Common mistakes when declaring cryptocurrencies in Spain and how to avoid them

IMPORTANT: This article analyzes common errors in reporting cryptocurrencies in Spain in accordance with the regulations, reporting forms, and tax criteria available at the time of publication. Currently, any tax return reporting transactions involving cryptoassets must be reviewed on a case-by-case basis, taking into account the applicable income tax filing period, current personal income tax regulations, the reporting requirements of Forms 172, 173, and 721, and the Tax Agency’s updated guidelines.

Cryptocurrency taxation has undergone unprecedented scrutiny. Discover the most frequent mistakes that trigger Tax Agency requirements and learn how to avoid them with this updated practical guide.

The Tax Agency has significantly strengthened its capacity to monitor cryptocurrency operations. Thanks to the implementation of informative forms 172 and 173, the Tax Agency receives detailed data—balances, operations, swaps, commissions—directly from exchanges. Any discrepancy triggers automatic alerts.

Therefore, if you operate with cryptocurrencies, avoiding the most frequent mistakes is essential to prevent requirements, penalties, and even costly tax regularizations. This guide clearly explains the 8 mistakes that the Tax Agency detects most easily and how to avoid them safely in 2025.

The 8 most frequent mistakes when declaring cryptocurrencies in Spain

Failure to Report Crypto-to-Crypto Swaps

This is the most widespread mistake among cryptocurrency investors. Many taxpayers mistakenly believe they only need to declare when they convert their crypto assets to euros. The reality is very different: every exchange between different cryptocurrencies generates a taxable event that must be declared as a capital gain or loss.

Example: swapping BTC → ETH is tax-equivalent to:

• A sale of BTC
• A purchase of ETH

You must declare the gain or loss based on the market value at the time of the swap.

How to avoid it:

• Record all your exchange operations between cryptocurrencies, including the date, amounts, and market value of both assets at the time of the swap.

Remember that every exchange of one crypto for another must be reflected in your income tax return as if you had sold and repurchased.

Incorrect Application of the FIFO Method

The General Directorate of Taxes has traditionally established that the FIFO method must be applied to determine which cryptocurrencies are transferred when you make a partial sale of your portfolio. This means that the units you acquired first are considered sold first, regardless of which ones you actually sell.

Important: Although the High Court of Justice of the Basque Country has recently questioned the mandatory application of FIFO to cryptocurrencies, the administrative doctrine of the Tax Agency continues to consider it the applicable method. Given this situation of legal uncertainty, the most prudent approach is to continue applying FIFO until there is clear regulation establishing otherwise.

A frequent mistake is applying FIFO per platform, when it must be applied per cryptocurrency in a unified manner across all your wallets and exchanges.

How to avoid it:

• Maintain an exhaustive chronological record of all your acquisitions for each type of cryptocurrency, regardless of the platform used.
• Use specialized tax calculation tools that automatically unify your operations from all platforms.

Remember that when you sell, you must apply FIFO considering all your holdings as a single set.

Waive purchase, sale, and transfer fees

Purchase, sale, and transfer commissions are deductible expenses that reduce your capital gain or increase your loss. However, many taxpayers omit them in their calculations, which generates discrepancies when the Tax Agency cross-references data with the information provided by exchanges through forms 172 and 173.

How to avoid it:

• Download detailed reports of your operations from each exchange you use.
• Ensure that your tax calculation tool or advisor correctly includes all commissions in both purchases and sales.
• Keep all commission receipts as part of your tax documentation.

Report only the gains and omit the losses

Some taxpayers, due to lack of knowledge or in an attempt to “simplify” their declaration, only include operations that have generated gains. This approach is doubly harmful: on one hand, it generates inconsistencies detectable by the Tax Agency when cross-referencing data with exchanges; on the other, it makes you lose the opportunity to tax-offset your losses.

How to avoid it:

• Declare all operations, without exception.
• Keep track of uncompensated losses from previous years to apply them correctly in subsequent years.
• If you have many operations, use professional tools or an expert advisor. To delve deeper into this topic, you can consult more tax guides on the IN DIEM blog.

Failure to report cryptocurrency income (staking, airdrops, wages)

Income received in cryptocurrencies, even if not immediately converted to euros, constitutes earnings that must be declared at their market value at the time of receipt. This includes:

• Staking: Rewards obtained for maintaining cryptocurrencies in network validation are considered income from movable capital and are taxed in the savings base.
• Airdrops: Tokens received for free are considered income that must be valued at the market price at the time of receipt.
• Salaries or professional payments: If you receive your remuneration fully or partially in cryptocurrencies, you must declare it as income from work or economic activities as appropriate.
• Interest from lending: Interest generated by lending your crypto assets is considered income from movable capital.

How to avoid it:

• Record the exact market value of any cryptocurrency on the date of receipt.
• Save transaction hashes.
• Clearly distinguish between income from movable capital (staking, lending) and possible income from economic activities if your cryptocurrency activity is of a business or professional nature.

