Are Crypto Assets and Cryptocurrencies Taxed in Spain?

Yes, crypto assets and cryptocurrencies are taxed in Spain. The Spanish tax authorities (Agencia Tributaria or AEAT) consider cryptocurrencies as a form of digital asset subject to taxation. The type of tax applied depends on the nature of the transaction involving the cryptocurrency. Here’s a brief overview:

• Capital Gains Tax (savings income Tax): When an individual sells or exchanges cryptocurrency, any profit made from the transaction is considered a capital gain and is taxed accordingly. The capital gains tax rate in Spain ranges from 19% to 28%, depending on the amount of gain.
• Income Tax: Income generated from activities such as mining or staking cryptocurrencies is subject to income tax. The rates for income tax can vary widely based on the individual’s total income.
• Wealth Tax: Spain imposes a wealth tax (Impuesto sobre el Patrimonio) on individuals whose total net worth exceeds a certain threshold. Cryptocurrencies are considered part of an individual’s net wealth and must be included in the wealth tax declaration. The thresholds and rates vary by region but typically range from 0.2% to 3.75% of the total net worth.
• Donations and Inheritance Tax: When cryptocurrencies are given as a gift (donation) or inherited, they are subject to the donations and inheritance tax (Impuesto sobre Sucesiones y Donaciones). The tax rate depends on the relationship between the donor and the recipient, as well as the amount and region. These taxes can be significant, so proper planning and valuation are crucial.

Taxable Events on Cryptocurrencies

In Spain, several activities involving cryptocurrencies are considered taxable events. The following are some of the key taxable events:

• Selling Cryptocurrency for Fiat Currency: Converting cryptocurrency to euros or any other fiat currency triggers a taxable event. The profit or loss from this conversion must be reported as a capital gain or loss.
• Trading One Cryptocurrency for Another: Exchanging one cryptocurrency for another is also a taxable event. The value of the cryptocurrency at the time of the transaction must be recorded, and any resulting profit or loss is subject to capital gains tax.
• Using Cryptocurrency to Purchase Goods and Services: When cryptocurrencies are used to buy goods or services, it is considered a disposal of the crypto asset. The difference between the purchase price and the value at the time of disposal is subject to capital gains tax.
• Receiving Cryptocurrency as Income: If cryptocurrencies are received as payment for goods or services, or through mining and staking, they are considered income and are taxed under income tax rules.

Cost Basis and Valuation

The cost basis of a cryptocurrency is the original value of the asset for tax purposes, usually the purchase price. Properly calculating the cost basis is essential for determining the capital gain or loss when the cryptocurrency is sold or exchanged. In Spain, the following methods can be used to calculate the cost basis:

• First-In, First-Out (FIFO): This method assumes that the first coins purchased are the first ones sold. It is the most commonly used method for calculating cost basis in cryptocurrency transactions.
• Specific Identification: This method involves identifying the specific coins sold and matching them with their purchase prices. It requires meticulous record-keeping but can potentially minimize tax liability by selecting coins with higher purchase prices for sale.

Crypto Tax Rates and Allowances in Spain

Cryptocurrency taxation in Spain involves various tax rates and allowances that investors need to be aware of. Understanding these can help optimize tax liability and ensure compliance.

Income Savings Tax (Capital Gains Tax Spain)

Capital gains tax in Spain applies to profits made from selling or exchanging cryptocurrencies. The rates are progressive, meaning they increase with the amount of gain:

• 19% for gains up to €6,000.
• 21% for gains between €6,001 and €50,000.
• 23% for gains between €50,001 and €200,000.
• 27% for gains between €200,001 and €300,000.
• 28% for gains over €300,000.

