YEREVAN (CoinChapter.com) – The new laws governing cryptocurrency taxation in Spain require residents to declare their foreign-held crypto assets by March 31, 2024. This mandate, announced by the Spanish Tax Administration Agency (Agencia Tributaria), is part of the efforts to regulate virtual assets and increase tax collection.
Cryptocurrency Taxation in Spain – New Laws for 2024
The reporting requirement applies to individual and corporate taxpayers with holdings exceeding 50,000 euros (about $55,000) as of Dec. 31. Users will need to report cryptocurrency assets stored in self-custodial wallets, using the standard wealth tax form, Form 714, while assets on non-Spanish platforms must be declared with another form.
Cryptocurrency transactions in Spain fall under the Income Savings Tax (Capital Gains Tax), ranging from 19% to 28%. A wealth tax is also applicable for individuals with a net worth exceeding 700,000 euros, and taxpayers must declare crypto holdings above 50,000 euros held outside Spain.
The law considers gains from cryptocurrency transactions and any income generated from crypto holdings as taxable. This includes income from professional activities, crypto mining, and payment for goods and services. General income tax rates are higher than the capital gains tax, ranging up to 47%.
The law also includes provisions for Inheritance and Donation Tax, applicable to crypto received as inheritance or gifts, with tax rates varying between 7.65% and 34% depending on the autonomous community. The tax treatment of crypto assets depends on the type of transaction, such as selling, trading, mining, staking, lending, or receiving as a salary or gift.
Spain Crypto Adoption
This regulation represents a significant step towards formal recognition and cryptocurrency taxation in Spain. As of 2023, cryptocurrency adoption in the country shows varying figures according to different studies.
According to a survey by the country’s securities markets regulator, CNMV, about 6.8% of people in Spain have invested in crypto, mainly motivated by profit and belief in the technology.
However, a report by TrippleA suggests a lower adoption rate of 2.5%, which translates to approximately 1.1 million crypto owners under cryptocurrency taxation in Spain. In contrast, a study by Finder in late 2021 reported a higher adoption rate of 12%, with Bitcoin being the most popular cryptocurrency at 5%, followed by Ethereum and Bitcoin Cash at 2%, and Ripple and Litecoin at 1%.
Meanwhile, Spain is the third country in Europe in terms of cryptocurrency value received, according to Chainalysis.
MiCA 2024 Advantages
The European Union introduced the Markets in Crypto-Assets Regulation (MiCA) in June 2023, with a 12-to-18-month period for developing detailed technical standards, involving public consultation on these standards.
The consultation process aims to incorporate feedback and ensure the smooth implementation of MiCA. This regulation, which will take effect in 2024, aims to provide a comprehensive framework for crypto-assets not currently covered by existing financial services legislation.
MiCA focuses on transparency, disclosure, authorization, and supervision of crypto-asset transactions to enhance market integrity and financial stability.
Crypto Regulation and Taxation in Spain and EU
The crypto regulation’s scope covers various aspects of the industry. It requires one of the EU’s national financial regulators to authorize companies offering crypto services within the EU. The services could include custody, trading, portfolio management, or advice.
Furthermore, companies offering crypto assets to the public must publish a fair and clear white paper, warning of risks without misleading potential buyers.
A significant part of MiCA is stablecoin regulation, classified as “e-money tokens” (EMTs) or “asset-referenced tokens” (ARTs). These tokens are required to hold suitable reserves and be well-governed. The regulation also sets stringent constraints on the usage of stablecoins, particularly those not pegged to an EU currency, to prevent them from supplanting the euro.
Licensed crypto providers under MiCA will receive a “passport” to operate across the EU. This provision offers legal certainty and is seen as essential for attracting traditional finance into the crypto sector. However, the regulation has faced some controversy, particularly regarding its application to non-fungible tokens (NFTs) and the enforcement of rules against crypto firms operating outside the EU.
MiCA could also influence global crypto regulation. The “Brussels effect” suggests that multinational companies often prefer to operate under a single set of standards. Thus, it could lead EU rules and cryptocurrency taxation in Spain to become the global norm.
