COMPLETE GUIDE TO THE TAXATION OF CRYPTOASSETS IN SPAIN
CONFIDENTLY NAVIGATE THE WORLD OF CRYPTOCURRENCIES AND OTHER DIGITAL ASSETS
In the era of digital innovation, the acquisition and trading of digital assets such as cryptocurrencies has become a trend. However, with this new form of investment, questions arise as to how these assets should be declared and taxed in Spain.
In our complete guide, we provide you with all the information you need to understand and comply with the tax obligations related to digital assets in Spain.
What do you need to know about the taxation of cryptoassets in Spain?
- Nature of Cryptocurrencies: In Spain, cryptocurrencies are not recognized as legal tender, but are considered digital assets. This implies that transactions with cryptocurrencies, including the purchase, sale, exchange, and use of cryptocurrencies for the purchase of goods and services, may have tax implications.
- Regulations in 2023: Significant changes to the taxation of cryptocurrencies in Spain are expected to be introduced in 2023. This includes new regulations that will provide a clearer framework for the taxation of cryptocurrencies, addressing issues such as the classification of cryptocurrencies for tax purposes, reporting obligations, and penalties for non-compliance.
- Cryptoassets Markets Regulation (MiCA): One of the key regulatory documents that is expected to have a significant impact on crypto taxation in Spain in 2023 is the Cryptoassets Markets Regulation (MiCA) proposed by the European Commission. This regulation aims to provide a legal framework for cryptoassets across the European Union.
- Declaration Obligations: Transactions with cryptocurrencies are considered capital gains and need to be declared in the income tax return in Spain. This is based on the Personal Income Tax Law 35/2006. In addition, a maximum limit of €1,000 per year per person will be established to carry out transactions with cryptocurrencies without having to declare them in the IRPF.
In order not to make mistakes during the filing of the relevant declaration, it is essential to have professional advice to fully understand the tax and legal obligations if you are a Spanish resident and make transactions with cryptocurrencies.
Current tax regulations on cryptocurrencies
Learn about the current laws and regulations governing the taxation of cryptocurrencies and other digital assets in Spain, and how they may affect your investments.
In Spain, the taxation of cryptocurrencies is something that investors should be aware of because of all that it implies at a fiscal level.
Generally, people who invest in cryptoassets tend to overlook the tax consequences of these investments at first. However, as time goes by, the taxes associated with cryptocurrencies become a concern due to their complexity and the lack of existing information.
Taxpayers in Spain must declare the profits obtained from cryptocurrency transactions.
As of today, there is no specific legislation on cryptocurrencies in Spain, but it is important to know the positions of the Tax Agency and the General Directorate of Taxes with their binding declarations.
Tax return for digital assets
Learn how to correctly declare income and gains derived from the sale and purchase of digital assets in your income tax return.
The following is a summary of how cryptocurrencies are taxed in Spain:
- Income Tax Return: If your income (including gains from virtual currencies) does not exceed 1,000 euros, there is no obligation to file an income tax return. However, if the gains exceed this amount, even by 1 euro, they must be declared. Losses do not have to be declared, but it is advisable to do so.
- How cryptocurrency income is reflected in the income tax return:
- Transmission gains and losses: This includes typical activities such as the purchase, sale and exchange of cryptocurrencies.
- Capital returns: This includes interest and bets on platforms where cryptocurrencies are held and generate returns.
- Profits and losses without transmission: This includes airdrops, referral programs, hard forks, etc., where a virtual currency appears in the wallet without any asset being transmitted.
- Economic activity: This includes mining, trading or buying and selling cryptocurrencies on behalf of third parties.
- Tax rates:
- The second and third categories are taxed at the special income tax rate.:
- Profits up to 6,000 euros: 19%.
- Profits between 6,001 and 50,000 euros: 21%.
- Profits between 50,001 and 200,000 euros: 23%.
- Profits over 200,001 euros: 26%.
- The first and fourth categories are taxed at the general income tax rate, between 18% and 47%.
- The second and third categories are taxed at the special income tax rate.:
- Wealth and Cryptocurrency Tax: In addition to income tax, there is a wealth tax that directly taxes the net wealth of individuals. It is complementary to the income tax. Each autonomous community in Spain establishes a limit from which this declaration must be made. On average, this limit is around 600,000 euros.
- Cryptocurrencies and Form 720: Form 720 is an informative declaration on assets and rights located abroad. It is not mandatory but must be submitted by individuals, legal entities and communities that own:
- Accounts in financial entities located abroad.
- Securities, rights, insurance and income deposited, managed or obtained abroad.
- Real estate and rights to real estate located abroad.
Remember, cryptocurrencies are subject to taxation, and individuals who carry out transactions with cryptocurrencies must, as a general rule, declare such transactions and the profits or gains obtained.
How to lighten the tax burden and comply with the tax authorities
Discover strategies to optimize the tax burden of your investments in digital assets and tips to avoid problems with the Tax Agency.
1. Keep Detailed Records:
It is essential to keep meticulous records of all cryptocurrency transactions, including dates, values in euros at the time of each transaction and the nature of the transaction. This is crucial for calculating capital gains and losses and for complying with reporting obligations in the income tax return (IRPF).
2. Consider the timing of Transactions and the Holding Period:
In Spain, capital gains derived from the sale of cryptoassets are subject to IRPF. The timing of the sale and the holding period may influence the amount of tax payable. It is important to consider these factors when planning transactions.
3. Using Tax Software Tools:
For those who conduct a large volume of transactions, the use of software tools that specialize in cryptocurrency taxation can be critical. These tools can help automate the process of tracking and reporting cryptoasset transactions.
4. Estate Planning:
Cryptoassets may be subject to Wealth Tax in Spain if the total value of an individual’s assets exceeds a certain threshold. Considering how cryptoassets fit into overall estate planning can be a valuable strategy when holding a large volume of cryptoassets or recently gained from a revaluation.