Spain Crypto Tax

Spain is the 14th largest economy in the entire world, offering access to the prosperous EU market and multiple tools for tax optimisation. The taxes are administered by the Spanish Tax Administration Agency which is responsible for the effective imposition and application of the tax rules, as well as the management, inspection, and collection of taxes. The authority hasn’t yet released specific rules for crypto taxation, and therefore general rules apply to businesses engaging in crypto-related activities. The tax year for companies is the same as the company’s accounting year and shouldn’t exceed 12 months.

It’s important to note right from the start that Spain’s autonomous communities are authorised to modify the national tax regulations (e.g., exemptions, rates, and deductions), which is why the structure of taxation ultimately depends on the location of the business. According to the Report on Regional Competitiveness in Spain 2020, the most competitive and entrepreneurial autonomous communities in Spain are Madrid, Navarre, the Basque Country, and Catalonia. Our team here at Regulated United Europe (RUE) will be pleased to provide further information, should you be interested in the taxation frameworks in any of these regions.

Tax Reliefs

Research & development (R&D) activities are entitled to such tax incentives as non-refundable subsidies, soft loans, and a 25% tax credit which can be used for expenses incurred by R&D activities. Furthermore, an additional 12% tax credit is available for the implementation of activities pertaining to technological innovation. Another additional 17% tax credit can be used for personnel expenses when the personnel is qualified to conduct and is conducting R&D activities.

Spain has over 90 international agreements on the elimination of double taxation, which can certainly have a positive effect on the structure of corporate taxes and cross-border investments. According to these agreements, such income as dividends, capital gains and royalties might be tax-exempt or subject to lower taxes. It’s important to note that these agreements apply only to tax-resident companies.

A company is a tax resident in Spain when it has been incorporated in accordance with Spanish law, and/or has a registered office in Spain, and/or has an effective head office in Spain, from where its business activities are managed and controlled.

Corporate Tax

The standard Corporate Tax rate in Spain is 25% and generally also applies to crypto companies operating in Spain. Tax residents are subject to paying the tax on their worldwide income, while non-resident companies are only taxed on the income sourced within the territory of Spain.

A reduced rate of 10% applies to newly established companies for both the first tax period in which they obtain a profit and the following tax period. However, it doesn’t apply to companies whose business activities were previously conducted by a related company or individual, to equity companies, or to companies that are part of a national or international group.

Startups may also be entitled to pay a reduced rate of 15%, provided that they meet predetermined conditions. This rate applies in the first tax period in which the company sources positive taxable income and in the following three tax periods, as long as the company still qualifies as a startup.

A company is considered a startup if the following conditions are met:

• A company is newly established or within the last five years (seven years for strategic sectors and companies which have designed and developed their own technology in Spain)
• Its registered office, company domicile, or permanent establishment must be located in Spain
• The company must be developing an innovative entrepreneurial project and demonstrate its scalability
• The company isn’t a result of a merger, spin-off, or transformation of companies that aren’t considered emerging companies
• Such a 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

The taxation system is based on self-assessment and annual Corporate Income Tax returns must be filed within 25 calendar days after the six months following the end of the tax year (e.g., if the tax year coincides with the calendar year, the return must be filed between the 1st of July and the 25th of July of the following tax year).

Value-Added Tax

In Spain, the standard VAT rate is 21% which is levied on the provision of products and services within the Spanish territory and on imports and intra-EU purchases of products and services. While certain crypto business models may raise VAT liability, crypto mining, free-of-charge supplies, and token modifications are out of the scope of VAT according to the EU rules.

Other relevant EU-wide crypto rules include:

• The crypto exchange, storage, and transfer remain VAT exempt across the EU as in this context cryptocurrencies are treated as fiat money
• When crypto wallet services are provided for a fee, only then do they fall within the scope of VAT and the standard rate applies
• The supply of products or services paid for in cryptoassets is treated in the same way as any other supply

One important change specific to Spain is related to the treatment of non-fungible tokens (NFTs) which are important and popular elements of the crypto ecosystem. Spain’s tax authority has ruled that the provision of NFTs is considered a supply of an electronic service and is subject to the standard VAT rate of 21%. Therefore, the seller must be able to identify the place of supply by the identification of the residence of the customer, which is rather challenging as usually it’s not provided by the platform. In this context, the standard EU rule applies – if the threshold of 10,000 EUR is exceeded during the tax year, and the buyer resides in another EU country, the sale is subject to VAT in the country of consumption.

Capital Gains Tax

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

The rates are 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 ranges from 0.2% to 3.5%. It’s an annual tax, which is payable on the total net value of the assets held on the 31st of December. The total net value is determined as all assets and rights of economic value owned by a natural person minus charges and burdens which reduce their value, as well as personal debts and obligations. This means that owners and employees of the Spanish crypto company may be liable for paying the Wealth Tax. There is an exemption for total values not exceeding 700,000 EUR, however, it applies only to resident taxpayers.

