As promised, follows Part II of our series of questions and answers on Income Tax and bitcoin taxation.
Soon, Part III will be made available, which will be dedicated to filling in the income tax return, for application as soon as the Federal Revenue generating program becomes available.
36. Whoever handled less than 35k / month has to inform the IRS?
It is necessary to separate the answer into two topics, since the declaration of cryptography is made monthly (under IN 1888) and annually (at the time of the IRPF)
Regarding IN 1888
If the transactions were made in a national exchange, it has already declared all its monthly transactions, regardless of value. If made on foreign exchange or non-exchange, it is necessary to declare IN 1888 whenever the sum of transactions exceeds 30k / month.
Regarding the IRPF:
Yes, you have to declare it annually.
37) Regarding the limits, to calculate the profit, are the 35K / month related to the profit or the sale value?
For the definition of the exemption range, total disposals are considered, not profit.
38) If I only exchange between crypts (use of exchange pairs – example: BTC / LTC), do I still need to observe the limits?
Yes. Consider the currency quote on the exchange date, both for the departure of one and for the entry of the second.
39) Is the tax levied on the exchange?
Yes. You see, you bought a currency for an “x” price on a date whose quote was a specific one. Then, on the exchange date, you will use that currency previously acquired by a “y” quote, from the date of the transaction. That is, you are, technically, making her profit (if there is profit). And with that amount you will acquire another currency.
In practice, for tax purposes, you took advantage of the valuation of the first to buy the second. I recommend reading the posts How to pay less tax completely legally and How to pay less tax on hold.
40) When I make a purchase with cryptocurrencies, is this use of cryptocurrency considered alienation?
Yes! When you use your crypto to make purchases, you are, in practice, making your currency, since you are lowering it from your stock.
41) How do I determine this achievement when spending on crypto?
You had it for the amount you purchased (cost). When using it for consumption, it acquires new value at the quotation of the day. This new value, less the cost you had on the purchase, is the profit or loss, depending on the quotation on the date of the write-off.
42) So, if I drink a coffee paying in crypto, do I pay income tax?
Not necessarily, because, always remembering, your exemption limit is 35K / month.
43) Does IOF apply to cryptocurrency spending?
44) I get paid in cryptocurrencies. Which quotation do I use?
From the date of receipt.
45) How do I make this control regarding what I bought less than what I spent?
There is no escape from doing a stock control of coins. Identify, in your case, the best method of controlling this stock.
46) Ah, but then I will trade only on the stock exchange. So I don't need that kind of control, right?
Wrong. At the stock exchange, you always do this same type of stock control, with the difference that you won't be able to buy a coffee by paying with one share.
47) Why can't I compensate for losses, as in operations on the Stock Exchange?
Taxation on the Stock Exchange is an old and improved matter over the years. Cryptocurrencies, on the other hand, are a more recent phenomenon. It is not yet possible to compensate for the losses, but this should be made possible in the near future.
48) If I negotiate with someone who declares and I did not declare, can I have problems?
Yes. Without a doubt, as the inconsistency will be detected by the IRS.
49) If I decide not to declare, will there be any impact on my CPF?
It is possible that it is. It may be that your CPF is considered "pending regularization" by the IRS.
50) What does pending regularization mean?
This situation occurs when the taxpayer fails to submit a declaration to which he was obliged, such as, for example, the Personal Income Tax Declaration for the last five years, or the Annual Exempt Declaration (until 2007). I recommend reading the post Do you have Bitcoin and have your regular CPF? Attention to IR 2020 !.
51) What tool can I use to calculate my monthly profits, losses and balances?
Make a map of all your operations, monthly. Much attention to trades.
52) I just want to make the statement of IN 1888 and I don't want to do anything else. It's possible?
No. If you had to make the IN statement, it was because you moved more than 30K / month in transactions. Consequently, it will be necessary to make an assessment, verifying whether there was profit or loss month by month, resulting in an obligation to declare in the IRPF.
53) I only hold. Do I need to do all this?
No. If you only do hold, its controls are basic (quantity and cost control). It only creates an obligation to declare for IN when it purchases or carries out (whether abroad or outside of exchange).
Only do GCAP when it is realized and there is a profit subject to IR. And the declaration of the balance annually in the IRPF is mandatory as well.
54) How do I post Atlas Quantum earnings?
In this case, the amount in the balance increases without increasing the cost amount. Thus, when selling, these fractions will have no acquisition cost (zero cost).
55) I have BTC “stuck” in an exchange in the process of Judicial Recovery. Do I need to declare?
Yes. State it.
56) Do I pay tax on bitcoin that I was unable to withdraw?
Here, be very careful. The taxable event occurred when you sold your BTCs in the exchange (arbitration). If you made these disposals in a period prior to the locks, you must pay. If later, analyze the possibility of deferred income tax with your accountant.
