How to Pay Taxes on DeFi Yield in Spain: 2024 Compliance Guide

Understanding DeFi Yield Taxation in Spain

As decentralized finance (DeFi) transforms how Spaniards earn passive income through crypto staking, lending, and liquidity pools, understanding tax obligations is critical. The Spanish Tax Agency (Agencia Tributaria) treats DeFi yield as taxable income, requiring full disclosure on annual returns. Failure to comply can trigger audits, penalties of 50-150% of unpaid tax, plus interest. This guide clarifies how to legally report DeFi earnings under Spain’s current crypto tax framework.

How Spain Taxes DeFi Yield: Key Principles

Spanish residents must declare all DeFi-generated income, categorized under two tax types:

• Savings Income Tax (Rendimientos del Capital Mobiliario): Applies to recurring yield like staking rewards or interest from lending protocols. Taxed at progressive rates: 19% (first €6,000), 21% (€6,001-€50,000), 23% (€50,001-€200,000), 26% (above €200,000).
• Capital Gains Tax (Ganancias Patrimoniales): Triggered when selling/exchanging tokens received as yield. Calculated as: (Sale Price – Fair Market Value at Receipt) – Allowable Costs. Taxed at same progressive rates as savings income.

Note: Yield from non-EU platforms still requires declaration under Spain’s worldwide income taxation rules.

Step-by-Step: Calculating Your DeFi Tax Liability

1. Identify Taxable Events: Record dates and values for yield receipt, token swaps, sales, or protocol exits.
2. Convert to EUR: Use Bank of Spain exchange rates at transaction time (not yearly average).
3. Calculate Income Tax: For rewards received, apply FMV in EUR at receipt date as taxable base.
4. Compute Capital Gains: When disposing of yield tokens: (Disposal Value – Acquisition Cost) = Gain/Loss. Acquisition cost = FMV when initially received.
5. Deduct Expenses: Include gas fees, platform costs directly linked to yield generation.

Reporting DeFi Yield on Spanish Tax Returns

File via Form 100 (Declaración de la Renta) by June 30th annually:

• Savings Income: Report in Box 0026 (Rendimientos del capital mobiliario)
• Capital Gains: Declare in Box 0336 (Ganancias patrimoniales)
• Foreign Platforms: Complete Form 720 if total overseas crypto assets exceed €50,000

Essential Records: Maintain CSV exports from wallets/protocols, exchange rate proofs, and transaction hashes for 4 years.

Top 5 DeFi Tax Mistakes in Spain

• Assuming “small” yield is tax-exempt (no minimum threshold exists)
• Using yearly average EUR rates instead of transaction-date rates
• Neglecting to report yield from non-custodial wallets (e.g., MetaMask)
• Failing to separate income tax (at receipt) from capital gains (at disposal)
• Omitting Form 720 for EU-based platforms like Lido or Aave

Legal Tax Optimization Strategies

• Offset Losses: Net capital losses against gains across all crypto assets
• Hold Long-Term While Spain has no reduced long-term rates, deferring sales spreads tax burden
• Deduct Expenses: Claim gas fees, subscription costs for tax software
• Explore SICAVs: High-net-worth individuals may use investment funds with flat 1% tax

Warning: Avoid “tax-free” jurisdictions – Spain taxes residents on worldwide income.

Frequently Asked Questions

Is yield from staking ETH taxable in Spain?

Yes. Staking rewards are taxed as savings income at progressive rates (19-26%) based on the euro value when received. Subsequent sales trigger capital gains tax.

How are liquidity pool rewards taxed?

Rewards (e.g., UNI tokens from Uniswap) are income-taxable at receipt. When you withdraw liquidity, the difference between deposited value and withdrawn value is a capital gain/loss.

What exchange rate should I use?

Only Bank of Spain’s daily EUR rates are acceptable. Crypto-to-crypto trades require converting both assets to EUR using the transaction timestamp.

Are there penalties for late DeFi tax filing?

Yes. Minimum penalty is €200 + 50% of unpaid tax. Deliberate concealment increases penalties to 150%. Interest accrues at 3.75% annually from July 1st.

Do I need to report yield if I didn’t cash out to euros?

Yes. Taxation applies upon receipt of tokens, regardless of conversion to fiat. The euro value at receipt establishes your tax base.

Can I use foreign tax credits for DeFi taxes?

Possibly. If you paid tax on the same income in another country (e.g., US withholding tax), you may claim credit via Double Taxation Agreements. Consult a gestor.

Staying Compliant

With Hacienda increasing crypto audits, meticulous record-keeping and timely reporting are essential. Use specialized software like Koinly or consult a gestor experienced in crypto taxes. As regulations evolve (e.g., DAC8 EU directive), proactive compliance remains your best strategy for stress-free DeFi participation in Spain.