The tax exemption also applies to shares in entities, listed or unlisted, when the following conditions are met:

• An individual owns at least 5% of the share capital (or at least 20% including shareholdings belonging to a spouse or other family members)
• An individual acts as a manager of the company, earning a salary that is at least 50% of the individual’s total net earnings
• The management of movable or immovable property can’t be the company’s main activity

Social Security Contributions

If a crypto company employs local people, it must register its employees with the Spanish Social Security authorities. The Social Security Contributions are shared between employees and employers. As of 2022, the total rate is 36.25%, where the employer pays 29.9% of the employee’s salary, and the employee pays the remaining 6.34%. The minimum amount of contributions is dependent on the salary, and the maximum contribution per employee is 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 healthcare
• Retirement and pension

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

In 2024, the taxation of cryptocurrency income in Spain continues to attract the attention of both experienced investors and newcomers to the field. Spanish cryptocurrency tax legislation is constantly evolving in an effort to adapt to the dynamically changing digital landscape. This article provides a detailed overview of the current requirements and procedures related to the payment of taxes on cryptocurrency gains in Spain.

Basics of cryptocurrency taxation in Spain

Spanish tax residents are required to declare cryptocurrency income in their annual tax return. It is important to realise that in Spain, cryptocurrency income may fall under different taxation categories depending on the type of activity:

• Capital gains (Ganancias patrimoniales): profits made from buying and selling cryptocurrencies.
• Income from economic activity (Rendimientos de actividades económicas): if cryptocurrency trading is carried out regularly and systematically, the income can be considered as business income.

How to declare income from cryptocurrencies

1. Capital gains declaration: All cryptocurrency transactions resulting in capital gains must be declared. Taxpayers must report the acquired gain or loss on their tax return.
2. Information on the ownership and storage of cryptocurrencies: From 2020, Spain introduced the obligation for taxpayers to inform the tax office about the ownership and storage of cryptocurrencies on foreign platforms through form 720.
3. Advance payments: Those who engage in economic activities using cryptocurrencies must make advance payments of tax throughout the year.

Tax rates

The tax rate for capital gains in Spain varies between 19% and 26% depending on the amount of the gain:

• Up to €6,000 of profit is subject to 19% tax.
• Between €6,000 and €50,000 of profit is subject to 21% tax.
• Over €50,000 of profit is subject to 23% tax.

For income from economic activities, general tax rates for individuals apply, which can reach up to 47% depending on the amount of income and the autonomous community of residence.

Penalties for non-payment of taxes

Failure to pay taxes on cryptocurrency income in Spain can result in serious financial penalties and fines. The Spanish tax authorities actively monitor cryptocurrency transactions and failure to declare or incorrectly declare cryptocurrency income may be considered tax evasion. It is important to declare all cryptocurrency income and transactions in a timely and accurate manner to avoid negative tax consequences.

Conclusion

In Spain, the tax system is adapting to the rapidly evolving world of cryptocurrencies, offering clear guidelines for declaring and taxing relevant income. It is important to keep up to date with changes in tax legislation and respond accordingly to these changes in your tax strategy. Carefully documenting all cryptocurrency transactions, understanding the applicable tax rates and obligations, and declaring income in a timely manner will help avoid penalties and maximise the financial benefits of cryptocurrency investments.

Given the complexity of tax issues related to cryptocurrencies, seeking professional tax advice is highly recommended. A qualified tax advisor can provide up-to-date information, personalised advice and support in managing your tax obligations in line with the latest legislative changes. In this way, it is possible to ensure compliance with all tax requirements and optimise your tax liabilities in Spain.

Table with the main tax rates in Spain for 2024. This table includes information on the rates of personal income tax, corporate income tax, value added tax (VAT) and also mentions the capital gains tax that may apply to cryptocurrency revenues.

These rates provide a general overview of the Spanish tax system. It is important to remember that tax laws are subject to change and there are specific conditions or deductions applicable to your situation. It is advisable to consult a tax professional for up-to-date information and advice, especially when dealing with cryptocurrencies and other specific investments subject to certain tax rules.

 

If you’re willing to run a crypto company in Spain, our team of dedicated and quality-focused lawyers here at Regulated United Europe (RUE) will be delighted to provide you with tailored, value-added support in structuring your taxes in accordance with local and EU legislation. We also offer crypto company formation, crypto licensing, and financial accounting services. Contact us now to book a personalised consultation.

Also, lawyers from Regulated United Europe provide legal support for crypto projects and help with adaptation to MICA regulations.