Confusing internal transfers between your own wallets with sales

Moving cryptocurrencies between your own wallets does not generate a capital gain or loss, as no transfer to a third party occurs. However, if you do not correctly document these internal transfers, they may be misinterpreted as sales, generating discrepancies with the data the Tax Agency receives from exchanges.

How to avoid it:

• Maintain a detailed record of all transfers between your own wallets and exchanges (including source and destination addresses, amounts transferred, and dates).
• Save transaction hashes.

Failure to retain supporting documentation

The General Tax Law establishes a four-year period for the Tax Agency to verify the tax situation of taxpayers. During this period, you must be able to prove the origin of your funds, the acquisition cost of your cryptocurrencies, and the reality of all your operations.

Failure to justify the origin of the cryptocurrencies or their acquisition cost can lead the Tax Agency to consider that the entire sale constitutes a capital gain (applying a zero acquisition cost) or even that there are signs of concealment or simulation.

How to avoid it:

• Keep all relevant documentation for at least four years: bank statements proving transfers to exchanges, screenshots of operations, purchase and sale confirmations, transfer receipts, and any relevant communication with the platforms.
• Periodically export complete operation histories from all exchanges you use. If you have performed operations on platforms that no longer exist or have closed your account, this documentation will be your only proof.

Reporting Cryptocurrencies on Form 720 When It Is Not Required

Many taxpayers confuse form 720 and 721. It is essential to understand their differences:

Form 720: Used to declare assets and rights located abroad (bank accounts, securities, real estate).

Cryptocurrencies are NOT declared on this form.

Form 721: The specific form for declaring cryptocurrencies located abroad. They must only be declared if:

• They are held by a third party abroad (exchanges or platforms outside Spain)
• The combined value exceeds €50,000 as of December 31
• They are not held in Spain through forms 172 and 173

Important: Self-custody wallets (where you control the private keys) should NOT be declared on form 721, as there is no third-party custodian.

More information on these informative obligations can be found on the Tax Agency electronic office.

How to avoid it:

• Identify if your exchange is in Spain or abroad.
• Check if the exchange reports forms 172 and 173.
• Submit form 721 only when it is actually appropriate.

The role of forms 172, 173, and 721

Informative forms 172 and 173 have radically transformed tax control over cryptocurrencies:

• Form 172: Platforms and exchanges with residence in Spain must report the cryptocurrency balances held by their clients as of December 31 each year, including the type of cryptocurrency, the amount, and its valuation in euros.
• Form 173: These same entities must report all operations performed by their clients: acquisitions, transfers, swaps, and transfers, with details of dates, amounts, and commissions.
• Form 721: Taxpayers who hold cryptocurrencies abroad held by third parties and exceeding €50,000 must submit this informative declaration between January 1 and March 31 of the following year.

These forms allow the Tax Agency to cross-reference data and automatically detect inconsistencies. Therefore, it is essential that your declaration matches exactly the information that the exchanges have reported to the Tax Agency.

Practical recommendations to avoid mistakes in your crypto declaration

1. Export your full history before submitting your income tax return.
2. Use professional software with validated traceability.
3. Record the exact value of each cryptocurrency income.
4. Distinguish between sales, swaps, and internal transfers.
5. Document your self-custody wallets.
6. Check that your declaration matches the reported data.
7. Consult with specialists if your operations are complex.
8. Voluntarily regularize if you have made mistakes in previous years.

On our IN DIEM blog, you will find more guides on taxation and technology applied to the legal sector.

Do you have doubts about your cryptocurrency declaration? Have you received a requirement from the Tax Agency? Do you need a professional tax report?

Contact us and we will offer you a personalized solution for your case. Cryptocurrency declaration requires specialized knowledge that combines tax law, blockchain technology, and knowledge of the crypto market.

At IN DIEM Abogados, in collaboration with Cryptoveritas 360, we prepare crypto tax reports with full traceability and specialized legal analysis to ensure regulatory compliance and your security before the Tax Agency.

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Our services include:

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• Adjustments to Prior Years: Complete reconstruction of complex transaction histories, wallets, and transactions.
• Defense against tax assessments or penalties: We respond to the tax authorities on your behalf with all the necessary legal documentation.
• Personalized attention from an expert attorney: Direct contact 24/7 to answer your questions and guide you through the entire process.
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If you operate with cryptocurrencies, we help you declare correctly and avoid risks.

Contact us. We are here to help you.

Cryptoveritas 360: Our Technology Partner

Advice on blockchain and cryptocurrencies requires a multidisciplinary approach. At In Diem Abogados, we work alongside Cryptoveritas 360, our technology partner, to offer a comprehensive service in the areas of cryptoassets, blockchain technology, and digital assets. We combine legal expertise and technological innovation to support companies and individuals at every stage of their projects.

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We are at your disposal for anything you need. You can reach us via IN DIEM Lawyers Phone (+34) 916 353 892. For urgent cases, you can contact us on IN DIEM 24-Hour Emergency Lawyers Phone: (+34) 610 667 452.