Cryptocurrency taxes in spain — everything about them

A short guide on taxes on cryptocurrencies in Spain

In Spain it’s not easy to calculate taxes on any of your cryptocurrency activities as the government has recently been implementing new regulations and guidelines on cryptocurrencies in addition to those put forward by the EU. How hard could it be? Let’s find out!

‍

A few facts about Spanish crypto taxes

• Any capital gains (or losses) noted at the time of sale of cryptocurrency into fiat or exchange into some other cryptocurrency are considered as ‘savings income’ for tax purposes.
• Any such sale of cryptocurrency should be noted on a personal tax return
• The tax you pay depends on the type of cryptocurrency transaction you have made. There are four options where you can be can be taxed with crypto, they are:

• ^{savings taxable income (capital gains tax)}
• ^{general taxable income}
• ^{wealth tax}
• ^{gift and inheritance tax} 

• There is no VAT charged when you buy cryptocurrency in Spain, as they are considered a means of payment under article 20 of the VAT law and so are exempt.
• The Spanish tax year starts on January 1st and ends on the 31st December. You must file your taxes by June 30th for the previous tax year..

‍

Which laws concerning cryptocurrencies currently apply in Spain?

Part of the Spanish government’s attempt to regulate the cryptocurrency market includes the recent making of an Anti-Tax Fraud law, which is intended to to track users and assets more effectively and thus make it easier to cut down on criminal activity. This law (Law 11/2021, dated 9 July 2021) means that probably at some point in 2023, crypto exchanges will have to provide the government with information about their Spanish customers. In addition to this law, the European Union’s AMLD6 came into force on June 5th 2021, which particularly has meaning for any business which in any way interacts with crypto, and has more to do with the need for them to identify customers, for example, when these customers buy crypto from them.

‍

‍

Where is a safe place to invest in cryptocurrency today?

In Spain, there has been a rise in crypto tax audits, so the matter of calculating and filing your taxes is important for both investors and businesses, with big fines attached for not doing so. After the collapse of the popular american crypto exchange FTX in 2022, Spanish regulators will, no doubt, be pleased that such regulations are being implemented. For investors though, trusting an exchange is now a little harder (as any of them could take your money or crypto with very little chance of you recovering your assets), which is why the author recommends using one of the over 40 Bitcoin ATMs all over Spain to perform such transactions.

‍

What are the various crypto taxes in Spain and how can I calculate them?

It is good for investors to understand how crypto is taxed in Spain so that they know which details to make a note of when making any transaction regarding crypto because this information could come in handy later when filling out their tax returns.

These are the various taxes on crypto in Spain: Income Tax, Income Savings Tax, Inheritance and Gifts tax, and Wealth tax. However Spanish regulations for crypto tax are not yet fully-formed, so it is not so easy to get your head around them. The main government body which deals with taxes is called the Agencia Estatal de Administración Tributaria (AEAT). They define crypto in this way: “(..) a digital representation of value that is neither issued nor guaranteed by a central bank or public authority, is not necessarily associated with a legally established currency and does not have the legal status of currency or money, but is accepted as a medium of exchange and can be transferred, stored or traded electronically.” Crypto, therefore, is not regarded as a currency but as an asset. 

You can view the AEAT’s cryptocurrency tax guide.

‍

1. Income Savings Tax / Capital Gains Tax

Whenever you dispose of your crypto you will have to pay a capital gains tax on it. This can include anything from changing it into fiat, changing it into another cryptocurrency, or simply sending someone your crypto. The amount you made on the crypto from when you first bought it is the amount that will be taxed. This is why it’s important to make a note of the price of the crypto when you buy it (plus fees paid to buy that crypto) as well as the price it was when you disposed of it, so that you can calculate the change of value of that crypto which you are disposing of, as accurately as you are able. This tax is between 19-26% and is decided as follows:

‍

‍

• Up to EUR 6,000 in profits -> 19% tax rate
• Profits between EUR 6,000 - 50,000 (up to €44,000 max.) in profits -> 21%  tax rate
• Profits between EUR 50,000 - 200,000 (up to €150,000 max.) in profits -> 23%  tax rate
• Profits from EUR 200,000 and over  in profits -> 26%  tax rate

‍

However Capital Gains Tax on crypto is progressive so you pay 19% on your first €6,000 of profit, then on the next €44,000, you pay 21%, then on the next €150,000 you would pay 23%, and any amount over €200,000 would be taxed at 26%. So if you had calculated €250,000 worth of profit, the last part would be calculated as 26% of €50,000, with each lower tier taxed with the corresponding tax percentage accordingly.

