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It's not easy to calculate taxes on any cryptocurrency-related activity in Spain, as the government has recently been implementing new regulations and guidelines for cryptocurrencies in addition to those put forth by the EU. Those living there permanently or seasonally are wondering how difficult it can be. Let's find out!
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Part of the Spanish government's attempts to regulate the cryptocurrency market includes the recent passage of an anti-fraud law that aims to track users and assets more effectively, thereby making it easier to curb criminal activity. This law (Law 11/2021 of July 9, 2021)means that it is likely that cryptocurrency exchanges will have to report information about their Spanish customers to the government at some point in 2023.
In addition to this law, on June 5, 2021, the EU's AMLD6 law came into effect, which is of particular importance to any company that interacts with cryptocurrencies in any way, and has more to do with the need to identify customers, such as when those customers buy cryptocurrencies from them.
Spain has seen an increase in the number of TAX AUDITS RELATED TO CRYPTO, so the issue of calculating and filing taxes is important for both investors and companies, with large fines for failing to do so. AfterTHE COLLAPSE OF THE POPULAR U.S. CRYPTOCURRENCY EXCHANGE FTX in 2022, Spanish regulators will no doubt be pleased to see such regulations being implemented.
However, for investors, trusting an exchange is now a bit more difficult (since any of them can take your money or crypto with very little chance of recovering your assets), so the author recommends using one of the more than 40 Bitcoin ATMs around the world of Spain to perform such transactions.
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It is good for investors to understand how cryptocurrencies are taxed in Spain, so that they know what details to note when making any cryptocurrency transaction, as this information may come in handy later when filling out tax returns.
Here are the various taxes on cryptocurrencies in Spain: income tax, tax on savings income, inheritance and gift tax, and wealth tax. However, Spain's cryptocurrency tax laws are not yet fully formed, so it's not easy to get around them. The main government body dealing with taxes is the Agencia ESTATAL DE ADMINISTRACIÓN TRIBUTARIA (AEAT). They define crypto this way: "(...) a digital representation of value that is not issued or guaranteed by a central bank or public authority, is not necessarily tied to a legally established currency and does not have the legal status of currency or money, but is accepted as a means of exchange and can be transferred, stored or sold electronically." Therefore, cryptocurrencies are not treated as currency, but as assets.
You can read AEAT'S TAX GUIDE ON CRYPTOCURRENCIES.
Every time you dispose of your cryptocurrency, you will have to pay capital gains tax on it. This can include anything from converting it to fiat currency, changing it to another cryptocurrency or simply sending someone your cryptocurrency. The amount you have earned from cryptocurrencies since your first purchase is the amount that will be taxed.
That's why it's important to note down the price of the cryptocurrency when you buy it (plus the fees you paid to buy that cryptocurrency), as well as the price it had when you sold it, so you can calculate the change in value of the cryptocurrency you're getting rid of as accurately as possible. This tax ranges from 19 to 26% and is determined as follows:
Up to EUR 6,000 -> 19%
Profits between €6,000 and €50,000 (up to a maximum of €44,000) -> 21%
Profits between €50,000 and €200,000 (up to €150,000max.) -> 23%
Profits from €200,000 and above -> 26%
However, capital gains tax on cryptocurrencies is progressive, so you would pay 19% on the first €6,000 of profit, then on the next €44,000 you would pay 21%, then on the next €150,000 you would pay 23%, and any amount above €200,000 would be taxed at a rate of 26%. So if you calculated a profit of €250,000, the last part would be calculated as 26% of €50,000, with each lower level taxed accordingly at the appropriate tax percentage.
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As you can see, this is a tax on any gains or profits made from disposing of a cryptocurrency. If you incur any losses, they are not taxed, but they can be calculated to offset your gains, so if you disposed of the cryptocurrency at a loss, you can deduct this from your profits. If you don't have any profits, these losses have a staggered expiration date of 4 years, so if you record profits at some point while disposing of your cryptocurrency, you can deduct these past losses (as long as they are within 4 years of your profits). However, such losses can offset a maximum of 25% of annual net capital gains.
In Spanish law, the so-called "economic activity" is quite important. For example, if there is something that is your main source of income, you must register it as a self-employment activity.
Let's take a closer look at some of the activities:
This is more of a "gray area" than a capital gains tax, as the AEAT rules are still unclear, but in general you can take into account any additional income you may have earned from cryptocurrencies. These can come from profits from cryptocurrency mining, liquidity mining on DEX, farming, any payments made to you in the form of cryptocurrencies or cryptocurrencies received in airdrops. As a very general rule of thumb, whenever you receive any cryptocurrency (but not from buying it), you may be taxed on its total value according to its market value in euros at the time you receive it, so it is advisable to make a note of these market prices when you receive the cryptocurrency, as it may be more difficult to check later.
