How to Invest in Cryptocurrencies in Spain? Don't do it without knowing this

On this occasion, we are going to analyze how to invest in cryptocurrencies in Spain. Although it is true that cryptocurrencies have been around for several years now, they continue to be a novel investment alternative today.

Learning how to invest in cryptocurrencies can give you what you need to diversify your finances. And the best part is that they are a type of investment that fits different types of budgets, so it is a viable option even with a small budget. 

And in terms of profitability, investing in cryptocurrencies in 2023 remains a good option. Just look at the growth of Bitcoin and various types of Altcoins, especially emerging projects that look promising for the future. 

There are several reasons for wanting to learn how to invest in cryptocurrencies. However, it is also common to have many questions about it. 

For example, are these types of investments legal? How much money do you need to invest in cryptocurrencies? In this post, we will answer your main questions and, above all, we will tell you what you can do to get the most out of your investment. 

Remember that you also have the article on how to make money with cryptocurrencies, which you can take advantage of.

What is the minimum amount required to invest in cryptocurrencies in Spain?

The price of Bitcoin tends to rise considerably, and it has reached historic highs that have positioned it as an expensive asset. With this in mind, it is common to think that we need a lot of money to invest in cryptocurrencies. 

So, the question is, how can you start investing in cryptocurrencies with little money? First, you need to choose a good online broker, one that allows you to start trading with an affordable minimum deposit. 

There are some online brokers for investing in cryptocurrencies that allow you to start trading with minimum deposits of €20. Likewise, there are trades that can be carried out for small amounts, even from €1. 

This shows us that it is appropriate to learn how to invest in cryptocurrencies in Spain even if we have rather limited capital. 

But there is something you need to take into consideration, and that is that it is not worth investing in financial assets if this poses a risk to your financial stability. 

Tips for taking care of your cryptocurrency investments

What leading financial gurus suggest is not to invest more than we are willing to lose. Because yes, in any type of investment we make, we are going to expose ourselves to a certain margin of risk. 

Another important aspect of investing in cryptocurrencies in Spain with little money is that your patience can lead to better outcomes. 

If you have limited capital and want to make the most of it, it is best to position your investment for the long term. Even when a cryptocurrency is down in the market, history has shown us that it can turn its situation around.

Being patient while managing our emotions correctly can help us achieve solid returns. 

How to invest in cryptocurrencies in Spain?

First, you should know that buying cryptocurrencies for savings is not the same as investing in this asset with a set goal in mind. 

And to make investments with this instrument, you have access to at least three different alternatives, which are as follows:

Mining cryptocurrencies.

Trading with cryptocurrencies. 

Long-term investment. 

Long-term investment

One of the best ways to learn how to invest in cryptocurrencies in Spain is by planning your trades over time. Imagine that at the beginning of 2021, you decided to invest $100 in Dogecoin. 

Dogecoin is one of the newest Altcoins, but logically, its value was much lower in its early days. By 2021, it had an estimated value of $0.0049. As of today (May 2023), Dogecoin is priced at $0.0722.

This means that over the years, this cryptocurrency has increased in value. So, based on this example, if the same $100 were sold today in Dogecoin, the return would be substantial, especially compared to the amount invested.

However, in our guide on how to invest in cryptocurrencies in Spain, we aim to be very objective. And just as it is possible to make profits, losses are not exempt. 

The best thing you can do is conduct a thorough analysis when investing in cryptocurrencies in Spain. Recognizing how solid and in demand an asset may be in the future is key.

Trading with cryptocurrencies

Another good option for investing in cryptocurrencies in Spain is through trading. This alternative allows us to trade on the price fluctuations of Bitcoin and Altcoins. 

It is similar to investing in Forex, as it is possible to trade cryptocurrency pairs. Although it is an option that is constantly growing in popularity, it has little to do with chance.

On the other hand, trading cryptocurrencies requires solid analysis, as even certain politically charged news stories can influence the price of the asset.

Now, if you are interested in the possibility of short selling with cryptocurrencies, this is a great option. 

And the best part is that today there are many trading strategies for this asset, and even the possibility of generating profits automatically using sophisticated automated trading algorithms. 

All of this shows us that not only is it legal to invest in cryptocurrencies in Spain, but there are also many ways to do so. You just have to choose the one that best suits your experience and capital. 

The following list shows some ideal platforms for trading cryptocurrencies:

• Coinbase.
• Etoro.
• Binance. 

