VAT and cryptocurrencies in Spain: when it applies and when it doesn't
The relationship between VAT and cryptocurrencies often causes confusion. The general rule is exemption, but there are cases where VAT does apply.
The CJEU Hedqvist ruling (2015)
The Court of Justice of the EU established in 2015 (Hedqvist case, C-264/14) that exchanges of Bitcoin for fiat currency (euros, dollars…) are supplies of services exempt from VAT, comparable to currency exchange.
Spain applies this doctrine: the buying and selling of cryptocurrencies between individuals and on exchanges is exempt from VAT.
What is exempt?
- Buying and selling of Bitcoin or other cryptocurrencies for euros.
- Crypto-to-crypto exchange.
- Exchange operations carried out by exchanges or dealers.
What is subject to VAT?
Cryptocurrency mining
Mining is considered an economic activity. If the miner receives crypto as remuneration for their validation service and cannot identify the specific recipient, it is treated as an activity without directly identifiable consideration, which has sparked debate.
Until the DGT clarifies definitively, the majority view is that individual mining does not generate VAT (there is no provision of service to an identifiable client), but mining pools or the sale of mining services may be subject.
Crypto-related services
Services related to cryptocurrencies (crypto tax advice, smart contract development, NFT design, etc.) are normally subject to VAT at 21%.
NFTs and digital works
NFTs are unique digital assets. The transfer of an NFT can be likened to a supply of goods or provision of services, potentially subject to VAT if the sale is of a business/professional nature.
The DGT has indicated that the transfer of NFTs may be subject to VAT as a service provided electronically, at the rate of 21%.
Charging for services in crypto
If you provide services (any economic activity) and charge in crypto, VAT applies to the service, not to the crypto. The crypto is simply the means of payment.
Summary of VAT application
| Operation | VAT |
|---|---|
| Buying BTC with euros | Exempt |
| Selling BTC for euros | Exempt |
| Swap ETH → USDC | Exempt |
| Charging for services in BTC | Subject (21%) |
| Selling digital art NFT | Subject (21%) |
| Individual mining without a pool | Generally exempt |
| Crypto tax advisory services | Subject (21%) |
Conclusion
The buying and selling of crypto is exempt from VAT in Spain. However, if you carry out economic activities related to crypto (services, NFTs, organized sales…), VAT may apply to those services even if payment is received in cryptocurrencies.