General taxable income rates (table)

General taxable income in Spain, which includes income from employment, business activities, and other sources, is taxed at progressive rates. Here’s a table showing the 2024 rates:

Wealth Tax on Cryptocurrencies

Wealth tax (Impuesto sobre el Patrimonio) in Spain is applicable to individuals whose net wealth exceeds a certain threshold. Cryptocurrencies are included in the calculation of net wealth. The wealth tax rates are progressive and vary by region, generally ranging from 0.2% to 3.75%. The national threshold for wealth tax is €700,000, although some regions may have higher exemptions.

Regional Wealth Tax Variations

Spain’s wealth tax can vary significantly depending on the autonomous community (region). For instance, Madrid offers a 100% exemption on wealth tax, effectively meaning no wealth tax is paid by residents of Madrid. Other regions may have different rates and thresholds as you can see in the table below. It’s important for cryptocurrency holders to be aware of the specific regulations in their region to accurately assess their tax obligations.

Income Tax

Income generated from activities such as mining, staking, and receiving cryptocurrencies as payment is subject to income tax. This income is added to the taxpayer’s general income and taxed according to the progressive rates outlined above. Proper record-keeping and valuation are essential to ensure accurate reporting and compliance.

Donations and Inheritance Tax

Cryptocurrencies given as gifts (donations) or inherited are subject to donations and inheritance tax (Impuesto sobre Sucesiones y Donaciones). The tax rate depends on the relationship between the donor and the recipient, as well as the amount and region. Rates can range from 7.65% to 34%, with potential regional variations and allowances.

Annual Tax-Free Allowance in Spain

Spain provides an annual tax-free allowance for individuals, which can help reduce overall tax liability. For the 2024 tax year, the general personal allowance is €5,550. Additionally, there are allowances for specific circumstances, such as disability or dependent children, which can further reduce taxable income.

Taxable Transactions in Spain

In Spain, various transactions involving cryptocurrencies are subject to taxation. Understanding these taxable events and their implications can help individuals manage their crypto assets more effectively. Below is an overview table followed by detailed explanations of each type of transaction.

Crypto-to-FIAT Trades

Selling cryptocurrency for fiat currency (e.g., euros) triggers a taxable event. The capital gain or loss is calculated based on the difference between the sale price and the purchase price (cost basis). The applicable capital gains tax rates are progressive, ranging from 19% to 28%.

Crypto-to-Crypto Trades

Exchanging one cryptocurrency for another is also considered a taxable event in Spain. The value of the crypto at the time of the exchange is used to calculate the gain or loss, which is then subject to capital gains tax ranging from 19% to 28%.

Crypto Staking Taxes

Staking involves locking up cryptocurrencies to support blockchain network operations in return for rewards. These rewards are considered income and are taxed as such, based on the taxpayer’s general income tax rates.

Mining Taxes in Spain

Income earned from mining cryptocurrencies is subject to income tax, ranging from 19% to 47%. The value of the mined coins at the time they are received is considered taxable income, and it must be reported and taxed accordingly.

Airdrops Taxes

Cryptocurrencies received through airdrops are treated as taxable income. The value of the airdropped tokens at the time of receipt is considered income and is subject to income tax, ranging from 19% to 47%.

Tax implications of payments with crypto

Using cryptocurrency to purchase goods or services is a taxable event. The difference between the purchase price and the fair market value of the crypto at the time of the transaction is subject to capital gains tax, ranging from 19% to 28%.

Crypto Gifts and ​​Donations

When cryptocurrencies are given as gifts or donations, they are subject to donations tax. The tax rate depends on the relationship between the donor and the recipient, as well as the amount and region. Rates can range from 7.65% to 34%.

Getting paid in crypto

Receiving payment in cryptocurrency for goods or services provided is considered income and is subject to income tax, ranging from 19% to 47%. The value of the cryptocurrency at the time of receipt is used to calculate the taxable amount.

NFT Taxes (Non-Fungible Tokens) in Spain

Transactions involving NFTs, whether selling or earning from them, are subject to taxation. The tax treatment can be tricky and depends on the nature of the transaction and who is involved in this transaction: capital gains tax or income tax applies for individuals, while  the standard 21% value-added tax applies to businesses selling NFTs.