As is clear, this is a tax on any gains or profits you have made from disposing of your crypto. If you have any losses, they are not taxed but can be calculated in to offset your gains, so if you have disposed of crypto at a loss then, you can deduct this from your gains. If you don’t have any gains, then these losses have an offset expiry date of 4 years, so if at some point you do record profits when disposing of your crypto, you can deduct these past losses from them (as long as they are within a 4 year range of the gains). Such losses, however, can only offset a maximum of 25% of your net annual capital gains.

In Spanish law, what is known as an ‘economic activity’ is quite important. If, for example, there is something which is your main source of income, you would need to register this as a self-employed activity.

‍

Let’s look at some activities more closely:

• Staking: (and specifically the returns obtained from staking) would be taxed as normal according to the table above, as it is considered a return from movable capital.
• NFTs: briefly speaking, if buying and selling NFTs is your main job you would need to register yourself as a freelancer, and all income you make from this ‘economic activity’ would be taxed as general income (see below). If you only do this occasionally, profits from buying or selling NFTs would be calculated as capital gains, and thus the above table should be consulted.
• Crypto Card Cashback rewards: These would be considered the same as staking rewards (i.e. income from movable capital and thus income to be included in the savings taxable base as described in the table above). Try to make a note of every time you receive such crypto rewards from using your card, so that you can track this when calculating your taxes.
• Play-to-Earn games rewards: Again, if this is your main occupation you must register it as your self-employment and the rewards will be taxed as your income from ‘economic activity’. Probably you are just playing sometimes, and in this case, whatever rewards are calculated the same as staking or crypto card rewards (i.e. returns from movable capital) unless the tokens you earned were from another player’s wallet, in which case it would be an equity gain.

‍

2. General Income Tax (impuesto sobre la renta de las personas físicas)

This is more of a ‘grey area’ than the capital gains tax as the rules from the AEAT are still unclear, but generally could take into account any additional income you may have earned from crypto. These could come from profits from mining cryptocurrencies, liquidity mining on DEXes, yield farming, any payments made to you in the form of crypto, or crypto received in airdrops. As a  very general rule, whenever you receive any crypto (but not from buying it), you can be taxed on its total value according to its market value in Euros at the time you receive it, therefore it is recommended to make a note of these market prices when you receive any crypto, as it could be more difficult to check it at a later date.

Income Tax in Spain is progressive like capital gains tax but also depends on where you live in Spain (according to your autonomous community - this information is for you to find out). You can check the following article to calculate your personal income tax (PIT) rates or see the table below for a general overview of general income tax rates for crypto:

‍

‍

• Up to EUR 12,450 of general taxable income leads to 19% tax rate
• Between EUR 12,450 and 20,200 of general taxable income leads to 24% tax rate
• Between EUR 20,200 and 35,200 of general taxable income leads to 30% tax rate
• Between EUR 35,200 and 60,000 of general taxable income leads to 37% tax rate
• Between EUR 60,000 and 300,000 of general taxable income leads to 45% tax rate
• Over EUR 300,000 of general taxable income leads to 47% tax rate

‍

Other instances when these rates apply:

• Air-drops: When you receive free crypto from any source, it is considered as a gift, and calculated in the general tax base (see the table above for rates), and should be included in the section called ‘304’, as it falls under ‘capital gains and losses that do not derive from the transfer of capital elements’.
• Mining: You would need to register yourself as self-employed if you are carrying out this activity. Thereafter, whatever profits you made would be subject to income tax.

‍

3. Wealth Tax

In some areas of Spain (eg. Andalucía, Comunitat Valenciana, and Barcelona) there is a wealth tax, and possession of cryptocurrency is counted towards total wealth, which for Spanish residents is calculated at the end of the tax year. In addition, all Spanish taxpayers have to pay a wealth tax if their wealth exceeds 2 million euros.

To calculate wealth tax you must calculate the value of all your crypto (on the 31st December of the tax year you’re calculating for) and pay the corresponding tax rate. Generally speaking, if your overall wealth (of which your crypto will be just a part) exceeds €700,000 then you will need to pay a wealth tax. It is quite a controversial topic in Spain and some autonomous communities have said they will put an end to it in their region. Spanish wealth tax is, again, progressively taxed, and ranges from 0.2% to 4%. See the applicable websites for your autonomous region. Madrid is the only region where the wealth tax is not implemented, but even so, if you have over 2 million euros in wealth then you must still submit a wealth tax return for the government to know how much you own. If you want to find a Bitcoin ATM in the Madrid area, you can find the locations here.

