Tecnología Financiera

Taxation in Mexico of transactions carried out in «virtual assets»

Taxation in Mexico of transactions carried out in «virtual assets»
agosto 29


This article has been prepared based on the reading of international academic publications as well as some other literature freely available on the Internet on the subject of «cryptocurrencies» or virtual assets.

Also, the content of this article was discussed in two presentations, one private for the International Tax Commission of the Public Accountants Association of Mexico (CCPM) and another public at the XX International Taxation Seminar organized by the same Commission in Acapulco on August 16th of present year.

The comments contained in this article may be debatable in light of the lack of specific regulations in Mexico. Nevertheless, I believe that this article could encourage all tax professionals to continue researching on the topic to define more uniform criteria and evaluate the different types of transactions that currently exist and those that will be developed in the future considering «cryptocurrencies» or virtual assets.


The starting point from which each analysis should always begin is to define the main difference between a digital currency and a virtual asset or «cryptocurrency».

Digital currencies are all those units of value representation that are linked to a currency of legal tender, such as the Mexican peso, the US or Canadian dollar or the euro. These units of value or digital currencies can be said to have the same nature as the currencies of legal tender that support their value.

On the other hand, virtual assets are digital representations of a notional value attributed by the holders of said «assets» that have nothing to back them up, they do not have a reference to a legal currency nor can they be represented in physical form .They are units of value that were developed to carry out exchange transactions between the parties directly without the need for an intermediary and without monetary or governmental regulation (peer-to-peer transactions).

Based on the foregoing, the rest of the article presented here will be limited to discussing the characteristics, attributes and tax questions related to the so-called «cryptocurrencies» or virtual assets.


On the day that the presentation for the XX International Taxation Forum referred to above was prepared there were 1722 different types of cryptocurrencies (July 31, 2018). At the time of preparation of this article (August 21, 2018) there were 1865 which are marketed in 13,224 unrecognized or unregulated “markets”. The «capitalization value» of all the «markets» was approximately $210 billion dollars, with Bitcoin being the highest valued with $111 billion dollars.

The 1865 cryptocurrencies can still be divided into different classes: (i) those that are only created and distributed among members of a community and that only have value within the community itself. Examples are all those currencies created for virtual casinos or even department stores, and (ii) cryptocurrencies for «universal» use which could be exchanged for goods or services whether digital or tangible or for coins of legal tender, either digital or physical.

Likewise, there is another type of cryptocurrency which derives its reference value based on an underlying asset other than currency of legal tender, such as precious metals (gold or silver), oil, shares, etc. These currencies are usually represented by tokens created digitally by an information technology company.

The identification of the particular currency and its characteristics is of vital importance to determine the tax consequences of its exchange between parties.


Bitcoin is by far the «highest valued» cryptocurrency in the 13,224 markets mentioned above. Considering the characteristics mentioned above, it can be said that Bitcoin is a «cryptocurrency» of universal use and that its value is not backed up by any type of underlying whether currency of legal tender or anything else.

It can be said that the real nature of Bitcoin is that of “software” that is open for any party with enough technological and human capacity to work around such platform and carry out an activity called “mining” which will be discussed below.

The main risks associated with Bitcoin are as follows:

  1. Prohibition or government intervention.- There is already history of other «cryptocurrencies» created before Bitcoin that were prohibited by regulatory or government authorities given the high risk of fraud.
  2. Theft (hacking) .- The virtual theft or «hacking» has already happened in some platforms that carried out Bitcoin intermediation and which disappeared leaving the «owners» of Bitcoin helpless due to lack regulation.
  3. Fraud-Given the existence of so many unregulated «markets» and all only existing in virtual form and where the Bitcoin purchaser has no interaction with a person, there is a high level of fraud risk, as there have already been some recent stories as well.
  4. Volatility-The volatility in the «valuation» is undoubtedly very high. Remember that the «value» of Bitcoin recently reached almost $ 20,000 dollars.
  5. Obsolescence.-It is highly probable that Bitcoin is not here to stay and that being a “software platform” in its true nature, Bitcoin will be displaced by other «cryptocurrencies» that provide a more efficient service.
  6. Little use.- The use as a means of exchange is really low in the retail markets of real goods or services.

Given the risks mentioned above, I wonder what is the real value of Bitcoin? In my opinion, the value of Bitcoin can only be given at the moment in which two parties agree to exchange the goods or services for the Bitcoins and this value is only applicable for those two parties carrying out the exchange.

