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

Understanding DeFi Yield Taxation in Spain

As decentralized finance (DeFi) transforms how Spaniards earn passive income through crypto staking, liquidity mining, and lending, understanding Spain’s tax implications becomes critical. The Spanish Tax Agency (Agencia Tributaria) treats most DeFi earnings as taxable income, with complex rules mirroring traditional investments. This guide breaks down exactly how to legally report and pay taxes on your DeFi yields while avoiding penalties.

Spanish Tax Laws for Cryptocurrency Earnings

Spain categorizes crypto activities under two main tax frameworks:

• Capital Gains Tax: Applies when selling/trading crypto (19%-26% rate)
• Savings Income Tax: Covers recurring yields like staking rewards (19%-26%)

DeFi yields typically fall under “Savings Income” as they’re considered generated wealth. Unlike some EU countries, Spain offers no special tax breaks for DeFi activities.

How DeFi Yield Is Taxed: Specific Cases

Taxable Events Include:

• Staking rewards received (e.g., ETH2.0, SOL)
• Liquidity pool earnings (e.g., Uniswap, PancakeSwap)
• Lending interest (e.g., via Aave or Compound)
• Yield farming incentives

Taxation triggers when you gain control of rewards. For example: staking rewards are taxable upon claiming, not when earned.

Step-by-Step: Calculating Your Tax Obligation

1. Convert yields to euros: Use exchange rates at reward receipt date
2. Track cost basis: Record acquisition value of tokens used in DeFi activities
3. Separate income types: Categorize as savings income (Form 100, Box 302)
4. Apply progressive rates:
   • €0-€6,000: 19%
   • €6,001-€50,000: 21%
   • €50,001+: 26%

Reporting DeFi Yield on Spanish Tax Returns

File earnings annually via Modelo 100 by June 30th. Essential documentation:

• Wallet transaction histories
• Exchange statements
• DeFi platform reports

Use third-party tools like Koinly or TokenTax to automate euro conversions and Form 100 preparation.

Critical Mistakes to Avoid

• ❌ Ignoring small yields (all income must be reported)
• ❌ Using incorrect exchange rates for euro conversions
• ❌ Mixing personal and DeFi transactions in wallets
• ❌ Forgetting to report airdrops linked to DeFi participation

Frequently Asked Questions (FAQ)

1. Is DeFi yield taxed differently than other crypto income in Spain?

No. The Agencia Tributaria treats DeFi yields as savings income, taxed at 19%-26% like dividends or interest. This differs from capital gains from trading.

2. Do I pay tax if my rewards are automatically compounded?

Yes. Auto-compounding triggers taxation each time new tokens are added to your balance, as you gain control over them.

3. How do I value rewards from obscure tokens?

Use the token’s market price on reputable exchanges (e.g., Binance, Coinbase) at receipt time. If unavailable, document your valuation method.

4. Are losses from impermanent loss tax-deductible?

Yes. When exiting a liquidity pool, calculate the difference between deposited value and withdrawn value. Net losses offset capital gains.

5. What penalties apply for undeclared DeFi income?

Fines range from 50% to 150% of unpaid tax, plus interest. Deliberate concealment may lead to criminal charges.

6. Can I use non-Spanish platforms to avoid taxes?

No. Spanish residents must declare worldwide income. Exchanges report data under international agreements like CRS.

Staying Compliant in 2024

With Spain increasing crypto tax audits, meticulous record-keeping is non-negotiable. Consider consulting a gestor specializing in crypto taxes. While DeFi offers exciting yields, proactive tax compliance ensures your gains remain truly profitable.