Cryptocurrency Tax requirements in Spain?

The Spanish government has finally decided to scale back its efforts to regulate crypto-currencies.

Indeed, Spain had previously planned to introduce new regulations that would have required crypto-currency platforms to share customer data related to their crypto-currency assets as well as transaction data such as collections, payments, transfers, purchases, exchanges and transmissions.

However, the Spanish tax authorities will have access to less information about customers using these asset classes.

Instead of that, crypto-currency investors will not have to declare their foreign holdings of bitcoins obtained in 2021.

Moreover, you have to know that all tax residents in Spain must declare all assets they own in other countries, above certain thresholds, in a form called “Modelo 720″.

This form generally covers assets such as bank holdings and real estate. However, with the explosion of crypto-currencies around the world, the Spanish government has attempted to regulate this asset class mostly in order to reduce fraud and money laundering.

Nevertheless, crypto-currency holders will have to pay capital gains tax on sales of virtual currencies, as they are part of an individual’s personal income.

Currently, Spanish tax residents are required to declare crypto-currencies in their annual Personal Income Tax returns. This document, called IRPF in Spain, subjects crypto-currencies and virtual currencies to the same financial reporting requirements as stocks, shares and bonds. The following tax rates apply to crypto-currencies:

• 19% up to €6,000.

• 21% between €6,001 and €50,000

• 23% from €50,001 to €199,999

• 25 percent from €200,000 and up.

Customers and traders in Spain will have to report their capital gains and losses to the country’s tax agency in their annual personal income tax returns.

Indeed, crypto-currencies are unique and problematic from a tax perspective due to their volatility. Capital gains can be huge and sudden with a burst of new value, but lows are equally volatile and can be quick and long lasting.

With such scrutiny of cryptocurrency in Spain, it is vital that all Spanish tax residents accurately report their crypto-currency assets on their annual personal income tax returns along with their stocks or real estate income.

In many ways, Taxation can seem quite difficult, which is why if you reside in Spain and hold crypto-currencies, our Tax Lawyers at Marfour International Law Firm will be pleased to help you and provide you with the best advice.