29 November 2023
Before we get started, please note that the Cryptocurrency tax regulations in Spain are in a continual state of change. Let's maintain tabs on Agencia Tributaria's Cryptocurrency rules as well as upgrade this advice on a daily basis to make sure you're always up to speed and that you're clear with the tax man.
How is Cryptocurrency Taxed in Spain?
Bitcoin, Ethereum, and other Cryptocurrencies are not recognized as legal money or treated as fiat monies like the euro by the Spanish Tax Administration. As per Article 1(5) of Law 10/2010, all Crypto assets are instead treated as intangible property for tax reasons. An electronic depiction of worth that is not produced or guaranteed by a central bank or public authority, that is not necessarily linked to a legally constituted currency, that does not have the legal status of currency or money, but is accepted as a means of exchange, and that can be moved, stored, and exchanged electronically; this is how Agencia Tributaria describes Bitcoin and all other Cryptocurrencies classified as virtual currencies.
In Spain, Cryptocurrency is subject to taxation. In Spain, Crypto is subject to income tax, savings tax, inheritance and gift tax, and wealth tax. To what extent this applies to a given transaction is transaction-specific. The Agencia Estatal de Administración Tributaria (AEAT), Spain's central tax authority, really hasn't issued especially detailed Cryptocurrency taxation guidelines until now. According to the aforementioned guidelines, Cryptocurrency is treated as an asset for tax purposes in Spain and therefore is subject to Personal Income Tax. Income Savings Tax or the Income General Tax (renta general) can apply to Cryptocurrency (renta del ahorro). As part of your individual tax return, you must provide information about your Cryptocurrency holdings and transactions. The Spanish government issued a bill restricting virtual monies in July 2021. Crypto dealers in Spain are required to report any Cryptocurrency holdings and transactions to the tax authorities. It includes any Cryptocurrency you may hold, regardless of where you are physically located. In 2022, this ministerial directive will be ratified and go into effect.
How about Taxation on Cryptocurrency Purchases in Spain?
Purchases of Cryptocurrencies may be subject to taxation in certain countries while others do not. If you purchase Crypto using fiat money, you will not be taxed, but if you purchase Cryptocurrency with another Crypto, you will be subject to capital gains tax. As Agencia Tributaria classifies the exchange of one Cryptocurrency for another as a transfer of assets, any profits made from the sale of the latter will need to be included into your tax return. A capital gain will result in taxable savings income. If you have a loss, it may be used to reduce your other profits or carried over to a future year if there is none.
How Spain Taxes Cryptocurrency?
Cryptos such as Bitcoin are not recognized as legal tender by the Spanish government. Rather, Cryptocurrency is treated as property by the Agencia Tributaria. As a result, the Income Savings Tax (Capital Gains Tax), Income Tax, Wealth Tax, Inheritance & Donations Tax are the 4 types of taxes that may be levied on Cryptocurrency transactions in Spain.
How to Calculate Capital Gains in Spain?
All Crypto exchanges for euros or other international currencies might generate a capital gain or loss, as stated in the Agencia Tributaria Crypto tax guide. We shall elaborate on this point later, but the same holds true even when one Cryptocurrency is traded for another.
Gain or loss from the sale of Cryptocurrencies requires knowledge of both the selling price or even proceeds and the original cost or cost basis. Its selling price is the same as the value of the Cryptocurrency in euros at the moment of the sale. First-In-First-Out (FIFO) accounting should be used to establish the final cost of the acquisition. If you have bought and sold the same Cryptocurrency more than once, the FIFO technique dictates that you sell the tokens you bought earlier.
According to Agencia Tributaria, the total cost of the deal must include not only the purchase price, but also any trading or brokerage costs incurred throughout the process. Because they are directly tied to the operation, trading costs may be deducted in full from your earnings.
Cryptocurrency Tax Calculation: Who Can Assist?
AEAT will not give you any slack just because Crypto tax reporting is new and uncharted territory for most accountants. To help you stay on the right side of the law and avoid any penalties, we've compiled a list of four strategies for handling your Cryptocurrency tax obligations. So, we'll begin with the simplest and also most reliable approach.
- You may make a Cryptocurrency tax report with the help of a Crypto tax calculator like Koinly. Include the report in your tax return by sending it to your accountant. Very precise and simple to use.
- To make a Crypto tax report, use a Crypto tax calculator like Koinly. Fill in the blanks and submit your own tax return. It's simple if you realize what you 're doing, and if you know what you are doing it's dead on.
- Provide your accountant with a full record of all of your Crypto transactions, including those made in each of your wallets, exchanges, and blockchains. Trust them to figure it out and submit the paperwork. Low precision, excessive overhead, and possible financial burden.
- Do the legwork and paperwork on your own. For your sake, I pray that everything falls into place for you.
Crypto Tax Deadline in Spain
In Spain, the fiscal year begins on January 1 and ends on December 31. Your Cryptocurrency tax payments should be included in your standard individual tax return. The Internal Revenue Service requires individuals to submit their tax returns by June 30th. That means you need to have your 2022 Crypto taxes in by June 30th, 2023.
Disclaimer: The author’s thoughts and comments are solely for educational reasons and informative purposes only. They do not represent financial, investment, or other advice.