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TAXES

How is crypto taxed in Spain?

Cryptocurrencies are becoming more and more popular in Spain and recently the government as been cracking down, enforcing tax controls and the declaration of crypto assets, but exactly how are they taxed?

Published: 15 March 2024 09:57 CET
How is crypto taxed in Spain?
How does Spain tax crypto assets? Photo: Karolina Grabowska / Pexels

If you live in Spain or a non-resident and have cryptocurrencies in Spain, it’s important to find out the government legislation on these virtual coins, so that you’re properly prepared, know to declare them and find out how much you’ll be taxed on them. 

Last week we wrote an article about Modelo 721, Spain’s new form for declaring crypto assets, which is due before March 31st 2024. This is an informative declaration only. You will not have to pay any tax because of it, but that doesn’t mean that cryptocurrencies aren’t taxed in Spain.

Are cryptocurrencies taxed in Spain?

Yes, all crypto coins are subject to tax in Spain, no matter what type they are, whether that’s Bitcoin, Ethereum, Polkadot, Litecoin or any one of the thousands of other ones.

You will be expected to pay tax on cryptocurrencies only when you trade them or make gains or losses.

Law 10/2010 on virtual currency, also called cryptocurrency, is considered for tax purposes as “an intangible asset, computable by units or fractions of units, which is not legal tender, but is used as means of payment as it can be exchanged for other goods, including other virtual currencies, rights or services if accepted by the person or entity that transmits the good or right or provides the service”.

If you are trading crypto coins for a personal investment, you will be subject to personal income tax, in the same way that you’re taxed on other profits from savings and investing.

READ ALSO: Do I really need to declare foreign assets to Spain’s taxman by March 31st 2024?

How much are crypto coins taxed in Spain?

Capital gains from trading cryptocurrencies are subject to taxes between 19 and 28 percent, depending on how much you earn. These are the rates.

  • From €0 to €6,000: 19 percent
  • From €6,000 to €50,000: 21 percent
  • More than €50,000: 23 percent
  • More than €200,000: 27 percent
  • From €300,000 upwards: 28 percent

Remember you will only be taxed on the gains you make. This is worked out by taking the amount you sold your crypto coins for minus the amount you bought them for in the first place.

Let’s say, for example, you made a gain of €60,000. In this case, you will pay 19 percent on the first €6,000, 21 percent for the next €44,000, and 23 percent on the remaining part of the €60,000.

This means you will pay a total of €12,940 tax on €60,000 profit, leaving you with €47,060.

You will also be taxed on gains you make from trading one cryptocurrency against one another. When you sell that coin you traded for a further profit, you will be taxed again on the second gain. 

Crypto as a business

The above amounts equal how much you’ll pay if you’re an individual, but if you’re making profits as a business or you are indeed mining crypto currencies you will be charged from 19 to 47 percent tax.

It’s not yet clear how much you will be taxed if you receive crypto by airdrop, but legal experts expect this also to be taxed between 19 and 47 percent.

How do you declare crypto earnings?

Any profit you make from cryptocurrencies must be declared during the annual declaración de la renta or income tax form, which is filed usually before the end of June each year for the previous year. 

You will report all your crypto transactions for buying and selling during that year. You can usually download a record of these from the crypto exchange you bought and sold them from.

If you made any losses you can also choose to report these. In certain cases, this may be used to offset any gains you make over the next four years.

Wealth tax

It’s important to be aware that cryptocurrencies are included in the wealth tax declaration on large fortunes. This means that the value of your crypto coins will be added to the value of your other worldwide assets including property, savings, money in your bank accounts etc.

It’s an annual tax, payable on the total net value of your assets held on December 31st of the previous year and is only applicable to those with a net wealth of over €3 million.

Rates and rules vary slightly depending on where you live in Spain, so it’s important to contact a tax professional to find out the laws in your region.

How do the Spanish tax authorities know if I have cryptocurrencies?

