Spain Crypto Tax

Spain is the world’s 14th largest economy, offering access to a prosperous EU market and multiple ways of tax optimization. The responsibility for taxes lies with the Spanish Tax Administration Agency, and it is, in turn, responsible for the effective imposition and application of the rules of taxation, management, inspection, and collection of taxes. The authority has not issued specific rules regarding crypto taxation; therefore, general rules will apply to those businesses engaged in crypto-related activities. A tax year for companies is the same as a company’s accounting year and shouldn’t exceed 12 months.

It will be the proper place to illustrate that in Spain, the autonomous communities are authorised to modify the national regulation of taxation, with respect to exemptions, rates, and deductions, and for this reason, the structure of taxation will be totally different depending on the location of the business. In fact, according to the Report on Regional Competitiveness in Spain 2020, Madrid, Navarre, Basque Country, and Catalonia are the most competitive and enterprising autonomous communities in Spain. Here at Regulated United Europe (RUE), our team will be glad to provide more details about the tax regimes of any of the above regions.

Tax Reliefs

Such tax incentives for research and development activities include a non-refundable subsidy, soft loans, and a 25% tax credit applicable for the expenses that R&D activities incur. An additional 12% tax credit is available for the implementation of activities under technological innovation. Yet another additional 17% tax credit can be availed on personnel expenses if such personnel is qualified to perform and performs R&D activities.

Of course, this can influence positively Spain’s corporate tax structure and cross-border investments with more than 90 international agreements about the avoidance of double taxation. Dividends, capital gains, and royalties constitute a kind of income which may be tax-free or be liable to lower taxes according to such agreements. In this respect, it should be underlined that the given agreements refer exclusively to companies that are tax residents.

A company is considered a tax resident in Spain if it is incorporated under the law of Spain and/or has its registered office within Spain and/or its effective head office where the management and control of its business are exercised is situated in Spain.

Corporate Tax

The regular Corporate Tax rate in Spain is 25 % , and this usually applies to crypto companies. However, tax residents are obliged to pay a tax on their worldwide income, while non-resident companies are only taxed with respect to income sourced within the territory of Spain.

The reduced rate of 10% is applicable in respect of newly established companies for the first tax period for which they derive a profit and for the immediately succeeding tax period. This does not apply to companies that continued to carry on a business which was previously carried on by a company associated with it or by any person. The reduced rate neither applies to equity companies, nor does it apply to companies forming part of a national or international group.

Startups may also obtain the right to pay a reduced rate of 15%, on condition that they fulfill certain pre-conditions. This is effective in the first tax period during which the company sources positive taxable income and in the three succeeding tax periods so long as the company still is characterized as a startup.

A company is considered a start-up if the following conditions are met:

• The company has been established less than five years ago, seven years for strategic sectors and companies that have designed and developed their technology in Spain.
• The registered office, head office, or permanent establishment is in Spain.
• Development of an innovative entrepreneurial project that shows scalability.
• The company isn’t a result of the merger, spin-off, or transformation of companies which aren’t considered emerging companies.
• Such company can’t distribute dividends or returns.
• It can’t be listed on a regulated stock market.
• 60% of its employees must have an employment contract in Spain.

Taxation is based on a self-assessment system, and annual Corporate Income Tax returns must be filed within 25 calendar days following the six months after the end of the tax year. For instance, if the tax year coincides with the calendar year, the return must be filed between the 1st day of July and the 25th of July of the following tax year.

Value-Added Tax

The standard VAT rate in Spain is 21%, and VAT is levied on supplies of goods and services performed within Spanish territory, while imports and intra-EU acquisitions of goods and services are subject to the same tax. Some crypto business models create VAT liability; however, crypto mining, free-of-charge supplies, and token modification are excluded from the scope of VAT under EU legislation.

Other relevant EU-wide crypto regulations:

• Crypto-exchange, storage, and transfer remain exempt from VAT throughout the EU, insofar as cryptocurrencies are treated as fiat money for that purpose.
• Where crypto-wallet services are provided for a charge, only then do they fall within the scope of VAT, with the standard rate applying.
• The supply of products or services paid for in cryptoassets is treated in the same way as any other supply.

The other important modification relevant only for Spain deals with the treatment of NFTs, important and popular elements of the crypto ecosystem. In this respect, the Spanish tax authority has classified the provision of NFTs as a supply of an electronic service that shall be taxed with the general VAT rate at 21%. Therefore, a seller has to be in a position to identify the place of supply by identifying the residence of a customer, which is rather challenging as it’s not usually provided by the platform. In this context, the general rule of thumb in the EU is that if a threshold of 10,000 EUR is exceeded during the tax year and if the buyer is resident in another EU country, then the sale is VAT-able in the country of consumption.

Capital Gains Tax

When cryptocurrencies are earned by selling, trading, swapping, or otherwise disposing of an asset in exchange for cryptocurrencies or fiat money, the received amount is considered capital gains or savings taxable income. The rates of Capital Gains Tax, depending on the income received, vary from 19% to 26%.

The rates will be applied as follows:

For the taxable income of up to 6,000 EUR – 19%

For taxable income of more than 6,000 EUR and up to 50,000 EUR – 21%

For taxable income of more than 50,000 EUR and up to 200,000 EUR – 23%

For taxable income of over 200,000 EUR – 26%

Wealth Tax

In Spain, the Wealth Tax rate is between 0.2% and 3.5%. It’s an annual tax, payable on the total net value of the assets held on the 31st of December. It establishes that the total net value is all assets and rights of economic value owned by a natural person, minus charges and burdens that reduce their value, besides personal debts and obligations. That means owners and workers in the Spanish crypto company may be liable for the Wealth Tax. The exemption for the total value not exceeding 700,000 EUR applies solely to resident taxpayers.

