In the following interview Sandra Adrián, cryptocurrency and blockchain advisor at MODO CRIPTO, analyzes the taxation of NFTs with a practical example and gives examples of different cases of individuals, freelancers or companies to understand the taxation and taxation of NFTs.
What taxes are payable in connection with the sale and purchase of NFTs?
We have to differentiate in order to be able to give an answer from what perspective or for what purpose the sale and purchase of NFTs is carried out.
If we are simply users, who sporadically buy NFTs because we like them, but after a while we sell them?
In this case we should be taxed in our income tax return as a change in net worth. The amount for which I will have to pay tax will be the yield obtained in the sale, that is to say, the result of calculating the Sales Value of that NFT minus my Acquisition Cost of the same. This gain or loss would be imputed to the savings base, which in case of being positive would be taxed from 19% to 26% by brackets, and in case of being negative it would be subtracted from other gains we may have due to onerous variations. It is important to remember that the losses can be compensated during the following 4 years, with their limitations. Beware if we buy back the same NFT and we have taken a loss, as doing so may imply that we are defrauding.
What if, on the other hand, we carry out this operation on a regular basis?
All those who are regularly making purchases of NFTs with the objective of subsequently selling them for a profit may be engaging in a business activity. If this were the case, its taxation in the IRPF should be treated as an Economic Activity, therefore, it would be necessary to calculate the yield jointly for all the sales and purchases. That is, all income minus expenses.
The fact that it is considered an economic activity also generates other obligations such as registration with the Social Security, bookkeeping and quarterly tax filing.
It is important to point out that in our opinion, depending on the type of NFT, since as of today, neither the Tax Agency nor the DGT has issued any opinion and/or interpretation on NFTs, we understand that the commercialization of NFTs would be considered as a service provided electronically for VAT purposes, and therefore this entails certain peculiarities that should be analyzed, since probably the issuer of the NFT does not have the means to determine whether or not the acquirer of the NFT acts as a businessman or which is his residence.
If we were a partnership, how would we be taxed?
The difference is that as a company it is subject to corporate income tax, which, if it is positive, would be taxed at 15% for the first two years of activity (subject to certain requirements), and at 25% for the following years. In this case, the partners for the work done would receive a remuneration as salary that would be taxed in income to the general base, and if dividends were distributed, we would be faced with a capital gain that would be taxed in the savings base in income.
For VAT purposes, it would be exactly the same as we have discussed in the case of being a self-employed with Business Activity.
For VAT purposes, it would be exactly the same as we have discussed in the case of being a self-employed with Business Activity.
We understand that it would be an economic activity, even if only on an occasional basis. Also if it turns out that there is a common project between several people, it can be a civil society or community of goods, partners are taxed in IRPF, or SCP to IS.