Income in Crypto

Any form of income received in cryptocurrency, whether from employment, business activities, or other sources, is subject to income tax, ranging from 19% to 47%. The value of the crypto at the time it is received is used to determine the taxable amount.

Tax Free Transactions in Spain

Certain cryptocurrency transactions are not subject to taxation.

Transferring Crypto Between Wallets

Transferring cryptocurrency between personal wallets does not trigger a taxable event. As long as ownership does not change, these transfers are tax-free.

Holding Cryptos

Simply holding cryptocurrencies without engaging in any transactions is not a taxable event. Taxes are only triggered when there is a disposal or realization of gains.

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How to Reduce Your Crypto Taxes

Reducing your crypto taxes requires careful planning and strategic actions. Here are several methods to help minimize your tax liability:

Utilize Tax Loss Harvesting

Tax loss harvesting involves selling cryptocurrencies at a loss to offset capital gains from other transactions. This can reduce your overall taxable income and lower your tax bill.

Consider Personal Allowances and Deductions

Spain offers various personal allowances and deductions that can help reduce your taxable income. Ensure you are making full use of these allowances to minimize your tax liability.

Consult with a Tax Professional

Engaging a tax professional who understands cryptocurrency taxation can provide tailored advice and strategies to minimize your tax liability effectively. They can help you navigate the complexities and ensure compliance with tax laws.

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How to report crypto taxes in Spain

Reporting crypto taxes in Spain involves several steps and requires accurate record-keeping. Here’s a guide on how to report your cryptocurrency transactions to the Spanish tax authorities:

1. Maintain Detailed Records: Keep comprehensive records of all your crypto transactions, including dates, amounts, and values at the time of the transaction.
2. Calculate Gains and Losses: Accurately calculate your capital gains and losses for each transaction.
3. Use Appropriate Tax Forms: Ensure you use the correct forms and declarations for reporting your crypto activities.

Model 100: Income Tax Return Including Crypto

Model 100 is the general income tax return form in Spain, which includes the declaration of income from various sources, including cryptocurrencies. When filing this form, individuals must report any income generated from crypto activities such as trading, mining, staking, and receiving payments in cryptocurrency.

Model 714: Wealth Tax Declaration for Crypto Assets

Model 714 is the wealth tax declaration form used to report the total value of an individual’s assets, including cryptocurrencies, if their net worth exceeds €700,000. This form requires the declaration of all crypto holdings and their values as part of the individual’s total wealth. Given the regional variations in wealth tax rates and thresholds, it is important to understand the specific requirements of your region to correctly calculate and report your wealth tax obligations.

Model 721: Declaration of Cryptocurrency Holdings

Model 721 is a newer form specifically for declaring cryptocurrency holdings. Spanish residents must report their crypto assets if the total value exceeds €50,000. This declaration helps the tax authorities track and assess the holdings for taxation purposes.

Crypto Tax Deadline in Spain

The deadline for filing crypto taxes in Spain typically aligns with the general income tax filing deadlines, which is usually by the end of June each year. It’s crucial to stay informed about specific dates and ensure timely submission to avoid penalties.

Can the Agencia Tributaria track crypto?

Yes, the Agencia Tributaria, Spain’s tax authority, has mechanisms to track cryptocurrency transactions. With increasing international cooperation and the use of advanced tracking technologies, the tax authorities can trace and link cryptocurrency activities to individuals. Ensuring accurate reporting and compliance is essential to avoid potential audits and penalties.

How to Calculate Your Crypto Taxes?

