What taxes do I have to pay if I have bitcoins?
The question of bitcoin taxation in Spain is complex because, although it is a cryptocurrency, it is not considered as such in our legislation.
In other words, there is currently no law in Spain that regulates bitcoins, nor are they recognised as money.
This article is not made by a machine and is not made with GPT, but has been written by tax professionals from Asesoria Orihuela Costa and here we explain what taxes have to be paid if you have bitcoins.
Taxation of bitcoins in Spain
Although they are used for transactions, Spain does not recognise bitcoin as legal tender.
The reason? There is no central bank that supports it, although some states, such as El Salvador, have adopted it unilaterally (alongside the dollar).
Consequently, bitcoin is just another financial asset here, just like a current or savings account, government bonds, company shares or shares in investment funds.
And this means that, for taxation purposes, these rules apply.
And this affects any person resident in Spain with a NIF (Tax Identification Number), DNI or NIE.
The holding or transaction of bitcoins can be used to calculate different taxes.
Let’s take note…
Can cryptocurrency payments be accepted?
A client owes him some money and, in response to his complaints, offers to pay him in bitcoins.
Well, currently in Spain there is no law regulating cryptoassets, nor are they recognised as money.
This does not mean that you cannot accept the proposal; however, if you do so and you agree that the debt will be cancelled with this payment, please note that:
- The amount of the invoice may be expressed in bitcoins, but the amount of any tax to be charged must be expressed in euros.
- As the value of bitcoin is constantly fluctuating (it is very volatile), you may have to declare a gain and be taxed on it if its value increases in the future. And if it decreases, you will have lost money.
Is cryptocurrency trading safe?
Accepting payments in cryptocurrencies is possible.
But given their lack of regulation and volatility, it is not recommended.
Personal income tax and Bitcoins
Bitcoins are considered intangible assets.
If you are going to invest in cryptocurrencies (bitcoins, ethereum, ripple, nxt, etc.), as mentioned above, please note that they are not considered to be legal tender, but intangible assets.
As a result, they are taxed for personal income tax purposes as follows:
- If you acquire cryptocurrencies and then sell them in exchange for euros, you must declare a gain for the difference between their acquisition value and the amount obtained from their sale.
- If you use them to purchase goods and services, you will be making an exchange.
In this case, you must declare a gain for the difference between their acquisition value and the higher of the market value of the cryptocurrency and the market value of the good or service acquired.
What about other cryptocurrencies?
The provisions of this second point apply even if you acquire other cryptocurrencies.
When buying and selling currencies, no profit has to be declared until the portfolio is transformed into euros. But this is not the case for cryptocurrencies, as they are not legal tender!
Example of bitcoin taxation
Holding a bitcoin in Spain means that it must be declared and taxes must be paid if it is sold.
For example, individuals who make a financial transaction of sale will have to pay personal income tax of between 19% of the capital gain (less than 6,000 euros), 21% (up to 50,000), 23% (up to 200,000) and, thereafter, 27%.
Companies trading bitcoins will have to pay their share of the gain in corporate income tax.
Taxation of bitcoins: declaration of assets abroad
Spain does not prohibit the holding of financial assets and wealth abroad by nationals and residents. What is prohibited is not to declare them if they exceed a certain value.
In the case of bitcoins, they must be declared in Spain in successive years if the amount abroad exceeds a gain of 20,000 euros over the previous year.
For the declaration of cryptocurrencies abroad, form 721 of the Spanish tax office is used. However, if the existing balance does not exceed 50,000 euros, it will not be necessary to file the declaration.
This is particularly important for residents of Spain.
If there is no agreement with Spain to avoid double taxation, the gains would be added to the taxable base for Personal Income Tax or Wealth Tax.
Wealth Tax
Bitcoins have a market value and, like shares, are part of equity.
Wealth tax is a state tax, although it is administered by the autonomous regions, which is levied on all assets of more than €700,000 (with exemptions and allowances depending on the territory; in the Valencian community it is €500,000).
Well, when calculating it, the valuation of the bitcoins, at market prices, will be added to calculate the taxable base.
