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Spain Crypto Tax Guide

Spain Crypto Tax Guide

Сryptocurrency in Spain

Spanish law defines virtual currencies as a digital representation of value, accepted as a medium of exchange that can be transferred, stored or traded electronically. Virtual currencies however are not considered money or foreign currency, but rather assets. We will call them further cryptoassets and they would include both cryptocurrencies and other types of tokens that can digitally represent right to the shares, property etc.

There is no specific cryptotax in Spain, however the transactions involving cryptyassets are taxable and may trigger different types of taxes, mainly Personal Income tax and Income Savings Tax.

Tax authority is called Agencia Estatal de Administración Tributaria (AEAT) – State Agency for Tax Administration.

You should not try to hide your crypto from them. When you open an account with the crypto providers, you send them the identification documents for AML purposes. Most of the crypto providers have data sharing programs with the state authorities including the AEAT. They are obliged to share information on crypto assets they hold. Thus it’s reasonable to assume that AEAT already knows about your crypto transactions. Tax evasion is a serious crime in Spain so always do file tax returns and show all your crypto income.

Main deadlines to remember and forms to complete

In Spain tax year starts January 01 and finishes December 31. You shall file your Income tax return and pay your taxes until June 30 of the next year.

You can file tax return on paper on online.

For the tax purposes, all your cryptoassets owned, sold, traded, acquired shall be valued in Euro – you shall use the exchange rate of the reputable crypto exchange as of the date of the event/transaction.

Taxes applicable on cryptocurrencies

There are two main taxes applicable to cryptoassets (1 and 2) and two additional ones (3 and 4):
  • 1
    Income tax
  • 2
    Income savings tax
  • 3
    Wealth tax
  • 4
    Inheritance and gifts tax
The borderline is the type of the transactions and the amount of cryptoassets involved: Income tax arises when the individual receives cryptoasset as earning (e.g. as a salary, or receives coins for mining activity, staking awards or airdrops), while Income savings tax is triggered by the profit you make when disposing of the cryptoassets. Wealth tax may arise when you hold a large amount of coins.

Income tax

Income Tax arises when you earn “new” crypto for example by getting a crypto salary. Local tax authorities have not issued clear guidance for specific crypto earnings like mining or staking awards, however it would be safe to assume that new coins you get as a result of such actions would be included into your income.

You will need to assess the income made in Euro as of the date of receipt based on the exchange rate of the crypto exchange and include this income into your tax return.

Note that when you later sell the crypto earned and its value had increased in the meantime, you may be subject to Income savings tax.

Income savings tax

Income savings tax in Spain is similar to the capital gains tax in some other countries: it’s a tax that is triggered by the profit you make when disposing of the crypto you owned.

For the tax purposes, disposal means “getting rid” of your crypto by any of the following means:

  • sell crypto for fiat currency (e.g. Euro);
Example: you buy Coin A for €3000 and later sell it for €4000. You'll need to pay Income savings tax on the resulting €1000 gain.

  • swap, trade, exchange one coin to another;
Example: You bought 1 Coin A for €2000. You exchange 1 Coin A for 10 Coins B. The market value of 10 Coins B is €3000 at the moment. Since initially you paid €2000 to acquire Coin A, you use the following equation: €3000 - €2000 = €1000, which is your gain for the Income savings tax purposes.

  • use crypto to buy goods and services;
Example: You buy Coin A for €5000. Later Coin A increases in value and you use it to buy a new device that costs €7000. The €2000 difference is your gain and you shall pay tax on it.

  • Gift cryptoasssets.
In this case when you are the donator of the gift, you are subject to Income savings tax since this event is considered a disposal. When you receive a gift, you are subject to Inheritance and gift tax.

Income savings tax arises when any of the above events happen. However you may get a gain or loss as a result. If you have a gain – you may pay tax on it. If you have a loss – not only you don’t need to pay tax, but rather you can reduce your tax burden in the current tax year. Note that you may only use the losses to reduce same type of tax: income savings losses v. income savings gains. You can not use income savings losses to reduce Income tax. If the loss is more than the profit, you can carry the loss to the next years.

The gain equals to the difference between the amount you sold the assets for and the amount you paid for them. If the asset was acquired for free, you shall take the market value of the asset at the date of acquisition.

How you calculate the amount of tax to pay

As we discussed above, when any of the events triggering Income savings tax happen, you may have either a gain or a loss.

If you make a gain, you may pay tax on it. If you make a loss, it can reduce your Income savings tax in the current tax year and you can even carry it forward to the next years.

In order to calculate the tax due, you shall start with the beginning: you need to calculate your cost basis and then calculate your gains/losses.

Your cost basis would consist of the price you paid for the cryptoasset in Euro + related costs (e.g. transfer fees, brokerage fees).

Thus the gains or losses would basically be the difference between the Euro equivalent of your cryptoasset at the time you disposed of it and at the time you got it. If the result is more than zero – you have a gain for this asset. If it’s less than zero – you have a loss and you don’t need to pay the tax and can even reduce your tax due.

Income savings gain/loss = your disposal price in Euro – your cost basis in Euro (the acquisition price + deductible fees)

Example: You acquired 1 Coin X for €1000 and paid a €100 fee. Then you sell your Coin for €2000 and paid a fee of €100. The cost basis is thus €1100. Gains would equal to €2000 less the cost basis of €1100 + the new fee of €100.