To prove the point, on the night of Wednesday, 17 August, one night before the XX International Tax Forum, I tried to pay the bill of all the 8 colleagues who were having dinner and offered to give 1 Bitcoin for the bill. At that time, 1 Bitcoin had a real value of $ 0.00 since the counterparty did not accept it. Even though the reference value was at that time more than $ 6,000.00 dollars, the real value was $ 0.00.

Moreover, among the thousands of commercial establishments that I have seen, I have only spotted one where Bitcoin was accepted as a means of exchange. This happened on the famous 5th Avenue of Playa del Carmen where there are hundreds of establishments on the street. So if in those holidays I had only brought my «Bitcoin wallet», I would not have been able to eat any food.


The main transactions that can be carried out with cryptocurrencies and that can derive tax implications are as follows:


The  exchange of goods or services for Bitcoin can only be compared in Mexico with a swap or a barter transaction which is regulated under the Federal Civil Code (Title Three Article 2331).  Said provision considers the swap or barter transaction as a purchase-sale transaction. Therefore, a swap of goods or services for Bitcoins can be considered for tax purposes as a dual purchase-sale of goods or services, which would derive  the causation of the value added tax (VAT) and the income tax in both parties involved in the swap.

The value of Bitcoin in the swap transaction will necessarily have to be referenced to the value of the other good or service that is received in exchange for Bitcoin, e.g., the value of a tangible good that is acquired in exchange for Bitcoin. The value attributed by the parties in the swap will be the value of the purchase-sale to determine the VAT and the income tax.

However, if the parties have no way to obtain a tax receipt for the acquisition of Bitcoin in the swap, the party receiving the Bitcoin runs the risk of not being able to claim the VAT in refund or credit and also may not deduct the expense or cost in the acquisition for income tax purposes.

Moreover, since VAT was incurred in the delivery of the good swapped for Bitcoin, said party also bears all the above-mentioned risks and one more: lack of liquidity to make the corresponding VAT payment to the tax authority.


Given the risks outlined above, I doubt that the ownership of Bitcoins is a healthy investment. The risk of disappearance for any of the reasons mentioned above is high. Moreover, if the acquisition of Bitcoin is considered an acquisition of goods or services, we return to the need for tax receipts to support the acquisition. In the event that the vouchers for the acquisition are obtained, the acquisition cost for tax purposes would be the one actually paid.

The next question is the accounting record. It seems that there is no uniformity of criteria in the way in which the acquisition of Bitcoins should be recorded. Some say they are intangible goods, some say they are inventories and other digital financial services. In the face of such questions, the actual valuation for financial purposes should also be discussed and argued for tax considerations. Let’s remember that proper accounting is a necessary requirement in Mexico for tax deduction. The question would be if you can really value Bitcoin given that the real value is that of the swap when the exchange actually takes place.

In the case of the sale, there is no doubt that the income received in currency, goods or services would be the gross income that would be compared with the cost to determine the gain or loss in the exchange of the Bitcoin that was originally acquired as an investment.


Bitcoin mining is the activity through which a party or group of parties with sufficient technological power expressed in equipment and human talents get into the open source Bitcoin software and given the circumstances at some point they are awarded with Bitcoins for their activities on the software platform.

The prize in Bitcoins can only be considered an item of taxable income until the award is exchanged for currency, goods or services. It does not make sense to consider that the Bitcoin award is a taxable income when it is received.

However, the investments made in computer equipment for the development of the activity must be capitalized while the costs and expenses could be deductible if they are considered strictly indispensable for the conduit of the enterprise’s business in compliance with the other deduction requirements established on the Income Tax Act.

Regarding the VAT, the sale of Bitcoin, as we said, would cause VAT if it is made in national territory. While if the sale is made abroad, there is a risk that the transaction does not qualify as export of goods or professional services, thus, also subject to VAT.


ICOs can have different modalities depending on what is offered by the offeror of the currency. Traditionally, the offeror goes onto a virtual market with a unit called «token» that he places and exchanges for cryptocurrencies. The bidding process is traditionally used to finance new projects. The «token» can be exchanged for different things, from royalties or services or be backed up by merchandise, securities or, in a few cases, by shares or debt.

This type of transactions has been compared to the traditional collective fundraising mechanisms also known as crowdfunding.