The exemption from tax extends to shares in entities, either listed or unlisted, whenever the following conditions occur:

• Where at least 5% of the share capital is owned by an individual, and a spouse or other family members may own at least 20%.
• A person acts as a manager of the company and derives a remuneration that is associated with at least 50% of the individual’s total net gains;
• The management of movable or immovable property cannot be the principal activity of the company.

Social Security Contributions

In case a crypto company employs locals, it needs to register its employees with the Spanish Social Security authorities. The burden of payment of Social Security Contributions is borne both by employees and employers. For the year 2022, the rate of contribution is 36.25%, where the employer shall pay for 29.9% of the employee’s salary, while the employee shall pay the remaining 6.34%. The minimum amount of the respective contributions shall be set for every calendar year and depends on salary, while the maximum per employee amounts to 4,139.40 EUR per month.

The contributions give access to the following benefits:

• Unemployment allowance
• Parental leave and childcare allowance
• Allowance for work-related incapacity due to sickness or injury
• Allowance for non-work-related illness or injury incapacity
• Public health care
• Retirement and pension

How do I pay taxes on crypto in Spain in 2024?

Taxation of Income from Cryptocurrencies in Spain: Already in 2024, the question is in the focus of both experienced investors and beginners in this field. The Spanish cryptocurrency tax legislation currently changes, moves, and adapts to the dynamically changing digital landscape. The following article will give a detailed overview of the current requirements and procedures concerning the payment of taxes on income from cryptocurrency gains in Spain.

Basics of Cryptocurrency Taxation in Spain

Under Spanish domestic law, resident taxpayers have to include their cryptocurrency-related gains in their tax return. It should be borne in mind that in Spain, depending on the kind of activity, income is normally qualified, for the purpose of taxing cryptocurrencies, under different categories:

Capital gains: in Spanish, Ganancias patrimoniales; it pertains to the benefits obtained from buying and selling cryptocurrencies.

Income from economic activity (Rendimientos de actividades económicas): In case the trading of cryptocurrency is carried out in a regular and orderly manner, it shall be treated as business income.

How to declare income about cryptocurrencies

Capital gains declaration: All the income realized coming from capital gains, relating to the cryptocurrencies transaction, shall be declared. The amount of the profit gained or loss incurred shall be reported on their return.

Crypto-asset ownership and custody data: Since 2020, Spain has introduced the obligation for taxpayers to declare before the tax authorities by means of form 720 the ownership and custody of cryptocurrencies held on platforms located abroad.

Payment on account: Taxpayers who carry out economic activities using cryptocurrencies are obliged to make payments on account of tax during the financial year.

Taxation rates

In this sense, the tax rates on capital gains are different in Spain and depend on the amount of the gain: profit of up to €6,000 is taxed at a rate of 19%, while profit from €6,000 to €50,000 will be taxed at a rate of 21%, and more than €50,000 profit – 23%. With respect to income from economic activities, the general tax rates for individuals will apply, which amounts to up to 47%, depending on the amount of the income and the autonomous community of residence.

Penalties due to non-payment of taxes

Failure to pay taxes on cryptocurrency income in Spain may lead to serious financial penalties and fines. Spanish tax authorities do monitor different types of cryptocurrency transactions regularly, and failure to declare or incorrectly declaring cryptocurrency income may be viewed as tax evasion. Correct declaration of all income and transactions related to cryptocurrencies in due time cannot be overemphasized in order to avoid adverse tax consequences.

In Spain, the fiscal system is moving hand in hand with the fast-changing world of cryptocurrencies, carrying very clear guidelines on how to declare and tax revenues derived therefrom. Where change either in personal circumstance or in tax legislation has taken place for the individual, a prudent response might involve adjusting the tax strategy accordingly. Thorough documentation of all cryptocurrency transactions, understanding of the tax rates and obligations, and timely declaration of income are needed to protect from penalties and ensure the maximum financial return of the investment in cryptocurrencies.

Given the complications that may arise in regard to taxation of cryptocurrencies, professional tax advice is strongly recommended. A qualified tax adviser can provide updated information, personalized advice, and assistance in managing your obligations with respect to taxes in conformity with the latest legislative changes. This way, you will be compliant with all tax requirements and can optimize your taxes in Spain.

Table with the main tax rates in Spain for 2024. This table displays lots of information related to personal income tax, corporate income tax, and value-added tax, V.A.T., and also mentions the possible general application of tax on capital gains to revenues from cryptocurrency.

The foregoing rates give a general view of the Spanish system of taxation. Bear in mind that tax laws can change, and there might be conditions or deductions applicable to your situation. You might want to reach out to a professional on taxes for updated information and advice, more so where cryptocurrencies and any other particular kind of investments may attract certain tax rules.

If you want to operate a crypto company in Spain, then our lawyers at Regulated United Europe will be pleased to provide individual consultations on how to structure your taxes in conformity with local legislation and the EU. Also, we can provide consultations on crypto company formation, crypto licensing, and perform financial accounting. Feel free to contact us right now for an appointment in a consultation.

Lawyers from Regulated United Europe also provide legal support for crypto projects, which help them adapt to MICA regulations.