‍

4. Gift and Inheritance Tax 

This tax is the same as the income tax but you are only taxed if you inherit any cryptocurrency. The rate will once again depend on where you are living in Spain and can vary from 7% all the way up to 36.5%.

‍

What is not taxed in regards to cryptocurrency in Spain?

Non-taxable events include: purchasing crypto, holding it in your wallet, or transferring it from one of your wallets to another one. Only at the point that it leaves your possession is it considered a taxable event, but this brings with it its own problems related to De-Fi (Decentralized Finance), yield farming, and also liquidity mining, which are hard to define and therefore tax.

‍

‍

How are Spanish Tax Reports made?

Income and capital gains can be reported to the AEAT, via your annual income tax return. To file them as a Spanish tax resident, you must fill out the Modelo 100 form, which you can do online after you have calculated your crypto tax, which can be done by crypto tax calculator applications, such as the ones listed here. There, you should go to the section titled ‘Capital gains and losses derived from transfers of other assets’, and you should enter “0” into the “1626” field, as this designates cryptocurrencies. Wealth tax, on the other hand, is reported using the Modelo 714 form. 

A new Modelo 721 form is currently being created which will specifically deal with cryptocurrencies but it is not ready yet - it will probably be introduced in 2023.

‍

What is the Modelo 720 - declaration of foreign assets?

If, as a Spanish citizen you own any foreign assets, you sometimes must declare them in the M720 form. However, for crypto there is no obligation (for now!) to declare your crypto holdings. On the other hand though, you do need to include them in your wealth tax calculation, as described above.

‍

How to register yourself on Spanish income tax forms?

There are three options: investors, self-employed, and employees.

1. Investors - Most of us are investors as this includes the activity of buying crypto at Bitcoin ATM to potentially sell it at a higher price later on, which would generate capital gains for you and thus be taxed under personal income tax.
2. Self-employed - This is for those whose salary is collected in full by themselves (e.g. crypto miners) but they are taxed in the same way as investors.
3. Employees - If you work for a company you are allowed by Spanish law to receive 30% of your salary in goods (i.e. crypto) which would be labeled as work income, and priced at the value on the day you received them. When selling this crypto though you would be taxed just like an investor.

Traders are not considered self-employed or as freelancers as they manage their finances on their own and don’t offer any goods (e.g. NFTs) or services to third-parties.

‍

What accounting method is used in Spain for calculating your crypto taxes?

In Spain, inventory valuation is calculated using the FIFO (in Spanish: PEPS) accounting method (first-in-first-out), and so it applies to crypto capital gains. What this means is that when you sell a cryptocurrency, although you may have bought it at many prices, in order to calculate your cost basis (the market value of the token at the time you received it plus any others fees you paid) you do so according to the price of it the very first time you added that token into your portfolio. You then compare it to the current market value of that token to calculate any gains. In essence, you are calculating the token’s rise in value (or not) based on the price it was at when you first added it into your wallet. This method has its pros and cons.

‍

When is the tax filing deadline for Spain?

The Spanish tax year is the same as a normal year which starts on January 1st  and finishes on December 31st but Spanish citizens have until June 30th to file their taxes for the previous tax year.

‍

A good way to buy or sell off Crypto in Spain: Bitcoin ATMs

An excellent way to purchase or even sell crypto is to use Bitcoin ATMs. Although in Spain there is a requirement to provide identification when using these devices, these details are never collected to be shared with the government but only to identify possible criminal activity like money laundering or terrorist financing. To this end, the author recommends using some of the Bitcoin ATMs, as they are reliable (good customer support) and offer very good fees (sometimes even 0%) when buying or selling cryptocurrencies. You can sign up to their social media to find out when these offers are available. 

Cryptocurrency taxes in spain - further reading

If you have further questions regarding crypto taxes in Spain or related subjects, check out the websites listed in the sources below, some of which share in more detail, for example, how to calculate the various taxes. If in doubt, consult a good cryptocurrency tax accountant.

‍

Sources:

1. https://thelawreviews.co.uk/title/the-virtual-currency-regulation-review/spain 
2. https://koinly.io/guides/crypto-tax-spain/ 
3. https://www.globallegalinsights.com/practice-areas/blockchain-laws-and-regulations/spain 
4. https://www.boe.es/diario_boe/txt.php?id=BOE-A-2021-11473 
5. https://coinpanda.io/guides/crypto-taxes-spain/ 
6. https://www.globallegalinsights.com/practice-areas/blockchain-laws-and-regulations/spain 
7. https://tokentax.co/blog/guide-to-crypto-taxes-in-spain#references 
8. https://www.modocripto.es/blog/como-tributan-las-criptomonedas/