Crypto Prediction Markets: Polymarket, Augur, and Spanish Tax Authorities

Prediction markets are platforms where users buy and sell shares based on the outcome of future events (elections, asset prices, sports events, etc.). Polymarket (on Polygon/OP Mainnet) and Augur (Ethereum) are the most well-known. In 2024-2025, they experienced spectacular growth, especially Polymarket during the U.S. presidential elections.

How Do They Work?

Real Example on Polymarket:

1. A market exists: "Will Candidate X win the election?"
2. You buy "YES shares" at 0.40 USDC → if they win, each share is worth 1 USDC (profit: 0.60 USDC per share).
3. If you buy 1,000 YES shares at 0.40 → you invest 400 USDC.
4. If correct → you receive 1,000 USDC → profit of 600 USDC.
5. If incorrect → you lose the 400 USDC.

Shares can also be bought and sold before the event (secondary market), so there are trading gains/losses before resolution.

The Legal Debate: Betting or Financial Instrument?

"Betting" Argument:

• The user bets on uncertain events.
• Comparable to gambling and betting regulated under the Gambling Law.
• Betting winnings are taxed under IRPF as general taxable base capital gains (losses cannot offset capital gains).

"Financial Instrument Derivative" Argument:

• Shares are tradable assets with market prices.
• They can be bought and sold without waiting for resolution.
• More akin to a derivative on events (Event-Driven Financial Instrument).

The AEAT has not published a binding consultation on crypto prediction markets. Their treatment remains uncertain, but there are hints in general regulations.

Probable Tax Treatment: Two Scenarios

Scenario 1: Classified as Betting (More Conservative)

• Winnings (resolution in your favor) → capital gain to be included in the general taxable base (rates up to 47% in 2025).
• Betting losses → deductible in the general base as capital loss, but only up to the amount of betting winnings for the year.
• You cannot offset prediction market losses with BTC sale gains.
• The tax rate is unfavorable as it falls under the general rate rather than the savings rate.

Scenario 2: Classified as Financial Asset Trading (More Favorable)

• Each share purchase/sale → capital gain or loss in the savings base (up to 28% in 2025).
• Can be offset with losses and gains from other financial assets.
• Similar treatment to cryptocurrency sales.

Secondary Trading in Markets

Regardless of the event resolution, if you buy shares at 0.40 and sell them at 0.80 before the event:

• Profit: 0.40 per share held.
• Almost certainly savings base capital gain: it’s an asset trade, not a betting result.
• Rate: 19-28% (savings base 2025).

The most confusing part is the market resolution (winning or losing the bet).

Tax Recordkeeping for Transactions

Given the volume of transactions that may occur:

1. Export the transaction history from Polymarket (USDC in/out and settlement).
2. Classify by type: share purchase, share sale, positive settlement, negative settlement.
3. Calculate the EUR result for each transaction (USDC × EUR/USD exchange rate on the transaction date).
4. If using stablecoins like USDC: the USDC/EUR exchange rate must be calculated using the ECB EUR/USD rate for that date.

USDC as Currency: Additional Tax Effect

If you buy USDC with EUR to use Polymarket:

• The EUR → USDC conversion does not trigger a taxable event (it’s considered a foreign currency purchase for practical purposes, EUR value ≈ USDC value).
• The conversion back from USDC → EUR may generate a capital gain if the USDC value has changed relative to EUR (though minimal since it’s a stablecoin).

Polymarket for Non-Residents in Spain: Access Issues?

Polymarket is geoblocked for U.S. citizens/residents. Spanish residents can access it but assume the regulatory risk of it being classified as unauthorized online betting in Spain. This does not directly affect taxation (tax obligations are independent of platform legality) but adds legal risk.

Practical Summary

Consult a tax advisor before declaring significant volumes in prediction markets. The lack of clear administrative criteria poses a risk of unfavorable interpretation.

Updated: April 2026 | Tax Year: 2025