Calculating your crypto taxes involves several key steps. Understanding these steps will help ensure you accurately report your cryptocurrency transactions and comply with Spanish tax regulations. Here’s a guide on how to calculate your crypto taxes:

1. Determine Your Cost Basis: The cost basis is the original value of the cryptocurrency at the time of acquisition. This includes the purchase price plus any associated fees.
2. Track Each Transaction: Maintain detailed records of every transaction, including the date, type of transaction, amount, and value at the time of the transaction.
3. Calculate Gains and Losses: For each transaction, determine the difference between the cost basis and the sale price (or the value at the time of exchange). This will give you the capital gain or loss.
4. Apply the Appropriate Tax Rate: Use the applicable capital gains tax rate to calculate the tax owed on each gain. Remember that losses can offset gains.
5. Consider All Taxable Events: Ensure you include all types of taxable events such as trading, selling, staking rewards, mining income, and payments made with crypto.

Which accounting method for crypto tax in Spain?

In Spain, the First-In, First-Out (FIFO) method is commonly used for calculating the cost basis of cryptocurrencies. This method assumes that the first coins purchased are the first ones sold or exchanged. FIFO is straightforward and widely accepted, making it a reliable choice for tax calculations.

Examples for the calculation of crypto taxes

Calculating crypto taxes can be complex, and individual tax situations can vary significantly based on numerous factors, such as the type of transaction, the amount involved, and personal circumstances. Below are some illustrative examples to help you understand how to calculate crypto taxes in different scenarios. These examples provide a general guide, but it’s important to remember that consulting with a tax professional is highly recommended to ensure accuracy and compliance with Spanish tax laws.

Example 1: Crypto-to-FIAT Trade

1. Transaction: Sold 1 Bitcoin for €40,000.
2. Cost Basis: Originally purchased 1 Bitcoin for €20,000.
3. Capital Gain: €40,000 (sale price) – €20,000 (purchase price) = €20,000.
4. Tax Owed: Assuming a 21% capital gains tax rate, the tax owed would be €20,000 * 21% = €4,200.

Example 2: Crypto-to-Crypto Trade

1. Transaction: Exchanged 1 Ethereum for 0.03 Bitcoin.
2. Cost Basis: Originally purchased 1 Ethereum for €1,000.
3. Value at Exchange: At the time of exchange, 0.03 Bitcoin is valued at €1,200.
4. Capital Gain: €1,200 (value at exchange) – €1,000 (purchase price) = €200.
5. Tax Owed: Assuming a 19% capital gains tax rate, the tax owed would be €200 * 19% = €38.

Example 3: Receiving Staking Rewards

1. Transaction: Received staking rewards of 0.5 Ethereum, valued at €1,500 at the time of receipt.
2. Income: The value of the staking rewards is considered income.
3. Tax Owed: Assuming a general income tax rate of 30%, the tax owed would be €1,500 * 30% = €450.

International Crypto Tax Considerations

Cryptocurrency taxation varies significantly from country to country, and understanding these differences is crucial for international investors. This section provides a brief overview of how crypto taxes are handled in some of the major jurisdictions around the world.

Crypto Taxes in the US

In the United States, the IRS treats cryptocurrencies as property. This means that general tax principles applicable to property transactions apply to transactions using virtual currency. Profits from selling or trading cryptocurrencies are subject to capital gains tax, which varies based on the holding period. Additionally, any cryptocurrency received as income, such as from mining or payment for services, is taxed as ordinary income based on the fair market value at the time of receipt.

Crypto Taxes in Australia

The Australian Taxation Office (ATO) views cryptocurrencies as property. Profits from disposing of cryptocurrencies are subject to capital gains tax, with individuals potentially eligible for a 50% discount on capital gains if the asset is held for more than 12 months. Cryptocurrency received as income, from activities like mining or as payment for goods and services, is taxed as ordinary income based on its market value at the time of receipt.

Crypto Taxes in the UK

Her Majesty’s Revenue and Customs (HMRC) in the UK treats cryptocurrencies as assets for tax purposes. Selling or exchanging cryptocurrencies results in capital gains or losses, which must be reported, with a tax-free allowance applicable. Cryptocurrency received as payment, mining rewards, or staking rewards is considered income and is subject to income tax based on its market value at the time of receipt.