Cryptolicense in Spain: What You Need to Know

The legal framework for cryptocurrencies in Spain is actively developing, reflecting the country's desire to create a favorable environment for innovation and growth in the crypto industry. The Spanish government understands the potential of cryptocurrencies and blockchain technologies but also recognizes the risks associated with these new financial instruments. Therefore, legislative initiatives aim to create a balance between supporting innovation and protecting investors.

The key legislative act regulating the activities of crypto companies in Spain is the Law on the Prevention of Money Laundering and Terrorist Financing (Ley 10/2010). This law requires crypto companies to comply with strict customer identification (KYC) rules and report suspicious transactions. KYC is the process of verifying a client's identity and assessing the risks associated with their activities. It is an important tool in the fight against financial crimes such as money laundering and terrorist financing.

In addition, Spain is a member of the European Union, so local legislation must comply with European directives and regulations. In particular, the EU Anti-Money Laundering Directive (AMLD5) and the EU Regulation on Markets in Crypto-assets (MiCA) have a significant impact on the regulation of cryptocurrencies in Spain. AMLD5 establishes uniform standards for combating money laundering and terrorist financing in the EU, while MiCA aims to create a single market for crypto assets in the EU and ensure legal certainty for crypto companies.

The Spanish regulator, the National Securities Market Commission (CNMV), plays a key role in supervising the activities of crypto companies and issuing cryptolicenses. The CNMV has developed a number of regulations and recommendations regarding various aspects of cryptocurrency activities, including requirements for obtaining a cryptolicense, rules for advertising cryptocurrencies, and reporting obligations for crypto companies. These documents provide detailed instructions on how crypto companies should operate in Spain to comply with the law and ensure the safety of their clients.

Understanding the legal requirements in Spain is critical for the successful getting of a cryptolicense and conducting crypto business in the country. Companies must comply with both national and European norms and regulations to avoid legal problems and ensure the stability of their activities. This requires crypto companies to constantly monitor changes in legislation and adapt their business processes to new requirements.

Cryptocurrency business in Spain is regulated as part of the implementation of measures to prevent and detect acts of money laundering derived from or in connection with criminal activities.

Obtaining a cryptolicense in Spain is a complex but necessary process for companies that want to legally operate in the country's crypto industry. The requirements for obtaining a cryptolicense are set by the National Securities Market Commission (CNMV) and are aimed at ensuring transparency, security, and protecting the interests of investors.

Main requirements for obtaining a cryptolicense:

• The crypto company must be registered in Spain as a legal entity. This can be a limited liability company (S.L.) or a joint-stock company (S.A.)
• The company must have a minimum capital, the amount of which depends on the type of legal entity. For S.L., it is €3,000 (formed in full during incorporation), and for S.A., it is €60,000 (formed at 25% during incorporation and further within a year). The authorized capital can be formed not only by money but also by other objects (property, intellectual property objects, etc.)
• The company must provide a detailed business plan that describes its activities, target audience, marketing strategy, financial forecasts, and risk management
• The company must develop and implement internal policies and procedures regarding anti-money laundering and counter-terrorist financing (AML/CFT), client data protection, cybersecurity, and risk management
• The company must have qualified personnel with experience in the financial sector and an understanding of cryptocurrencies and blockchain technologies
• The company must have a reliable and secure technical infrastructure for storing cryptocurrencies and conducting transactions
• The company must regularly provide financial statements to the CNMV to demonstrate its financial stability and compliance with requirements

To authorize a cryptocurrency company, the following documents are required:

• Form for registration in the register of Currency Exchange Service Providers
• Form for registration as a Custodian Service Provider
• Suitability assessment form for the applicant legal entity and, in addition, a suitability assessment form for each of the natural persons effectively managing the entity, signed by each of them
• Criminal record certificate with an issue date no earlier than 3 months prior to the date of submission (the certificate is required for the applicant legal entity and for each of the natural persons effectively managing the entity)
• Copy of the national identity card/NIE/NIF/foreign identification document of the legal person applying for registration, and in addition, of all natural persons effectively managing the entity, where such provider is a legal person
• Manual on the prevention of money laundering and terrorist financing
• Risk analysis document
• Detailed Business Model description
• IT Systems and Internal control mechanisms to comply with the legal or regulatory provisions aimed at preventing money laundering and the financing of terrorism

The process of obtaining a cryptolicense:

• Submission of an application: the company submits an application for a cryptolicense to the CNMV, providing all necessary documents and information
• Review of the application: the CNMV reviews the application and conducts a check of the company, including checking its financial stability, business plan, policies and procedures, personnel qualifications, and technical infrastructure
• Issuing a license or refusal: the CNMV decides whether to issue a cryptolicense or refuse it. If the application is approved, the company receives a cryptolicense and can start its activities

Cryptocurrency taxation in Spain is an important aspect that needs to be carefully studied and considered when obtaining a cryptolicense and conducting crypto business in the country. The Spanish tax system regarding cryptocurrencies is constantly evolving, reflecting the dynamics of this new and innovative industry. Therefore, it is important to stay up-to-date with the latest changes in legislation and regularly consult with tax experts to ensure proper tax payment and avoid potential fines or misunderstandings with tax authorities.

Main taxes related to cryptocurrencies in Spain:

• Personal income tax (IRPF): profit from the sale or exchange of cryptocurrencies is considered capital income and is taxed on a progressive scale. This means that the higher your income, the higher the tax rate. Tax rates on cryptocurrency profits in Spain range from 19% to 26%.
• Corporate tax (IS): for legal entities engaged in cryptocurrency activities, such as cryptocurrency exchange, providing crypto wallets, or mining, the profit from this activity is taxed at a rate of 25%. This means that companies must pay a profit tax of a quarter of their net profit from cryptocurrency operations.
• Value added tax (IVA): in most cases, cryptocurrency transactions, such as buying, selling, or exchanging, are exempt from VAT in Spain. However, there are exceptions when VAT may apply, for example, when providing services related to cryptocurrencies, such as cryptocurrency tax consulting or developing software for crypto wallets.
• Property tax: if you own a significant amount of cryptocurrencies that exceeds the established threshold, you may be required to pay property tax. This tax is levied based on the value of your cryptocurrency assets on a certain date, usually at the end of the year.

Important aspects of cryptocurrency taxation in Spain:

• Tax residency: tax rates and rules for cryptocurrency taxation may vary depending on your tax residency. If you are a tax resident of Spain, you must declare your cryptocurrency income earned both in Spain and abroad. If you are not a tax resident of Spain, you are generally taxed only on cryptocurrency income earned in Spain.
• Accounting for cryptocurrencies: for the correct calculation of taxes and to avoid problems with tax authorities, it is important to maintain detailed and organized records of all cryptocurrency transactions. This includes records of transaction dates, cryptocurrency amounts, their value in euros at the time of the transaction, as well as any commissions or expenses associated with the transactions.
• Tax returns: you must file tax returns annually and declare all your income, including income from cryptocurrencies. Incorrect declaration of income or tax evasion can lead to serious fines and other legal consequences.
• Tax benefits: in some cases, you may be eligible for tax benefits on cryptocurrency transactions. For example, if you invest in startups or companies engaged in research and development in the field of blockchain technologies, you may be entitled to a reduced tax rate or tax deductions.
• Double taxation treaties (DTT): Spain has concluded double taxation treaties with many countries around the world. These agreements are aimed at preventing double taxation of the same income in two different countries. If you receive cryptocurrency income from sources outside of Spain, DTT can help you reduce your overall tax burden.