Pay Taxes on DeFi Yield in Spain: Your 2024 Compliance Guide

Understanding DeFi Tax Obligations in Spain

Decentralized Finance (DeFi) has revolutionized how Spaniards earn yield through crypto lending, staking, and liquidity pools. But as returns grow, so does tax scrutiny. In Spain, all DeFi-generated income is taxable – failure to declare it risks audits and penalties from the Agencia Tributaria (Tax Agency). This guide breaks down exactly how to legally pay taxes on DeFi yield in Spain, helping you avoid costly mistakes while maximizing compliance.

How Spain Taxes DeFi Yield: The Legal Framework

Spanish tax law treats DeFi earnings as capital income or savings income, taxed under the Impuesto sobre la Renta de las Personas Físicas (IRPF). Key principles include:

• Yield as Income: Interest from lending, staking rewards, and liquidity mining profits are taxed upon receipt at market value.
• Progressive Rates: DeFi yield falls under savings income tax brackets: 19% (first €6,000), 21% (€6,001–€50,000), and 23% (above €50,000).
• No Distinction for Assets: Taxes apply whether earnings are in stablecoins, ETH, or other tokens.
• Record-Keeping Mandate: You must document transaction dates, values in EUR, and wallet addresses for 5 years.

Tax Treatment of Different DeFi Yield Types

Not all DeFi income is taxed identically. Here’s how Spain categorizes common yield sources:

• Staking Rewards: Taxable as income upon claimable date. Later sales trigger capital gains tax if value increases.
• Lending Interest: Treated as savings income. Taxed annually based on EUR value when received.
• Liquidity Pool Tokens (LP): Rewards are taxable income. Swapping or selling LP tokens may incur capital gains tax on price differences.
• Airdrops & Forks: Taxable as miscellaneous income at fair market value upon receipt.

Step-by-Step: Calculating Your DeFi Tax Liability

Follow this process to determine what you owe:

1. Convert to Euros: Calculate EUR value of all yields using exchange rates at receipt time.
2. Categorize Income: Separate into savings income (staking/lending) or capital gains (token sales).
3. Apply Tax Brackets: Sum all savings income and apply progressive rates (19%-23%).
4. Deduct Expenses: Gas fees and transaction costs directly related to earning yield are deductible.
5. Use Tools: Leverage crypto tax software like Koinly or TaxScouts to automate calculations.

Example: María earns €5,000 in staking rewards and €3,000 from liquidity mining. Her total savings income is €8,000. She pays 19% on €6,000 (€1,140) and 21% on €2,000 (€420), totaling €1,560 in tax.

Reporting DeFi Income on Spanish Tax Returns

Declare DeFi earnings in Modelo 100 during the annual IRPF filing (April–June). Specifically:

• Enter savings income in Box 0026 (Rendimientos del capital mobiliario).
• Report capital gains/losses from token sales in Box 0294.
• Non-residents use Modelo 210 quarterly with a flat 19% rate.

Penalties for underreporting range from 50% to 150% of evaded tax plus interest.

Avoiding Common DeFi Tax Pitfalls in Spain

Steer clear of these frequent errors:

• Ignoring “Small” Yields: All income must be reported, even under €1,000.
• Misclassifying Income: Confusing staking (income tax) with token appreciation (capital gains).
• Poor Records: Failing to track EUR values at transaction time complicates filings.
• Overlooking Deductions: Forgetting to subtract gas fees or platform costs.

Frequently Asked Questions (FAQ)

Q: Is yield from stablecoin lending taxable in Spain?
A: Yes. All interest earned via DeFi protocols – including stablecoins – qualifies as savings income taxable at 19%-23%.

Q: When exactly is staking yield taxed?
A: At the moment rewards are claimable or transferred to your wallet, whichever comes first.

Q: Do I pay tax if I reinvest DeFi earnings?
A: Yes. Reinvestment doesn’t avoid taxation – you owe tax on the yield when received, regardless of subsequent use.

Q: Can I offset losses from DeFi against taxes?
A: Capital losses from token sales can offset capital gains. However, yield-generation losses (e.g., impermanent loss) aren’t deductible against income tax.

Q: Are there any tax-free DeFi thresholds?
A: Spain has no minimum threshold for crypto income tax. All DeFi yield must be declared.

Disclaimer: This article provides general guidance only. Consult a gestor or crypto-specialized tax advisor for personalized advice regarding your DeFi activities.