Income tax in Spain is progressive, like capital gains tax, but it also depends on where you live in Spain (according to your autonomous community - this information is for you). You can read 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 cryptocurrencies: General taxable income Tax rate Up to €12,450 19
Other cases where these rates apply:
In some areas of Spain (e.g. Andalucía,Comunitat Valenciana, Barcelona) there is a wealth tax, and cryptocurrency ownership is included in the total wealth, which for Spanish residents is calculated at the end of the tax year. In addition, all Spanish taxpayers must pay wealth tax if their assets exceed €2 million. It is easy to exceed this amount if you are a Bitcoin ATMs user in Madrid or Barcelona.
To calculate wealth tax, you must calculate the value of all your cryptocurrencies (as of December 31 of the tax year for which you are calculating) and pay the appropriate tax rate. In general, if your total wealth (of which crypto will only be a part) exceeds €, you will have to pay wealth tax. This is quite a controversial topic in Spain, and some autonomous communities have announced that they will put an end to it in their region. SPAIN'S WEALTH TAX is again taxed progressively and ranges from 0.2% to 4%.
See the relevant websites for your autonomous region. Madrid is the only region where wealth tax is not implemented, but even so, if you have more than 2 million euros in assets, you still need to file a wealth tax declaration so the government knows how much you own. If you want to find a Bitcoin ATM in the Madrid area, you can find locations HERE.
this one is the same as income tax, but you are only subject to tax if you inherit any cryptocurrency. The rate will again depend on where you live in Spain and can range from 7% all the way up to 36.5%.
Non-taxable events include: buying cryptocurrency, holding it in a wallet, or transferring it from one wallet to another. It's only when it leaves your ownership that it's considered a taxable event, but this comes with its own issues of De-Fi (decentralized finance), yield farming, and liquidity extraction, which are difficult to define and therefore taxable .
Income and capital gains can be reported to AEAT through your annual tax return. To report them as a Spanish tax resident, you must fill out the MODELO 100 , which you can fill out ONLINE after calculating the crypto tax, which can be done using crypto tax calculator apps such as those listed HERE. There you need to go to the section "Capital gains and losses from transfers of other assets" and enter "0" in the "1626" field, as it stands for cryptocurrencies. On the other hand, wealth tax is reported using MODELO 714 .
A new Modelo 721 form is currently being developed that will deal specifically with cryptocurrencies, but it is not yet ready - it will probably be introduced in 2023.
If you, as a Spanish citizen, have any foreign assets, you sometimes have to declare them on the FORM M720. However, in the case of crypto, there is no obligation (for now!) to declare your crypto assets. On the other hand, you must include them in your wealth tax calculations, as described above.
There are three options: investors, self-employed and employees.
Traders are not considered self-employed or freelancers, as they manage their own finances and do not offer any goods (e.g. NFT) or services to third parties.
In Spain, stock valuation is calculated using the FIFO (Spanish: PEPS) (first-in-first-out) accounting method, so this applies to capital gains on cryptocurrencies. This means that when you sell a cryptocurrency, even though you may have bought it at multiple prices, in order to calculate the cost basis (the market value of the token when you received it plus any other fees paid) you therefore do according to the price the first time you added the token to your wallet.
You then compare it to the current market value of that token to calculate any gains. Basically, you calculate the token's appreciation (or not) based on the price it had when you first added it to your portfolio. This method has its advantages and disadvantages.
The Spanish tax year is the same as the regular year, which begins on January 1 and ends on December 31, but Spanish citizens have until June 30 to file their tax returns for the previous tax year.
A great way to buy or even sell cryptocurrencies is to use Bitcoin ATMs. Although in Spain there is a requirement for identification when using these machines, this data is never collected for sharing with the government, but only to identify possible criminal activity such as money laundering or terrorist financing. For this purpose, the author recommends using the services of some operators Bitcoin ATMs, as they are reliable (good customer service) and offer very good fees (sometimes even 0%) when buying or selling cryptocurrencies. You can find a list of such Bitcoin ATMs on the subpage Bitcoin ATM MAPA. You can register on their SOCIAL MEDIA, to find out when these offers are available.
If you have further questions about cryptocurrency taxes in Spain or related topics, check out the websites listed in the sources below, some of which provide more detailed information, such as how to calculate various taxes. They are generally useful for users of Bitcoin ATMs, especially users of Bitcoin ATMs WARSAW. If in doubt, consult a good cryptocurrency tax advisor.
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