Mined cryptocurrencies will be treated as inventory and taxed upon sale

The tax treatment of digital assets obtained through mining processes has been defined following a recent resolution from the Directorate General of Taxes (DGT). The ruling addresses how to include this income in the taxable base of Corporate Income Tax (IS).

What the DGT has resolved

The Directorate General of Taxes (DGT) establishes that cryptocurrencies obtained through mining activity are classified both accounting-wise and for tax purposes as inventory. Consequently, their valuation must be carried out according to their production cost.

Regarding the timing of taxation, income is not recognized at the moment the cryptocurrency is obtained, but only when the control of said asset is transferred to a third party, for the amount of the consideration received. Likewise, the regulations allow for the following treatments:

• Impairment losses on this inventory are tax-deductible.
• The reversal of such losses is possible when the causes that originated the impairment disappear.
• The recognition of revaluations of cryptocurrencies is not permitted while they remain in the company's inventory.

What this means for you

If your company carries out cryptocurrency mining activities for the purpose of commercializing them, you will not be able to compute profits based solely on the appreciation of the market value of your assets while you hold them. The tax impact will occur exclusively at the moment of sale or transfer.

This criterion requires companies in the sector to maintain rigorous control over the production cost of each mined unit, as this value will be the basis for determining the profit or loss in the subsequent sale operation.

What you should do

Companies operating in this field must ensure that their inventory valuation system complies with the requirements of the Corporate Income Tax Law (LIS). It is necessary to implement control mechanisms that allow for the precise identification of the production cost and the correct documentation of the moments of impairment or reversal to avoid discrepancies with the Administration.