Token Taxation. Second Q&A at The Token Club

Token taxation is an increasingly relevant topic in the financial world, especially for investors and companies looking to operate legally and optimize their tax obligations. In our second “The Token Club” Q&A, we explored how the tax obligations of tokens and cryptoassets are handled in different jurisdictions.

These were some of the questions that the audience asked directly to the experts during the Q&A, seeking to resolve their doubts about the taxation of tokens in various jurisdictions:

How should the income obtained from the sale of tokens be declared in Spain?

In Spain, income derived from the sale of tokens is considered capital gains and must be declared in the income tax. It is crucial to keep a detailed record of all transactions, including dates of acquisition and sale, as well as the corresponding values. Gains are subject to different tax brackets depending on the total amount of annual gains. In addition, current regulations require cryptoasset holders to report their annual positions and intermediaries, such as exchanges and custodians, to report trades and balances. It is essential to comply with these obligations to avoid penalties and ensure fiscal transparency.

Question to Héctor Torres about El Salvador

What tax benefits does El Salvador offer for companies operating with cryptoassets?

El Salvador, a pioneer in adopting Bitcoin as legal tender, offers several tax incentives to attract investments in cryptoassets. These benefits include tax exemptions on capital gains derived from Bitcoin transactions and other incentives for cryptoasset-related businesses. These tax benefits are designed to encourage local and foreign investment, facilitating a secure and favorable environment for technological innovation. In addition, El Salvador's legal framework provides clarity and security for companies seeking to establish operations in the country, making El Salvador an attractive destination for cryptoasset companies.

Question to Ana Elisa Iparraguirre about Argentina

How are operations with tokens issued and managed from Argentina controlled?

In Argentina, transactions with issued and managed tokens are subject to income tax and, in some cases, personal property tax. Gains from the sale of cryptoassets must be declared and are subject to a 15% tax rate for individuals. In addition, tokens issued in Argentina are subject to tax if they exceed certain thresholds. Argentine tax authorities also require justification of the source of funds used to acquire cryptoassets, which can complicate the process if you do not have a clear record of transactions. It is important to be aware of regulatory changes and have specialized tax advice to comply with all obligations and avoid penalties.

Question to Sergi Andrés about Andorra

What specific tax advantages does Andorra offer for cryptoasset investors?

In Andorra, cryptoassets are considered digital assets and are subject to favorable taxation. Income derived from their sale is subject to personal income tax (IRPF), but at competitive tax rates. The first €24,000 is exempt, income between €24,000 and €40,000 is taxed at 5%, and any amount above that is taxed at 10%. In addition, Andorra's digital asset law offers a 25% reducing coefficient for each year that cryptoassets have been held, which significantly reduces the tax burden for long-term investors. These benefits make Andorra a very attractive destination for cryptoasset investors seeking a favorable tax environment.

General Question to All Experts

What is your opinion on the taxation of tokenized Real World Assets (RWA), and what controversial legal issues could arise?

Íñigo Egea (Spain): The taxation of tokenized Real World Assets in Spain can be complex, given that these assets can include real estate, works of art or financial products. The main legal controversy could arise from the valuation and taxation of these tokenized assets. The lack of clear regulations specific to tokenized RWAs can lead to conflicts with the tax administration on how these assets should be valued and declared, underscoring the need for specialized tax advice.

Hector Torres (El Salvador): In El Salvador, tokenized RWAs would benefit from the same clarity and legal certainty as other cryptoassets, including tax exemptions on capital gains. One legal controversy could be the proper custody and transfer of the rights associated with real-world assets, ensuring that the tokens actually represent the underlying assets and that these can be legally transferred through the blockchain.

Ana Elisa Iparraguirre (Argentina): The taxation of tokenized RWAs in Argentina should consider income and personal property taxes. A significant legal controversy could arise from the need to register the real rights of the underlying assets, such as real estate, which traditionally require deeding and registration in local entities. Tokenization of these assets could face challenges in terms of legal recognition and compliance with property registration rules.

Sergi Andrés (Andorra): Andorra offers a favorable tax environment for tokenized RWAs, with advantages such as exemption of the first €24,000 of income and reducing coefficients. However, a legal controversy could be double taxation and coordination between different jurisdictions, especially if the underlying assets are located outside Andorra. The need to harmonize the taxation and recognition of these assets between different countries could be a significant challenge.

Conclusion

Understanding the taxation of tokens in different jurisdictions is essential to operate legally and optimize tax obligations. The Token Club experts provided valuable insights on how to manage these liabilities in Spain, El Salvador, Andorra and Argentina. Join our next Q&A to get personalized answers and connect with professionals who can help you navigate the complex world of cryptoasset taxation - sign up now and take your knowledge to the next level!