Tokens offered may have a reference value depending on what supports them. The acquisition of the tokens could in any case become a depreciable asset depending on the reception of the goods or services promised in the exchange.

However, who has the most questions to resolve is the token issuer. Suppose that a Mexican company issues a token to finance the construction of a technology platform based on artificial intelligence and the token is represented by services to be supplied through said platform for 10 years. In this case, I believe that we are in a situation of services charged in advance which should be accrued as taxable income at the time of receipt of the cryptocurrencies.

On the other hand, crowdfunding transactions in Mexico must be carried out under the terms of the Act that Regulates Financial Technology Institutions also known as the FINTECH Act and the General Regulations issued by the Bank of Mexico. For this reason, crowdfunding transactions denominated in cryptocurrencies are traditionally carried out outside of Mexico.


The FINTECH Act recognizes cryptocurrencies as «virtual assets» and defines them in article 30 as the value representation electronically registered and used by the public as a means of payment for all types of legal acts and whose transfer can only be carried out through electronic means. In no case the virtual asset shall be understood as currency of legal tender in the national territory.

In accordance with this Act, the Financial Technology Institutions regulated and approved by the National Banking and Securities Commission, may only operate with virtual assets that are determined by the Bank of Mexico through general regulations. In these provisions, the Bank of Mexico may establish the  terms and conditions that the Institutions must observe for the cases in which the virtual assets approved are converted into other types of assets or modify their characteristics.

In order to carry out the transactions with the virtual assets referred to in the preceding paragraph, the Institutions covered by the Act must have prior authorization from the Bank of Mexico.

As of today the regulation from the Bank of Mexico has not been issued.  Therefore, as expressed in the XX Forum of International Taxation, the current operations with Bitcoins are not regulated by the FINTECH Act referred to.

In addition to the foregoing and as a support to my conclusions, the Bank of Mexico has launched a public consultation in accordance with its communication of 15 August of this year, «to establish, among other things, the terms and conditions regarding the issuance of electronic payment funds. referred to foreign currency or virtual assets and, in general, the carrying on of transactions with foreign currencies, as well as the provision of money transfer services referred to in the Act in foreign currency «.

That said, the rules referred to in the Act have not been issued and therefore the Act does not regulate transactions in virtual assets such as Bitcoin today.


As can be seen, there are many questions to be resolved in the matter of transactions carried out with virtual assets aka “cryptocurrencies”.

Nevertheless, based on the foregoing arguments and statements, some conclusions can reach as follows:

  • Virtual assets are not currency of legal tender in Mexico. Therefore, they cannot per se be considered as a means of payment.
  • The transactions in which we exchange virtual assets for other goods or services whether digital or tangible must be regulated under the concept of the swap or barter in the terms of the Federal Civil Code, thus, deriving the corresponding VAT and income taxes for both parties in the barter transaction.
  • The investment in virtual assets such as Bitcoin carries a very high risk if we consider the precedents of government prohibition, theft, fraud, volatility and disappearance due to obsolescence. Therefore, the valuation can only occur at the time of the exchange for real or non-virtual goods or services.
  • The Bitcoin mining transactions, if carried out by a taxpayer in Mexico, would derive, in its case, a taxable receipt until the Bitcoin award is exchanged for currency, an asset or real service, whether digital or tangible. The expenses and investments could be deductible if the taxpayer has the corresponding statutory support.
  • ICOs can derive different tax treatments depending on the value that supports the tokens issued as we mentioned before. The greater risk would be the accumulation of anticipated income for services to be provided in the future. Some transactions can or should be recorded as debt, others as capital and others as income.
  • As long as there are no rules issued by the Bank of Mexico, the Financial Technology Institutions of Mexico could not operate with virtual assets within a regulated framework. The transactions that currently prevail in the market are carried out abroad or in the cloud and have been outside the institutional regulatory framework in Mexico.
  • Once the Bank of Mexico issues its rules and after the public consultation referred to is completed, there would probably be two types of cryptocurrencies in Mexico, i.e., those of free circulation issued and transacted outside Mexico and those regulated under the FINTEC Act. To such extent, it will be interesting to see in detail the result of the public consultation and the rules to be issued by the Bank of Mexico and at that moment define the tax effects in case of change of criteria.


C.P.C.; P.C.FI.; Adv. LLM, M.I. Juan Ángel Becerra Cantú
Integrante de la Comisión Fiscal Internacional

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