Mining cryptocurrencies

To mine cryptocurrencies, you need a large investment, which is far from being the best option if you have modest capital. The thing is, to do this, you need special technical equipment.

These are computers that use algorithmic and mathematical analysis to generate a process in the Blockchain system, which allows a small amount of cryptocurrency to be obtained.

On average, you need a few thousand dollars to get started in Bitcoin or cryptocurrency mining in general. And of course, there are also risks involved.

Which Spanish banks work with cryptocurrencies?

Banco Santander is one of the banks in Spain that allows cryptocurrency transactions. 

In fact, it has generated efforts to consolidate a Bitcoin exchange-traded fund, which means that people will be able to invest in an ETF of the world's leading cryptocurrency. 

Although BBVA initially had its doubts, it now allows certain transactions with cryptocurrencies, but not in Spain. However, its headquarters in Switzerland does allow certain services with Bitcoin. 

On the other hand, alternatives such as CecaBank have also jumped on the bandwagon in terms of services that support cryptocurrency transactions in Spain. Likewise, one of the most significant achievements is that of Santander, especially since it is a traditional bank. 

Which exchange should you use in Spain?

In the following chart, you can see some of the most widely used exchanges in Spain. Later on, we will share the pros and cons of each alternative. 

50.1% of Spaniards surveyed in this study use Binance as an exchange to invest in cryptocurrencies. 

Next, 12.2% use Coinbase, and it is interesting to note that 22.2% indicated that they use some other platform to invest in cryptocurrencies.

Binance

It is one of the most widely used platforms for buying, selling, and investing in cryptocurrencies. One thing that really stands out about this option is that it offers considerable flexibility in terms of commission fees.

In addition to allowing users to purchase Bitcoin, it also allows them to invest in different Altcoins, with a list of at least 140 options available to its users. 

Coinbase

According to experts on how to invest in cryptocurrencies in Spain, this is a good option for those with less experience in this type of trading. The reason? Well, it is a practical platform with a great interface.

However, objectively speaking, we can say that its commission rates may be slightly higher compared to Binance, for example. 

What happens if I don't declare my cryptocurrencies?

Failure to declare your cryptocurrencies can have several legal and financial consequences in Spain. Below, I detail the main risks and penalties you could face:

1. Economic Sanctions

Fines for Failure to Declare

• Form 720: If you do not declare your cryptocurrencies on Form 720 (declaration of assets and rights located abroad) when they exceed €50,000, you may face severe penalties. Fines can be €5,000 for each piece of information or set of information not declared, with a minimum of €10,000.
• Capital Gains: Failure to declare gains obtained from the sale of cryptocurrencies may result in fines of between 50% and 150% of the undeclared amount.

Late Return Fees

• Penalties: If you pay your taxes late, you may face late filing penalties. These penalties can be 5%, 10%, or 20% depending on the delay.

2. Late payment interest

• Interest: The Tax Agency may apply interest on arrears to amounts not paid within the corresponding period. This interest accrues daily and can significantly increase the total amount owed.

3. Review and Audits

• Tax Inspections: The Tax Agency may initiate inspections and audits if it suspects that you have not correctly declared your cryptocurrencies. This may result in a thorough examination of your finances and other possible tax irregularities.

4. Legal Implications

• Tax Crime: In serious cases, failing to declare cryptocurrencies may be considered a tax crime. This occurs when the amount defrauded exceeds €120,000. The consequences may include heavy fines and prison sentences of one to five years.

5. Money Laundering

• Money Laundering Investigations: Failure to declare cryptocurrencies may also raise suspicions of money laundering. This can lead to further investigations and more severe penalties if it is determined that cryptocurrencies are involved in illegal activities.

How to Regularize Your Situation

1. Voluntary Disclosure: If you realize that you have not declared your cryptocurrencies, it is advisable to file a voluntary disclosure before the Tax Agency initiates an audit. This can significantly reduce penalties.
2. Form 720: If your cryptocurrencies exceed €50,000 and are held on foreign platforms, be sure to declare them on Form 720.
3. Income Tax Return: Include all cryptocurrency gains and losses in your annual income tax return (IRPF). Capital gains must be declared and taxed according to current regulations.

Professional Advice

• Tax Advisor: Consulting with a tax advisor specializing in cryptocurrencies can help you understand your tax obligations and avoid costly mistakes.
• Documentation: Keep detailed records of all your cryptocurrency transactions, including purchases, sales, exchanges, and transfers. This documentation will be essential for correctly calculating your tax obligations and defending yourself in the event of an audit.

