Cryptocurrencies and their tax implications

Cryptocurrencies have great importance in the global economy. The global trading volume based on cryptocurrencies had very important peaks in 2021. For example, by May 19 of that year, the value of the total cryptocurrency market amounted to 500,000 million dollars.

In December 2021, Mexico was ranked 14th among 27 countries that own cryptocurrencies, and it is estimated that 15% of adult internet users in the country (about 14 million people) have one of these.

Particularly, people from 18 to 34 years old in Mexico predominate in terms of the possession of cryptocurrencies, with 57%; people aged 35 to 45 own 26%; while those over 55 years of age are in last place, with 17%. On the other hand, expert estimates affirm that by 2022, 40% of Mexicans will use cryptocurrencies.

Despite its popularity in the market, and that the Fintech and Anti-Money Laundering laws have considerations in this regard, there is no special tax regulation for the sale of these virtual assets, which sometimes generates the false belief that the sale of these virtual assets does not exist. is taxed. Therefore, our intention is to help you have a clear idea about how you can declare the income from the sale of your cryptocurrencies to the SAT.

If you are one of those who invest in cryptocurrencies and want to get more out of your investment, or simply want to learn a little more about this topical topic, this article is for you. We hope that this guide will help you understand this topic and lose your fear!

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What are cryptocurrencies?

Cryptocurrencies are a currency that, despite not being regulated by the governments of several countries, is legal. However, we have the example of El Salvador, a country in the world where cryptocurrencies are considered legal tender, that is, they are accepted as a form of payment for all types of purchases. Other countries such as Germany, Portugal, Singapore and Switzerland are considered quite friendly to its use, to the point of being widely accepted in many establishments.

For Mexican law, cryptocurrencies are virtual assets, used as means of payment, alternatives to conventional money, to exchange goods or services. However, they are not yet recognized by the Bank of Mexico as legal tender.

Despite this, in Mexico, many people are dedicated to buying cryptocurrencies, waiting for them to acquire a high value and then sell them and thus obtain a profit. They are also often used as a means of payment, since there are many cases where they are accepted as currency.

Cryptocurrencies operate with their own codes and, thanks to the nature of the technology blockchain, it is almost impossible to duplicate transactions or produce fake cryptocurrencies. For this reason, it is considered safe to invest in them.

Among the most famous are Bitcoin and Ether, but there are more than 7,000 in the world and new ones are being developed every day.

How can I declare my income from the sale of cryptocurrencies?

As previously stated, there is no specific regime in Mexican law that clearly defines the way in which individuals who sell cryptocurrencies must pay ISR.

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Based on this, PRODECON made a detailed study of the tax treatment applied to the sale of cryptocurrencies, and considered that this activity complies with the provisions of article 14, section I, of the Federal Tax Code (CFF) which establishes what is meant by alienation of assets, “…Any transfer of property…”.

Therefore, the Property Disposal Regime of the ISR Law is applicable, where 20% of ISR must be paid provisionally on the total of the operation. However, if the operating income is not more than $227,400, the payment must only be made on the annual return.

When selling cryptocurrencies, it is important to determine the cost of their acquisition, as well as the amount of commission paid to intermediaries. With this, deductions can be applied that allow reaching a tax on real profits.

Example: a sale of cryptocurrencies in the year of $50,000 pesos, where the acquisition cost is $20,000 pesos and a commission of $5,000 pesos, gives us a profit of $25,000 pesos. Based on this, an annual tax would be applied to that amount, without having previously made a 20% payment on the operation.

To inform the SAT of your income from the sale of cryptocurrencies in the annual declaration, it is important to have the information of:

  • Income obtained in the fiscal year
  • Purchase price or cost
  • Date of purchase and sale
  • Commission paid to broker (example: Bitso)

On the other hand, in the opinion of other specialists, cryptocurrencies are personal property and, therefore, their sale is exempt from ISR up to an amount equivalent to $98,080 per year, on the profit. Would you like to know more?

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