Cryptocurrencies and the tax residence change regime

The tax treatment of crypto-assets in the event of a change in tax residence has raised doubts regarding the possibility of applying specific benefits for residents moving to Spain. A recent binding ruling from the Dirección General de Tributos (DGT) has delimited the scope of this benefit regarding the ownership of virtual currencies.

What the DGT has ruled

The query concerned whether the capital gains regime for changes in tax residence, provided for in Article 95 bis of Law 35/2006 (LIRPF), is applicable to cryptocurrencies. The DGT has ruled that this regime is exclusively limited to the positive differences between the market value and the acquisition value of shares or interests of any type of entity.

In this regard, the Administration establishes that virtual currencies or cryptocurrencies do not possess the legal nature of shares or interests in an entity. Therefore, the ownership of these assets is not included in the scope of application of said deferral regime.

What it means for you

If you are an expatriate moving your tax residence to Spain and you hold a cryptocurrency portfolio, this criterion has direct implications for your income tax return:

• Exclusion from the benefit: You will not be able to apply the deferral regime of Article 95 bis to the gains obtained from the sale of crypto-assets, even if the change of residence is the reason for the move.
• Nature of the asset: Current regulations clearly distinguish between assets that represent an interest in an entity and digital assets that do not have that status.
• Other crypto-assets: The DGT points out that, for other types of crypto-assets, it would be necessary to analyze their individual characteristics to determine their treatment.

What you should do

In a scenario of a change in tax residence involving digital assets, it is necessary to perform a detailed analysis of the portfolio composition. Since the classification of each asset may vary, it is recommended to assess the legal nature of each position to determine its exact tax treatment in Spain and avoid errors in the settlement of Personal Income Tax (IRPF).