Over the years since Bitcoin was born – and there are thirteen already – more and more cases are accumulating where someone has died and left a certain amount of cryptocurrency to inherit among their holdings. A legacy that can be caught on foot turned into more than one: If resolving the hereditary problem at the time of emotional bankruptcy is already complex, it is even more complex to unblock a situation in which the legal, technological and often ignorance of heirs and even lawyers intervenes.

Additionally, more factors come into play: If cryptocurrencies can be accessed, do they need to be taxed? How? Is it taxed on capital gains as well? Let’s say if someone buys 1,000 euros worth of cryptocurrencies and sells it for 10,000, he has to pay around 20% for the 9,000 euro profit. Does the heir have to pay for it too? Ceca Magán Abogados helped us answer these questions.

Without taxing capital gains, but yes for other taxes

Firstly, deceased person will not be taxed on capital gains (profit from the operation). “According to the provisions of Article 33.3.b of the Decree Law, there is no capital gain or loss due to lucrative transfers (called capital gains of the decedent) due to the death of the taxpayer”, explains. Paula Gamez, Expert cryptocurrency lawyer. In other words: it will be taxed on the inheritance of cryptocurrencies, but not on any capital gains the deceased may have achieved.

The places that the heirs have to pay are included in the Inheritance and Gift Tax (ISD). This is a tax on autonomous communities and should be taken as a reference to know the percentage payable. place of residence of the deceased.

However, an important nuance comes into play: “Cryptocurrencies must be valued at market value at the time of death, and that’s where the challenge lies,” says Paula. Spain does not yet have a specific regulatory framework for cryptoassets, so the DGT (Directorate General of Taxes) is responsible for clarifying the tax treatment regarding property, activities or legal businesses linked to cryptocurrencies.

“While the DGT has not decided that cryptocurrencies should be taxed in inheritance tax, it has decided that they should be taxed as VAT, personal income tax, and Wealth Tax (IP),” says Paula.

“For intellectual property purposes, as with inheritance tax, cryptocurrencies should be valued for their equivalent value in euros, specifically at market value “as a capital in a foreign currency”, and we understand that this result is a perfectly predictable one that the heirs have to pay the inheritance tax. In the community, cryptocurrencies should be treated as ‘foreign currency capital’, their equivalent value in euros, or at the time of the death of the cryptocurrency holder”.

This point is important as Delaying the settlement of the inheritance for too long may result in us paying taxes on an amount of money that does not match what we received.. In other words: if the value of these cryptocurrencies fell from death to collection time.

An example: If your father had 10,000 euros in Bitcoin when he died, you would pay taxes on that amount, even if it was only worth 3,000 when you bought it.. importance timing extreme in this regard due to the volatility of cryptocurrencies.

One final note: an heir, a exchangeIf the cryptocurrencies are together, if you do not have the access codes, you must submit documents such as death certificate, will and testament as well as an heir or testament statement.

And Paula explains: “After the death of the owner of the cryptocurrencies, exchange Passes the keys to the heirs so that they can access the cryptocurrencies without previously presenting the supporting documents of the inheritance tax, they can be considered liable for the inheritance tax that has been stopped by them”.

technical problems

The comments in the previous paragraphs apply to exchange houses such as Coinbase, which can unlock access to cryptocurrencies (some also allow a living heir to be appointed to facilitate the process), but the deceased may not be able to use cryptocurrencies as a gift. cold wallet (a physical wallet), only knowledge of the keys will allow access to its interior.

In this case, if someone is in this situation, it is recommended that they add an access path to themselves in their will, or entrust the keys to an over-trusted person, worth the redundancy.

This part is thorny as depositing access codes elsewhere accessible by a third party can lead to theft of cryptocurrencies. should be especially careful.

If the deceased had this wealth in a physical wallet and left nothing planned in case they died so that their relatives could access cryptocurrencies, this is unlikely to be resolved after death. Some of the 4 million bitcoins that are thought to exist forever are related to situations like this. hodler till the end.