The Taxation of Income from Cryptocurrencies in Various Jurisdictions (Part 10): Spain
By Santiago Lapausa, JC&A Abogados
In the absence of a definition in Spanish law of what is meant by cryptocurrencies, Spain takes the concept from the proposal of EU Directive 2015/849.
There is no specific regulation for cryptocurrencies in Spanish legislation, so all this information derives from binding consultations released by the Spanish General Directorate of Taxation.
Personal Income Tax: as it happens with securities and currencies, cryptocurrencies are taxed only on realised gains. A gain or a loss is made when selling cryptocurrencies on the difference between the sale and the purchase price exchanged in euros.
In Spain, there are two taxable bases: saving income (passive income such as dividends, interests, or capital gains) and general income (salaries, business, rentals, and certain capital gains).
Saving income is taxed at 19% on the first EUR 6,000, 21% from EUR 6,001 to EUR 50,000 and 23% above EUR 50,000. General income is taxed according to a tax scale that may vary depending on the region where the taxpayer is resident at, with a top marginal rate of 45% above EUR 60,000 (State Law).
The gain made from the sale of cryptocurrency derives from the transmission of assets, and it is, therefore, taxed as saving income (marginal tax rate of 23%). Purchase and sale costs and taxes can be offset to calculate the gain or loss.
The Spanish tax authorities have recently cleared that not only the sale of cryptocurrency in exchange for a legal currency is subject to taxation, but the exchange for another cryptocurrency, too. Therefore, all the transactions in a crypto wallet have to be valued in euros to calculate the gain or loss made separately.
However, the acquisition of cryptocurrency due to mining is considered as a business activity (selfmanagement of human and material resources, or of one of them, in order to intervene in the production or distribution of goods or services) and is subject to taxation as general income (lowest marginal tax rate of 45%). And, like in any other business activity, the costs for electricity, internet connection, maintenance, and depreciation of equipment are deductible.
If the purchase and sale of cryptocurrencies take place within a business activity, they will be taxed accordingly as general income. It is the same as in the case of those buying and selling through ATMs or vending machines in return of a commission, for example.
Wealth Tax: this tax on the net value of assets and rights held at 31 December is shifted to regional governments and taxation may vary considerably. There is a standard threshold of EUR 700,000 per taxpayer. For those obliged to file this tax, the market value of cryptocurrency at 31 December exchanged in euros has to be considered. The top marginal tax rate is 2.5% for income above EUR 10,696,000 (State Law).
Inheritance and Gift Tax: this tax is also shifted to regional governments. The market value of cryptocurrency at the date of decease or donation has to be taken into account for this tax. The reductions and allowances vary substantially depending on the region. The top marginal tax rate is 34% for income above EUR 797,555 (State Law).
VAT: cryptocurrency is considered a legal means of payment in Spain since 2015, and therefore it is exempt from VAT. Regarding any mining activity, due to the lack of direct relationship between the service provided and the received compensation, as there is no relation between provider and recipient because there is no actual client as far as new cryptocurrency is automatically produced by the network. Therefore, mining services are not subject to VAT. Those buying and selling within a business activity are subject to VAT but exempt because cryptocurrencies act as a means of payment.
Transfer tax and Stamp Duties: cryptocurrency is exempt from those taxes due to its classification as a means of payment.
Tax Form 720: Spanish tax residents have to declare foreign assets of value exceeding EUR 50,000. The legal form of cryptocurrencies is not amongst the kinds of assets to be disclosed in this way, and its intangible nature does not make it a foreign asset per se as it can be transferred to a real wallet instantly. Therefore, it is not clear today if they have to be reported in this form.
Exit tax: individuals who have been considered Spanish tax residents during at least 10 of the last 15 years, and that emigrate are taxed for unrealised capital gains due to the ownership of shares or equity interests, provided that certain requirements are met. Cryptocurrencies are not part of the assets to be considered for exit tax.
V1028-15 about cryptocurrency trading through cash machines concluding that it is not subject to VAT despite the classification as business activity due to Art.135.1(d) of EU VAT Directive 2006/112, by which transactions, including negotiation, concerning deposit and current accounts, payments, transfers, debts, cheques, and other negotiable instruments, but excluding debt collection are exempt. Cryptocurrencies fall into the concept of “negotiable instruments”.
V1029-15 about cryptocurrency trading through its own internet website concluding the same about VAT.
V0999-18 about a private investor in cryptocurrencies on transactions made through foreign platforms, concluding that exchanging one cryptocurrency for another constitutes a swap and as such it is subject to taxation for the gain that may arise from the swap, and that capital gain is taxed as saving income.
V1149-18 about a private investor who may emigrate in the future, concluding that cryptocurrencies do not fall within the scope of the exit tax.
V1604-18 about a private investor and the exchange commissions paid when buying and selling, concluding that they are deductible for capital gains as far as they are related to those transactions, and about the partial sale of cryptocurrency purchased in different moments and at different prices concluding that the FIFO method has to be applied.
V1748-18 about a blockchain miner, the equipment purchased for this activity and VAT, concluding that no VAT is deductible as far as the miner cannot charge VAT on its activity.
V2034-18 about a blockchain mining company that will also provide trading services as well as advisory, investigation and development of blockchain networks, concluding that mining services are not subject to VAT and the rest are subject but exempt as they are considered financial services.
Santiago LapausaJavier Carretero y Asociados – Abogados, Marbella, Spain
T: +34 95 292 46 56, F: +34 95 286 41 62
JC&A Abogados is a firm based in the city of Marbella, Spain, comprised of lawyers and economists aimed to provide local, national and international professional advice. We speak Spanish, English, French, Russian, German and Dutch.
Santiago Lapausa is a partner of JC&A Abogados. With a Bachelor degree in Economics and Business Studies, he joined the firm in 2003 to found and develop the tax department. Santiago is involved in all areas of general tax practice and specialises in non-residents and international tax planning.
Published: Spring 2019