If you have started investing in cryptocurrencies, you might be wondering how and when to declare the corresponding taxes. Don't worry, this guide will provide you with the necessary information to assist you in this process.
Taxes on Cryptocurrencies
To begin, consider the following key questions related to taxes on cryptocurrencies:
Have you made sales of ETH or other cryptocurrencies with gains? If you've sold cryptos for a value higher than the purchase price, it's important to consider the gains for tax declaration.
Have you engaged in trading or exchanging cryptocurrencies? Trading or exchange transactions can also have tax implications, so make sure to take them into account when filing your taxes.
Have you conducted remittances with cryptocurrencies? If you've sent cryptos as remittances, this could also have tax implications you need to consider.
Have you engaged in trading or holding activities? Depending on your investment strategy, whether it's active trading or long-term holding, there could be different tax implications.
If the answer to some of these questions is yes, you likely need to declare taxes.
An important point before you start:
Before you begin, it's essential to highlight that we don't provide tax advice. This guide is for informational purposes only and aims to help our users become aware of their tax obligations. If you have questions or concerns about your taxes, we recommend consulting a lawyer or accountant. You could also seek assistance from a knowledgeable friend.
The responsibility for this obligation lies with you!
Do I Have to Pay Taxes for Using Cryptocurrencies?
Cryptocurrencies are becoming a part of our everyday lives, and we increasingly use or rely on them.
Keep in mind that tax obligations depend on many variables, such as:
- Total taxable income received during the year.
- Whether you're an individual or a corporation (company or entity).
- Whether you're subject to VAT or not.
- Whether you're required to maintain full accounting records.
- Other specific conditions.
If you live in Argentina, you'll need to pay taxes when:
- You buy or sell cryptocurrencies, resulting in increased value.
- You hold cryptocurrencies at the end of the fiscal year without selling them.
Let's briefly go over existing taxes to make things clearer:
Income Tax: Regarding potential gains from buying or selling cryptos, they're treated the same as assets like stocks or bonds. Starting from a minimum threshold, 15% tax is levied on gains. These gains fall under the provisions of the 27430 Financial Income Law.
Personal Assets Tax: You can consider crypto holdings when making your annual declaration, especially if you plan to use cryptos for future purchases. It's best to use funds that are also declared to avoid justification problems.
However, the regulation is unclear as it considers both national and foreign cryptos, generating doubts about their treatment. Since cryptos aren't stored locally but exist worldwide, the law doesn't clarify. Some think crypto holdings are taxed, while others lean towards exemption. There's no unanimous stance.
Those closer to the tax authorities claim crypto assets are taxed, while others argue cryptos are intangible assets and thus exempt. In any case, the general opinion is that eventually, the tax agency will interpret cryptos as taxable and demand the corresponding tax payment.
VAT: The law doesn't specify, but the consensus is that buying and selling cryptos isn't subject to VAT, so VAT registration isn't necessary.
Monotributo - Self-Employed - Companies: If your activity specifically involves buying and selling cryptocurrencies for income, you should issue invoices just as you would for any other goods, provided there's regularity in transactions. Otherwise, sales of cryptos shouldn't be invoiced, as taxes are governed by the 27430 law, with a similar framework across provinces.
Income Tax: What Does Law 27430 Say?
"When the determination of the net gain of the subjects referred to in the first paragraph of this article includes results covered by Title IX of this law from operations involving the sale of shares, representative securities and certificates of deposit of shares, as well as other securities, quotas, and social participations — including shares of investment funds and participation certificates of trusts and any other rights on trusts and similar contracts — digital currencies, securities, bonds, and other securities, as well as the sale of real estate or transfers of rights over real estate, these will be subject to tax at a rate of fifteen percent (15%)."
It's worth clarifying that there's a non-taxable minimum. For 2018, it was $66,917.91; for 2019, $85,848.99; for 2020, $123,861.17. For 2021-2022-2023, there's no update from the tax agency, and we recommend consulting your trusted accountant.
Calculating Gains or Losses:
You'll need your transaction history, which you can download from both crypto and fiat wallets. Compare the difference between purchases and sales to deduce if you've gained or not.
This taxation applies to individuals as well as companies.
Which Calculation Method to Use?
If you bought once and sold at a profit, the calculation is straightforward. For example:
- Selling Price – Purchase Price – Fees = Gross Profit.
- Gross Profit – Non-taxable Minimum = Net Profit.
- Net Profit * 15% = Tax to Pay.
In practice, you likely have multiple entry and exit prices at different times. Therefore, there are methods like:
- FIFO (First-in-First-Out)
- LIFO (Last-in-Last-Out)
- CPP (Weighted Average Cost)
Personal Assets Tax
As mentioned earlier, the law keeps an area of ambiguity regarding this tax. There's even a different rate between foreign and local assets, with foreign assets taxed at 2.5% and local assets at 1.5%. However, these distinctions don't apply to cryptocurrencies, making this tax quite self-determining.
Prepare Your Forms
Both financial income and personal assets taxes are calculated using forms that your accountant will download from the AFIP portal and fill out based on the information you provide. For financial income, your transaction history and fees are usually sufficient. For personal assets tax, providing information in a declaration is enough to reflect your tax liability at year-end.