In summary, failing to declare your cryptocurrencies can have serious consequences, including financial penalties, late payment interest, tax audits, legal implications, and possible money laundering charges. It is crucial to stay informed about your tax obligations and seek professional advice to regularize your situation and avoid future problems.

How are cryptocurrencies declared in Spain?

Declaring cryptocurrencies in Spain involves following a series of steps and complying with certain tax obligations. Here's how to do it:

1. Income tax return (Personal Income Tax)

Capital Gains and Losses

You must declare capital gains and losses arising from the sale of cryptocurrencies. These are included in the taxable savings base.

• Calculation of Gains/Losses:
• Gain/Loss = Sale Value − Acquisition Value − Associated Expenses \text{Gain/Loss} = \text{Sale Value} - \text{Acquisition Value} - \text{Associated Expenses}Gain/Loss=Sale Value−Acquisition Value−Associated Expenses
• Example:
  • You purchase 1 Bitcoin for 20,000 euros.
  • You sell 1 Bitcoin for 30,000 euros.
  • The profit is 10,000 euros (30,000 - 20,000).

Type of Tax

Capital gains are taxed according to the following scale for the 2023 fiscal year:

• Up to €6,000: 19%
• From €6,001 to €50,000: 21%
• From €50,001 to €200,000: 23%
• Over €200,000: 27%

2. Form 720 (Declaration of Assets and Rights Abroad)

If you have cryptocurrencies on foreign platforms and the total value exceeds €50,000, you are required to file Form 720.

• Reportable Categories:
  • Accounts with financial institutions.
  • Securities, rights, insurance, and income deposited, managed, or obtained abroad.
  • Real estate and rights over real estate located abroad.

3. Form 100 (Income Tax Return)

Include capital gains and losses in your annual income tax return.

• Section: You must include them in the capital gains and losses section of the savings tax base.
• Documentation: Keep detailed records of all transactions (date, quantity, purchase price, sale price, platform used, etc.).

4. Form 714 (Wealth Tax Return)

If your total net worth, including cryptocurrencies, exceeds the established threshold (generally €700,000, although this may vary depending on the autonomous community), you must file a Wealth Tax return.

5. Other Obligations

VAT

In general, the purchase and sale of cryptocurrencies is not subject to VAT. However, if you engage in commercial activities with cryptocurrencies, such as mining or related services, you may have additional obligations.

Forms 130 and 303

If you have economic activity related to cryptocurrencies, such as professional trading or mining, you may need to file quarterly returns using Forms 130 (installment payment of income tax) and 303 (VAT).

Practical Example of Income Tax Return

Let's assume that during the year you have made the following transactions:

1. Purchase:
   • 1 Bitcoin for 20,000 euros in January.
2. Sale:
   • 1 Bitcoin for €30,000 in June.
3. Purchase:
   • 0.5 Bitcoin for 15,000 euros in July.
4. Sale:
   • 0.5 Bitcoin for 25,000 euros in December.

Calculation of Gains/Losses

• First Sale:
  • Profit: 30,000 - 20,000 = 10,000 euros.
• Second Sale:
  • Profit: 25,000 - 15,000 = 10,000 euros.

Total capital gain: 10,000 + 10,000 = 20,000 euros.

Statement

• Form 100: In the capital gains and losses section, include the two gains of €10,000 each, totaling €20,000.
• Tax rate: 19% applies to the first €6,000 and 21% applies to the next €14,000.

Tips and Recommendations

• Documentation: Keep detailed records of all your cryptocurrency transactions.
• Software and Tools: Use specialized software to track and calculate your transactions and tax obligations.
• Professional Advice: Consult with a tax advisor specializing in cryptocurrencies to ensure you comply with all obligations and optimize your tax burden.

By following these steps, you will be able to properly declare your cryptocurrencies in Spain and comply with your tax obligations.

How and where do I store my cryptocurrencies?

The way to buy cryptocurrencies for savings is by using a digital wallet. One of the most widely used platforms for this is LocalBitcoins, but you should know that there are other options available for this in Spain. 

When selecting a platform to store your cryptocurrencies, it is important to consider the risk involved. Therefore, you should look for references about the virtual wallet to find out how transparent and effective it is. 

Of course, you can also store cryptocurrencies on Binance. In fact, it is one of the most popular wallets not only in the United States, but in many other countries as well. 

