According to article 27.1 of the LIRP, economic activity income can be defined as
"those which, proceeding from personal labor and capital jointly, or from only one of these factors, involve the taxpayer's own management of means of production and human resources or of one or both, with the purpose of intervening in the production or distribution of goods or services."
According to this legal wording, the concept of income from economic activities is delimited by the concurrence of two facts: the existence of an autonomous organization of means of production or human resources and the purpose of intervening in the production or distribution of goods or services.
First of all, we can briefly define cryptocurrency mining as those operations that allow the creation of new blocks, from which in turn new cryptocurrencies are derived and which are remunerated by the system or protocol with an amount of them.
A miner therefore engages in an economic activity, since, in order to be able to undertake this action, it is assumed that material means and other resources have to be arranged in order to be able to participate and intervene in the provision of a service for which they receive a consideration.
With respect to personal income tax, the income obtained from the mining activity will be included in the general tax base and, as in any economic activity, the miner may deduct from his income from the activity all those expenses necessary to obtain it, among which may be the depreciation of mining equipment, expenditure on materials and services necessary for the development of the process, and all those related supply expenses used exclusively to undertake the activity.
What implications can the exercise of this activity have on other taxes such as VAT or IAE? Well, for VAT purposes, based on the existing administrative regulations, we can conclude that the development of this activity is outside the scope of VAT, an interpretation that extends to the other activity mentioned about trading, buying and selling, exchange or intermediation in cryptocurrencies for third parties.
We have, to provide confirmation and legal certainty in this regard, different binding consultations issued between 2016 and 2020, which determine that the mining of cryptocurrencies is not subject to VAT since it is impossible to identify the recipient of the transaction, in addition to not being able to determine a direct relationship between the service provided and the consideration received, but involves the performance of an economic activity subject to IAE, for which the taxpayer must register under heading 831.9 "other financial services not classified elsewhere", within the tax on economic activities.within the tax on economic activities. Therefore, neither mining, nor the aforementioned exempt cryptocurrency operations entitle the taxpayer to deduct the VAT incurred for the performance of such activities. Those taxpayers who carry out the activity of buying and selling cryptocurrencies for third parties through a web portal will also have to register under this IAE epigraph.
We can in turn extend this explanation to other related activities, in order to determine their relationship with the VAT tax, such as the rental service of electronic equipment for mining cryptocurrencies. In this case, we would be dealing with an economic activity subject to the tax and not exempt from the payment and presentation of this tax. Services of purchase and sale of cryptocurrencies in vending machines or ATMs, whose operations constitute the delivery of goods subject to and exempt from VAT, as cryptocurrencies are qualified, for the purposes of this tax, as a means of payment assimilated to fiat currency. However, the sale and purchase of cryptocurrencies in these vending machines or ATMs also implies the performance of an economic activity subject to the IAE, for which the taxpayer must register in the epigraph 969.7 "Other automatic machines".. Likewise, we can also state that financial services related to the transmission of cryptocurrencies are exempt from VAT, while those services focused on the research and development of blockchain networks, on the contrary, are subject to and not exempt from VAT.
