Taxation of crypto in Spain is convoluted territory to navigate due to the significant discrepancy in tax rates across Spain’s Autonomous Communities. The Agencia Estatal de Administración Tributaria (AEAT) states that from a tax perspective, crypto is considered to be an asset and as such is taxable under Personal Income Tax. The PIT rate and personal allowance, however, are subject to variable taxation.
All earnings made on and dealings in crypto must be properly declared to the Spanish tax authorities. In recent years, the AEAT has begun to closely monitor crypto activity and impose steep noncompliance penalties; failure to declare capital gains can result in fines that range from 50% to 150% of the unpaid taxes.
How is Crypto Taxed in Spain
Due to the fact that the AEAT considers crypto to be property, it is taxed as such, and falls into one of the following four categorizations:
- Income Savings Tax
- Income Tax
- Inheritance and Donations tax
- Wealth Tax
In order to ensure full compliance when paying taxes on crypto, it is important to understand which of these taxes will be levied on your earnings.
Spain’s Income Savings Tax on Crypto
Income Savings Tax will be levied on capital gains from crypto that is sold for fiat currency, or that is traded or sold for another crypto.
As is true for all of Spain’s Income Savings Tax, crypto gains will fall into one of four tax brackets that range from a tax rate as low as 19% to as high as 26%. To determine which tax rate will be levied, the total gains over the course of the tax year must first be calculated.
In order to figure out the exact profit or loss made from the sale or trade of a crypto asset, it is necessary to begin by determining the fair market value of the cryptocurrency on the day it was acquired. Add or subtract from the acquisition price any costs associated with buying or selling the crypto asset to arrive at the tax basis.
For calculating the final sum, which reflects either the capital gains or losses, subtract the tax basis from the price at which the asset was sold or traded.
In the case of capital gains, Income Savings Tax will be owed according to the total earnings for the year. In the case of capital losses, the amount lost can be used to offset capital gains on other investment gains- crypto or otherwise.
Calculating Income Savings Tax on Crypto Gains
The rates for Spain’s Income Savings Tax (IST) are broken down into four tax brackets:
- Capital gains of €6,000 or less: 19% IST
- Capital gains of €6,000-€50,000: 21% IST
- Capital gains of €50,000-€200,000: 23% IST
- Capital gains of More than €200,000: 26% IST
Income Tax on Crypto in Spain
While paying Income Tax on crypto is less common than Income Savings Tax, there are a number of occasions on which it is levied. The following scenarios would result in Income Tax being owed on crypto:
- Receipt of crypto for the payment of goods or services.
- Crypto earned from mining activities.
- The buying, selling and trading of crypto that surpasses personal investments and is at the capacity of a professional day trader and/or constitute as one’s complete source of income.
When crypto activities fall into one of the above-listed categories they will be subject to Spain’s Income Tax.
Calculating Income Tax on crypto follows the same progressive tax rates applied to any other form of income. These are dependent on not only the income earned over the course of the taxable year, but will vary based on the Autonomous Community in Spain in which an individual resides.
Inheritance and Gift Tax
Unfortunately, even crypto received as a gift in Spain is subject to taxation. For both an inheritance of crypto and a gift of crypto, a tax is levied that varies depending on the region of the recipient and the amount of crypto received. Each Autonomous Community will tax inherited or gifted crypto differently.
Spain’s Wealth Tax
In Spain, there is a general Wealth Tax levied on individuals with worldwide net worths exceeding €700,000. When reporting taxes, individuals are obligated to declare the sum total of all their global assets, which include crypto assets.
If the worldwide net worth exceeds the allotted allowance (which can vary depending on the autonomous community in which an individual or couple are based), a region-specific Wealth Tax that ranges from .2% to 3.75% will be levied.
Compliant Crypto Payroll in Spain with Rise
Ensuring compliant crypto transactions is challenging as the EU’s virtual asset laws rapidly evolve and Spain's Autonomous Communities adopt their own tax rates that are subject to extreme variation.
Additionally, taxation is harshly enforced in Spain and the repercussions of noncompliance are far more costly than the taxes themselves.
Rise is a web3-enabled payroll and compliance solution that takes care of your organization’s processes of hiring, managing and paying contractors while ensuring total compliance. With Rise, payroll is automated and payouts are close-to-instant and in the currency of your choice- whether that’s fiat currency, crypto or mixed.
Avoid the fallout of Spain’s harsh noncompliance penalties and streamline your global crypto payroll and compliance with Rise. Schedule a demo today to learn more about how Rise can keep your crypto transactions compliant.