How to invest in cryptocurrencies in Spain with Binance?

• Open your Binance account. You will mainly need an email address.
• Make the minimum deposit required by the platform for your capital. 
• Select the cryptocurrency you want to invest in. 
• Select the amount of your investment and a recurring program. Done! 

How much money can I have in Binance without declaring it?

In Spain, the obligation to declare cryptocurrencies does not depend so much on the exact amount of money you have on a platform such as Binance, but rather on the profits obtained and whether certain thresholds and conditions established by tax regulations are met. Here are the main obligations and thresholds you should take into account:

1. Obligation to declare capital gains in personal income tax returns

• Any Gains: If you make a profit from buying and selling cryptocurrencies, you must declare it on your annual tax return, regardless of the amount. There is no minimum threshold for declaring capital gains.

2. Form 720 (Declaration of Assets and Rights Abroad)

• Threshold of 50,000 EurosIf the total value of your cryptocurrencies on foreign platforms, such as Binance, exceeds €50,000, you are required to file Form 720. This declaration is made annually, and you must report if the balance exceeds this threshold as of December 31.
  • First Year: If you reach or exceed €50,000 for the first time, you must file Form 720.
  • Subsequent Years: You are only required to file Form 720 again if the value has increased by more than €20,000 since the last declaration.

3. Form 100 (Income Tax Return)

• Income from Activities: You must declare any income derived from activities related to cryptocurrencies, such as mining, staking, or professional trading. This income must be included in your income tax return and taxed accordingly.

4. Wealth Tax

• Wealth threshold: In some autonomous communities, if your total net wealth, including cryptocurrencies, exceeds a certain threshold (generally €700,000, although this may vary), you must file a wealth tax return. This threshold may vary depending on the autonomous community.

Consequences of Not Filing

• Fines and Penalties: Failure to file may result in significant financial penalties, late fees, and interest charges.
• Tax Inspections: The Tax Agency may initiate inspections and audits if it suspects that you have not correctly declared your cryptocurrencies.

Recommendations

1. Keep Detailed Records: Keep accurate records of all your cryptocurrency transactions, including dates, amounts, purchase and sale values, and platforms used.
2. Consult with a Tax Advisor: A tax advisor specializing in cryptocurrencies can help you understand your tax obligations and ensure that you comply with them.
3. Use Management Tools: There are specific tools and software available to track and calculate cryptocurrency transactions and tax obligations.

In summary, if the total value of your cryptocurrencies on Binance exceeds €50,000 as of December 31, you must declare it using Form 720. In addition, any gains obtained from the sale of cryptocurrencies must be declared in your annual income tax return.

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How much tax is paid in Spain on cryptocurrencies?

As with other activities such as trading, cryptocurrency transactions may also be taxable. Broadly speaking, users may be liable for income tax.

This tax is subject to capital gains, which averages between 19% and 23%. All of this may cause you stress, but there is something you should know.

Taxes on cryptocurrencies in Spain are paid when a transaction or exchange results in a profit. Suppose that you earn €2,000 from a Bitcoin trade. That transaction may be taxable. 

Advantages and risks

The benefits of investing in cryptocurrencies in Spain are related to several aspects, particularly the following:

• They are highly liquid instruments.
• Due to its volatility, it is possible to invest in short positions with successful strategies.
• You don't need to have a lot of money to invest in cryptocurrencies. 
• The Blockchain system is one of the most secure, which prevents risks of fraud. 
• They are decentralized financial assets that help offset factors such as inflation. 

Of course, there are also certain risks, such as the possibility of encountering scams or the burden of fluctuations. This can lead to financial losses. 

 Conclusion: Should you invest in cryptocurrencies or not?

Cryptocurrencies have a promising future, and this has become evident over the years. They have even made their way into everyday life, which will allow them to become more firmly established.

Finally, exercising caution, increasing our knowledge, and not investing beyond what is safe will always help us achieve better outcomes. 

Would you like to learn about other ways to invest and multiply your money? Remember that at Domoblock we offer secure investments with an annual return of 10%. You get returns in less than 8 months. 

No matter what type of investments you make, you can invest in startups and resort to different types of real estate investments and still achieve the aforementioned returns and profitability.

I suggest you keep reading: Best investments in times of crisis and what to invest in 2023

But if you want to learn more about real estate, you can click on the link real estate tokenization or real estate crowdfunding. Why not click on both and learn even more?