Learn how to declare cryptocurrencies in Income Tax 2022

Taxpayers who own cryptocurrencies and other crypto-assets and are required to declare the Income Tax in 2022 cannot forget to inform their investments to the IRS.

According to the tax authorities, when the purchase value of each type of crypto asset is equal to or greater than BRL 5,000, the investment must be included in the declaration. Assets of smaller values ​​do not need to be declared.

The deadline to declare the IR goes until May 31. Whoever is obliged and delays the delivery of the declaration pays a minimum fine of R$ 165.74, which can reach 20% of the tax due in the year. Anyone who omits income or makes any other mistake falls into the fine mesh and can be fined.

Cryptocurrencies and other assets must be declared in the “Assets and Rights” form. For each type of asset, open a new tab under “New”. According to David Soares, a specialist in Income Tax at IOB, there is a specific group for investments of this type, which is group 8 of this sheet.

“The IRS separated the goods into groups, and this specific group is a novelty”, says Soares. After choosing the group, the taxpayer must indicate the code of the crypto asset they are declaring.

There are five options for cryptocurrency codes in IR:

• 01 – Bitcoin Crypto – BTC
• 02 – Other cryptocurrencies, known as altcoins, for example, Ether (ETH), Ripple (XRP), Bitcoin Cash (BCH) and Litecoin (LTC)
• 03 – Cryptoassets known as stablecoins, for example, Tether (USDT), USD Coin (USDC), Brazilian Digital Token (BRZ), Binance USD (BUSD), DAI, True USD (TUSD), Gemini USD (GUSD, Paxos USD ( PAX), Paxos Gold (PAXG), etc.
• 10 – Crypto assets known as NFTs (Non-Fungible Tokens)
• 99 – Other crypto assets

According to the IRS, the code “99-Other cryptoassets” should be chosen when dealing with assets that do not fit the other codes. In this option are the various utility tokens, used to access specific services, such as games, fan tokens (for fans of football clubs or other sports), as well as tokens linked to real assets or rights, such as real estate , actions, court documents, consortia contemplated, football player passes and carbon credits, among others.

What to write in the discrimination field

It is also necessary to inform whether the asset belongs to the holder of the declaration or to a dependent on the IR. Also state which country you purchased the asset from. In “Discrimination”, enter data such as type of currency, quantity, when purchased, name and CNPJ of the custodian. If the custody is your own, make this information clear on the form and inform the type of wallet.

According to Soares, when the custody of the crypto-asset is carried out by an exchange, a broker specializing in this type of trading, the taxpayer must have access to the income report, which contains the information necessary to declare the IR without making any mistake.

The Revenue also informs that, depending on the code chosen, there is a way to fill in the “Discrimination” field. For those who declare in code 01, the description must have the following information: quantity and where it is in custody (company name with CNPJ or own custody).

Assets in code 02 must contain information such as type, quantity and where it is held in custody (company name with CNPJ or own custody). For each type of crypto asset (ether, binance coin, XRP, bitcoin cash, litecoin, cardano, solana, dogecoin, for example), open a different chip under “New”.

For stablecoins, code 03, the “Discrimination” field must contain type, quantity and where the currency is held in custody (company name with CNPJ or own custody). Examples of stablecoins are tether brazilian digital token, USDC, dollar binance, trueUSD, DAI, paxos gold and gemini dollar.

In the case of NFTs, which go in code 10, and for other cryptoassets, in code 99, inform type, quantity and where it is in custody (company name with CNPJ or own custody).

Declared values ​​are always those of the purchase

The taxpayer must fill in the value of the crypto-assets in the “Status on 12/31/2020” and “Status on 12/31/2021” fields. The main guidance of the specialists is that, in the declaration, the values ​​informed are always those of the purchase, even if the asset has appreciated throughout the year.

Those who bought the crypto asset in 2021 must leave the 2020 field blank. Those who sold a cryptocurrency last year must write off this asset, leaving the “Status on 12/31/2021” blank.

For those who sold only part of the cryptocurrencies or any other asset, this information must appear in “Discrimination”. In the “Status on 12/31/2021” field, you must inform the value of that asset at the end of last year.

And when there is profit?

Richard Domingos, executive director of Confirp Accounting, says that when the crypto asset is sold and the taxpayer makes a profit, those amounts also need to be declared. There is, however, an exemption for sales whose operation is up to R$ 35 thousand.

In the case of commercialization of greater value, called sale by the tax authorities, it is necessary to have completed the Capital Gain program (GCap) by the last business day of the month following the sale and pay IR of at least 15%. In this year’s IR statement, just import the GCap data on the left.

Samuel Gaudêncio, partner at Gaudêncio Advogados, the Revenue recognizes the IR exemption on cryptocurrency profits. The limit value of BRL 35,000, however, is monthly and applies to all types of crypto-assets or virtual currencies.

Davi Soares, from IOB, informs that the profit from disposals of up to R$ 35 thousand must be declared in the “Exempt and Non-Taxable Income” sheet, in line 5, of exempt capital gain in this type of operation. Also inform the gain value manually or import it from CCap, if you have filled in the program.

Monthly statement to the Revenue

Those who carry out monthly cryptocurrency sales operations also need to fill out a specific statement from the Federal Revenue Service for this type of transaction in the month in which they sold the asset. “If you buy or sell cryptocurrencies in an amount greater than R$30,000 a month, you have to notify the Federal Revenue. There is a declaration called cryptoasset declaration”, says Soares.