€2000 - €100 – (€1000 + €100) = €800

If you acquired or disposed of your crypto otherwise than buying or selling for Euro, you shall use the similar equation and take the data from the reputable exchange on the date of the relevant transaction.

It’s easy if you have acquired a number of crypto items at once and have sold the same number in one take. However it’s not always the case. If you sell only part of the items you hold, you may face the following situation:
You bought 1 Coin A for €5000. Later you bought another Coin A for €10 000. Now when you decide to sell one Coin A, Coin’s A value equals to €7000. Which of the coins A shall be accounted for the tax purposes? The first one or the second one? If we take the first one – you have €2000 profit. If we take the second one, you have a loss of €3000. This makes a serious difference. In order to sort it out, you shall have a fair treatment in such situations.

AEAT suggests you use the FIFO method for calculating gains or losses (“first in – first out”), which means that when disposing of your crypto, you start accounting with the “first in” cryptoassets acquired.

Wealth Tax

Unlike some of the countries, even holding cryptoassets may give rise to tax if you reach a certain threshold (depending on the autonomous community you live in). The threshold is quite significant and depends on the total value of all your assets minus allowances: the resulting value starts from somewhat about €700 000. So the Wealth tax would not be applicable to each and everyone holding crypto. The tax rate varies from 0.2% until 3.5% (variable from region to region and the amount of assets).

Inheritance and gifts tax

When you receive crypto as a gift or inherit it, you are subject to inheritance and gifts tax. The rate depends on the amount of gifted or inherited assets (you will need to calculate the market value of the crypto on the date of receipt). The national rates range from 7.65% up to 34%. You can deduct some allowances from the total assets received depending on your status as the donator’s / deceased relative. The final rate applicable may also depend from the region you live in and might be higher or lower than the national one.

Tax Rates

In Spain both Income tax and Income savings tax consist of two rates: national one and the one of the respective autonomous community where the person resides. While the national rates are the same for the whole country, community rates vary. On average, community rates more or less double the national rate, thus on average your final rate for the income tax would be 19%-49%, for the income savings tax – 19%-26%. For the final tax scale applicable, you would need to check the respective rate of your autonomous community.

Both types of rates are progressive. Which means that if you have received for example €34 000 of annual income, you don’t pay 15% on the whole amount. You pay 9.50% on your first €12 450, then 12% on the remaining 7,750.00, and then 15% on the remaining amount.

National Income tax rates:
National Income savings tax rates:

Losses

When you have a loss on your income savings transactions, you can use them to offset your gains within the same type of tax.

If you have lost your coins due to trading platform bankruptcy or similar event, you can not automatically claim the loss since there is a potential chance to get your assets back after the bankruptcy procedure. You shall file a specific claim and wait for a certain period which may be a year or so, and only upon expiration thereof you can recognize the lost amount of cryptoassets as your loss and offset against gains.

Tax exemptions

Although most of the transactions imply taxes, some are exempted. This might be the case if you:
  • hold crypto, unless you reach the certain threshold which triggers Wealth tax;
  • buy cryptocurrency for fiat currency;
  • transfer the crypto between your wallets.

Specific cases to consider

AEAT has not provided for detailed guidance on cases below, thus assumptions are based on the general tax rules.

NFT’s
Since NFT’s are also considered cryptoassets, it’s possible to suggest that if you have acquired NFT as an investor and later disposed of it – you are subject to Income savings tax. If you create an NFT as an artist and sell it, you may be subject to Income tax.

Mining
If your mining activity is more of a hobby, it would be subject to Income tax at the market value of the mined crypto as of the date of receiving. If you carry mining activity as your business, you will be subject to additional administrative obligations as a self-employed individual.

DeFi transactions
There are numerous types of DeFi transactions and they might have different tax consequences. As with other income-like events, when you earn new coins as a result of the DeFI transactions, you need to consider Income tax. Whereas if you get gains on your invested coins within the DeFi platforms, you may be subject to Income savings tax for making profit.

Staking
Staking should be treated similar to mining. Awards received on a business-like scale shall be treated as your income and included into the Income tax.

Airdrops
When you receive new coins as a result of the airdrop and they have some market value, you are subject to Income tax.

You shall also note that when you later sell any of the cryptoassets reported as your income, you may be additionally subject to Income savings tax if you get a profit. Don’t worry about double taxation – this is not actually the case here. Imagine you mine a coin worth €1000. You need to pay Income tax on this value. If you later sell it for €1500, you pay Income savings tax on the difference between the initial cost and the cost of selling: €1500 - €1000 = €500 which is your gain and you will need to pay tax on it. However if you sell it for e.g. €500 only, your transaction results in a loss and you may reduce your other gains for this amount.

Records you need to keep

AEAT requires to keep records of all the cryptoasset transactions. It’s the tax payer’s responsibility. If for example the crypto exchange collapses, this won’t release you from this obligation and thus you are advised to record carefully all your data related to crypto for at least 5 years.

The records shall include at least:
  • The type of the cryptoassets and the number of units;
  • Date of the transactions and it’s type (sell/buy/gift etc);
  • Value of the transaction in Euro as at the date of the transaction;
  • The record of the other party involved (other party’s crypto wallet or your own one);
  • Bank and exchange statements related to the transaction
Liability

Tax evasion is a serious crime in Spain and might end up in imprisonment or significant fines.

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