.
This article is merely informative and the reader has the freedom and right to delve deeper into decentralized finance, taking any personal action or decision under his or her own responsibility.
Note: The author of this article only expresses his professional knowledge about centralized and decentralized economies in a harmonious and didactic way, in order to be able to provide the reader with a broader vision of their tax obligations at the time in which their digital assets appear. in his name.