57) I don't have extracts from all exchanges. What do I do?
The first point here is that it is your responsibility to always have this documentation. Something that the IRS has been reporting since 2017, recommending to keep extracts, prints, etc.
But if you don't have it, patience. In this case, make a survey of everything you have and set up your operations in an understandable way, aiming at the possibility of this being analyzed by the IRS.
Have your map and extracts. Find out what you can compose. Remember that it is better for you to check with what you have, than to stop checking.
58) I do arbitration, but I don't bag at Fiat. There is no tax, right?
Wrong. Every time you sell it to buy it back, it does. In practice, it will always focus on the gain you had between one operation and another.
59) But does this not constitute bi-taxation?
No. You will only pay on the profit of each round (one less than the other) and, in fact, when you withdraw, you will only be paid tax on the last round (the previous ones will already be paid).
60) For those who operate on national and international exchanges, is it correct to account for all national + international movements to calculate taxes and to send only international data through GCAP?
No. In GCAP all disposals go above 35k, if there is profit.
61) For those who only operate on national exchanges and exceed the limit of 30k in monthly transactions, is it also necessary to report through GCAP?
Not necessarily. The GCAP is only completed for profit calculations.
62) Do I need to deliver the GCAP monthly?
No. Although the GCAP is generated month by month, if there is profit, the file is only used upon export to the Income Tax in April of each year. It is not sent at any other time.
63) Can I use GCAP every month to generate DARF, without the need to export to the Revenue?
Yes. It can be used for calculations, tests and DARF issuance. The file, as already mentioned, is only exported in April.
64) Do I need to inform my currency balance in the IRPF?
65) In the declaration provided for in IN 1888, when filled out by the taxpayer, is information on the balance of crypto assets necessary?
No. The balances are mandatory in the national ones, in relation to the balance at the end of the year.
66) Does the IRPF balance information only concern national exchanges?
No. In the IRPF it is necessary to inform ALL the balances.
67) How to report losses from scams, hacked exchanges, loss of wallets, etc.?
Through write-off in the declaration of assets and rights, reporting, in the history, the fact that led to the write-off (in a summarized form). It is also interesting to keep news, vouchers and prints, if necessary filing with the IRS.
68) What are the penalties I am subject to in case of non-delivery of IN 1888?
I – for the extemporaneous provision:
a) R $ 500.00 (five hundred reais) per month or fraction of a month, if the declarant is a legal entity in the beginning of activity, immune or exempt, opting for the Special Unified System of Collection of Taxes and Contributions due by Micro and Small Businesses. Small Size (Simples Nacional), instituted by Complementary Law No. 123, of December 14, 2006, or that in the last statement presented, it determined the Corporate Income Tax (IRPJ) based on the presumed profit;
b) R $ 1,500.00 (one thousand and five hundred reais) per month or fraction of a month, if the declarant is a legal entity not included in item “a”; or
c) R $ 100.00 (one hundred reais) per month or fraction, if an individual;
II – for providing inaccurate, incomplete or incorrect information or omitting information:
a) 3% (three percent) of the value of the operation referred to in the omitted, inaccurate, incorrect or incomplete information, not less than R $ 100.00 (one hundred reais), if the declarant is a legal entity; or
b) 1.5% (one integer and five tenths percent) of the value of the transaction to which the missing, inaccurate, incorrect or incomplete information refers, if the declarant is an individual; and
III – for failure to comply with the RFB subpoena to comply with an ancillary obligation or to provide clarifications within the deadlines stipulated by the tax authority, the amount of R $ 500.00 (five hundred reais) per calendar month;
§ 1 The fine provided for in item “a” of item II of the caput will be reduced by 70% (seventy percent) if the declarant is a legal entity opting for Simples Nacional.
§ 2 The fine provided for in item “b” of item I of the caput will also be applied, in case of presentation of information outside the period provided for in art. 8, to the legal entity that, in the last statement, used more than one method of calculating profit or carried out a corporate reorganization operation.
§ 3 The fine provided for in item I of the caput will be reduced by half in cases where the accessory obligation is fulfilled before any official procedure.
Art. 11. Without prejudice to the application of the fine provided for in item II of the caput of art. 10, communication to the Federal Public Ministry may be formalized, when there are indications of the occurrence of the crimes provided for in art. 1 of Law No. 9,613, of March 3, 1998.
It should be noted that in addition to the fines above, the taxpayer is subject, through cross-checking, to a tax mesh procedure, collection and inspection, in addition to framing crimes such as tax evasion and evasion.
About the author
Text written by Ana Paula Rabello and originally published on the blog Declarando Bitcoin. Ana Paula is an Accountant, Judicial Expert and Income Tax Specialist.