The DGT turns Bitcoin into a tax problem: paying with cryptocurrencies will be costly and cumbersome

Summary

The Directorate General for Taxation (DGT) has issued binding ruling (consulta vinculante) V0935-25PDF[1], according to which payments in Bitcoin constitute an exchange (permuta) of intangible assets subject to Transfer Tax (ITP). This position contradicts both the DGT’s own previous criteria (V2407-23, September 7, 2023) and the case law of the Court of Justice of the European Union (CJEU) in Hedqvist (CJEU, Grand Chamber, October 22, 2015, C-264/14PDF). The result is an incoherent tax framework that creates legal uncertainty, discourages the use of cryptocurrencies in Spain, and undermines Spain’s competitiveness relative to comparable neighboring countries.

The Directorate General for Taxation has issued binding ruling V0935-25 and, true to form, has chosen to complicate what, on the face of it, seemed simple. For the tax authorities, Bitcoin (and, by extension, any cryptocurrency) is not money but an intangible asset. Consequently, when it is used to make payments, it is not considered a payment in money but an exchange.

This position contradicts both the DGT’s own previous criteria (V2407-23, September 7, 2023)[2] and the CJEU’s case law in Hedqvist (CJEU, Grand Chamber, October 22, 2015, C-264/14). The result is an incoherent tax framework that creates legal uncertainty, discourages the use of cryptocurrencies in Spain, and undermines Spain’s competitiveness relative to comparable neighboring countries.

In binding ruling V2407-23 (September 7, 2023), the DGT held that cryptocurrencies were to be treated as means of payment for VAT (IVA) purposes, in line with European case law: a restaurant that accepted Bitcoin simply had to charge VAT on the service, without the use of cryptocurrencies giving rise to any additional obligation.

Two years later, in V0935-25, the DGT itself backtracks: paying with Bitcoin is no longer paying with money, but an exchange taxed under ITP. The consequence is absurd: what is treated as money for VAT purposes is treated as an intangible asset for ITP purposes.

The CJEU’s judgment in Hedqvist (C-264/14, October 22, 2015)[3] was clear: the exchange of traditional currencies for Bitcoin constitutes a supply of services, but it is exempt from VAT under Article 135(1)(e) of Directive 2006/112/EC because Bitcoin, although not legal tender, serves as a means of payment. In other words, for Europe, Bitcoin is money for tax purposes.

The DGT, however, has decided to apply a different logic in the ITP context, creating a double standard that generates legal uncertainty. What the CJEU considers a valid means of payment exempt from VAT, the Spanish tax authorities classify as an “intangible asset” and subject to additional taxation.

More red tape, more taxes

The result is as simple as it is devastating: whoever receives the Bitcoin will have to “pay up” and settle Transfer Tax, as if, instead of digital currencies as a means of payment, they had acquired a used car.

In short:

• Higher tax burden: whoever is paid in cryptocurrencies will have to bear the ITP and, to compensate, demand a value higher than the cryptocurrency’s market price at the time of the transaction.
• Greater administrative complexity: the transaction is characterized as an exchange, which requires filing the corresponding self-assessment return for the tax.

All of this entails a tax and administrative bill that does not exist when payment is made in euros.

The contrast is evident. In VAT matters, the Court of Justice of the European Union (Hedqvist, C-264/14) held that Bitcoin must be treated as a means of payment: exchange transactions between traditional currencies and cryptocurrencies are exempt from VAT because they perform the same function as money, even though they are not legal tender.

The DGT itself aligned with this criterion in ruling V2407-23 (September 7, 2023), by allowing a restaurant to accept Bitcoin as a means of payment without this giving rise to any additional tax obligations beyond charging the VAT applicable to the hospitality service.

However, in the recent V0935-25, the DGT maintains the opposite: for ITP purposes, Bitcoin ceases to be money and becomes an intangible asset. The consequence is that the same tax authorities that in 2023 recognized cryptocurrencies as a valid means of payment now, in 2025, classify them as the object of a taxable exchange.

This double standard creates a situation of legal uncertainty:

• For VAT, Bitcoin is money.
• For ITP, Bitcoin is an intangible asset.

The result is inconsistent tax treatment that discourages the use of cryptocurrencies in the real economy.

Does this kill cryptocurrency transactions between private individuals in Spain?

Realistically, the answer is yes. In the area of transactions between private individuals, the conclusion is clear: no one will bear the additional cost of a tax simply for using Bitcoin instead of euros. The incentive disappears, transactions decline, and those who wish to operate freely will do so in more favorable jurisdictions, where taxation does not turn innovation into a minefield.

Uncertainty as the norm

What is clear is that every time the Spanish tax authorities speak about cryptocurrencies, ordinary citizens see more red ink on their calculators and more forms to fill out. Meanwhile, without a clear law to bring order, Spain continues to lag behind in the technology race, weighed down by a backpack full of levies and formalities that other countries have chosen not to impose.

Each new DGT pronouncement on cryptocurrencies seems to add more uncertainty than certainty, while ordinary citizens see more red ink on their calculators and more red tape to deal with. Instead of positioning itself at the technological forefront, Spain risks losing competitiveness with fragmented, contradictory, and fiscally burdensome rules. The absence of a clear law turns the taxation of cryptocurrencies into a field of permanent uncertainty, where what is considered money in Europe can become just another tax in Spain.

Where are we heading?

This pronouncement raises several open questions:

• – Will this criterion be extended to transactions carried out on exchanges or decentralized markets?
• – Will the tax treatment depend on traceability and on the information available to the tax authorities?

Every day that goes by without clear regulation, Spain runs the risk of losing competitiveness in a sector that is evolving at great speed.

[1] Directorate General for Taxation, Binding Ruling V0935-25 of May 27, 2025. Available at https://petete.tributos.hacienda.gob.es/consultas/?num_consulta=V0935-25.