I. Crypto-assets and the Tax Authority: New Supervision of Investments
In an increasingly digital financial world, crypto-assets have gained growing importance among both investors and speculators. It is no longer unusual for small investors to hold savings in cryptocurrencies or to have carried out several buy-and-sell transactions. Cryptocurrencies are no longer seen as something risky, but rather as another intangible asset, comparable to stocks or investment funds.
Moreover, the exponential gains of recent years have attracted the attention of the Tax Authority, which discovered that many taxpayers were not declaring the capital gains derived from these assets. To improve control over the ownership and movements of crypto-assets, the Tax Authority has imposed on cryptocurrency service providers operating in Spain the obligation to report to the Spanish authorities the balances of their electronic wallets as of December 31st (Form 172) and all transactions carried out throughout the year (Form 173).
The first year this requirement came into force was 2023. Providers such as Binance, Coinbase, Bit2Me, among others, had to submit Forms 172 and 173 in January 2024. As a result of these filings, many taxpayers received a message in their tax data like this one:
This year, the situation has worsened. Instead of a simple generic warning, your tax data may include specific details of the transactions carried out during the year, showing that the Tax Agency is exercising stricter control over cryptocurrency operations.
Today more than ever, it is essential to understand the tax impact of holding crypto-assets and how to properly report the gains or losses arising from their transfer.
II. How are crypto-assets declared in the income tax return?
In the income tax return, crypto-assets are declared as capital gains or losses. If there has been a transfer of crypto-assets (buy-sell, crypto-to-crypto exchange, or the use of cryptocurrencies as a means of payment, among others), the gain or loss is calculated as the difference between the purchase price and the selling price. This gain or loss is included in the taxable savings base and taxed according to the following progressive rates:
-
19% for gains up to €6,000
-
21% for gains from €6,000.01 to €50,000
-
23% for gains from €50,000.01 to €200,000
-
27% for gains from €200,000.01 to €300,000
-
28% for gains above €300,000.01
It is important to note that losses can also be offset against other capital gains, which may reduce the taxable base and, therefore, the tax burden.
III. How are crypto-assets declared in the Wealth Tax return?
In the Wealth Tax return, crypto-assets must be included as part of a person’s assets, since they are considered goods or rights with a measurable economic value. Like other assets, crypto-assets must be valued at their market price on December 31 of the corresponding year. In this case, the value of cryptocurrencies or tokens must be based on the exchange rate on that date.
For example, on December 31, 2024, the value of Bitcoin closed at $93,557.2 (according to Investing.com and Yahoo Finance), which would be approximately €85,857.44 (with an exchange rate of 0.9177). In your tax data, the value of crypto-assets will be shown in euros as of December 31. However, if Bitcoin was stored in a cold wallet, the corresponding exchange rate would still be used for reporting purposes.
At LGConsulting, we help you manage the complex tax processes related to cryptocurrencies. We understand how important it is to comply with your tax obligations correctly and efficiently, especially with the new regulations affecting the income tax return and the Wealth Tax return. Our tax experts have in-depth knowledge of the digital sector and are ready to provide you with personalized advice that optimizes your tax situation and helps you avoid problems with the Tax Authority.
If you own crypto-assets and are unsure how to declare them, or if you need help understanding the tax implications in your return, do not hesitate to contact us.