If you purchased your cryptocurrencies on a Spanish exchange, they will have been obliged to provide information to the Treasury about their users, so most likely they will already know. 

If you purchased crypto through a foreign exchange, such as the well-known Binance, it is likely that they will have also given your details to the Spanish tax authorities as they are inscribed with the Bank of Spain. 

Currently, there are around 70 exchanges inscribed with the Bank of Spain including Binance, Bit2Me, BitPanda, Criptan, Bitbase and Bitonovo. You can find a full list of them here if you scroll to the bottom. 

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For members

PENSIONS

What Brits should know about SIPP and QROPS pensions if moving to Spain

This Q&A offers some key information on SIPP and QROPS pension plans for British pensioners thinking of retiring in Spain, to help them decide which option is better for them.

Published: 9 May 2024 09:39 CEST
What Brits should know about SIPP and QROPS pensions if moving to Spain

Q: What are SIPPs?

A: SIPP stands for Self-Invested Personal Pension and is a UK-based pension plan. If you open an international SIPP then you can draw from this while you’re living in Spain.

Q: What is QROPS?

A: QROPS stands for Qualifying Recognised Overseas Pension Scheme. It allows you to transfer your UK pension out of the country. They are outside the UK tax regime, but must be inside the European Economic Area (EEA) if you want to avoid charges from HMRC. They also need to have similar rules and regulations to a UK-registered pension plan. Many QROPs from those wishing to retire to somewhere in Europe are transferred to Malta. As there is a dual tax treaty between Spain and Malta you will not be subject to Maltese tax when you draw your pension from there.

Q: What do I need to consider when opening a SIPP?

A: If you choose to open a SIPP, as it is self-invested, you will be responsible for managing it and making all the investment decisions. It is therefore best for those who already have some knowledge of investing or those who have the time and who are willing to put the work in to learn. It does, however, mean that you also have greater control and flexibility over your finances. You can choose to have the SIPP managed by a professional advisor, but of course this is an extra expense. Your SIPP could also be potentially subject to UK tax laws. 

Q: What do I need to consider when opening QROPs?

A: This is best for those wishing to cut all ties with the UK and permanently retire to Spain for the rest of their lives. You could lose UK domicile if you choose to do this and don’t have any other assets there, but it could mean you could also avoid UK inheritance tax. It’s also ideal if you wish your family also live outside of the UK

Q: I intend to return to live in the UK at some point in the future, which is best for me?

A: As SIPPs are UK-based, if you plan on returning there to live at some point during your retirement, that option is best. If you have QROPS, you could be subject to a large tax payment if you want to transfer it back to the UK.

READ ALSO: Six factors British people need to consider before retiring to Spain

Q: Which option will be cheaper for me?

A: SIPPs are generally cheaper than QROPs as you are managing it and investing yourself. If you choose someone else to manage it for you, however, this may not be the case.

Q: Will my SIPP be subject to tax in Spain?

A: Yes, if you are resident in Spain then you must follow Spanish tax regulations meaning that any withdrawals from SIPPs will be subject to income tax here. Pensions in Spain are subject to progressive tax rates ranging from 19 to 47 percent.  While SIPPs are also subject to UK tax rules, due to the double tax treaty between Spain and UK, you will not be taxed twice.

Q: Will my QROPS my subject to tax in Spain?

A: Yes, again if you’re resident in Spain you will be taxed on pension income. You must report income from a QROPS on your annual tax return. If you’re already a Spanish tax resident when you move your pension, it’s important to be aware that you’ll pay Spanish income tax on the whole value of the fund, therefore it’s much better to move it beforehand and then make your permanent move to Spain. 

Q: I want my pension to be paid in Euros to avoid exchange fees, which option will be best for me?

A: If you want to be paid in Euros, then QROPS will be the best as you will have completely transferred it out of the UK and into the EEA. This means that when you draw your pension, it will be paid out to you directly in Euros.

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