The 2026 tax filing season is underway. Between April and June, millions of Spaniards must report what they earned—and what they lost—last year. And in the world of cryptocurrencies, there’s a mistake that’s made with alarming frequency: failing to report losses. Not out of bad faith, but out of ignorance. Because it seems illogical to report to the tax authorities something that’s already painful enough on its own. Why tell the tax authorities that I lost money?
The answer is simple: because Failing to report losses is the same as giving money away to the tax authorities. And in a year when Bitcoin has fallen more than 40% from its all-time highs, that windfall could be huge.
The context: The tax authorities already know what you have
Before getting into the tax details, it’s important to understand the context in which we operate. The year 2026 marks a turning point in the relationship between cryptocurrency investors and the Tax Agency. New European regulations and reporting forms 172 and 173 have strengthened the tax authority’s position: there are no longer any gray areas or grace periods due to lack of knowledge.
This is important because many investors still operate under the assumption that cryptocurrencies are an opaque space that is difficult to track. Those days are over. Starting this year, cryptocurrency exchanges and custodians are required to automatically report activities involving digital assets to the tax authorities. In other words, if you trade on Coinbase, Kraken, Binance, or any platform with a presence in Europe, your trading information is sent to the tax agency without you having to do anything. The problem is that the burden of correctly calculating those gains and losses still falls on you.
What is considered a taxable event and what is not
This is where the confusion begins for most people. Not everything you do with your cryptocurrencies triggers a tax liability, but it does apply to far more situations than people realize.
You can only exclude your crypto assets if all you've done is "hold" them—that is, you've simply bought cryptocurrency and done nothing else. As soon as there's any activity, you're required to report it.
The following are events that result in a capital gain or loss and must be reported:
- Sell cryptocurrencies for euros.
- Exchange one cryptocurrency for another (BTC for ETH, for example).
- Pay for a good or service with cryptocurrency.
- Receive staking rewards or airdrops.
- Losses due to hacks or scams (under certain conditions).
Important note: Exchanging Bitcoin for Ethereum is a taxable event. The tax authorities consider that you have sold BTC—with the corresponding gain or loss—and purchased ETH. You must report that gain even if you never actually received any euros. This is one of the most common and costly misunderstandings among Spanish investors.
The Mistake That Costs the Most Money: Ignoring Losses
In 2025, Bitcoin went from hovering around $126,000 to plummeting to lows of $62,000. Many Spanish investors sold during that downturn, realizing actual losses. And that’s the crux of the matter: most didn’t report those losses because they saw no point in doing so. With no gains to offset them, why bother?
The reasoning is understandable but completely wrong, and it could end up costing a lot of money in the future. Losses are tax-deductible, and you have four years to offset them against future gains. In tax planning, this is known as tax loss harvesting, and it is one of the most powerful tools available to investors.
Here’s how it works: if in 2025 you lost 5,000 euros selling Bitcoin and you don’t report it, that loss doesn’t exist for the tax authorities. If in 2026 you make 5,000 euros on another transaction, you’ll pay taxes on the full 5,000 euros. On the other hand, if you had reported the loss at the time, you could have used it to offset the gain and Your tax bill would have been zero.
It is common for many investors not to report their losses because they have no gains against which to offset them. As a result, if they realize gains on cryptocurrency in subsequent years, they will not be able to offset those gains with those past losses because, as far as the tax authorities are concerned, the losses do not exist.
The Models You Should Know About
The taxation of cryptocurrencies in Spain is handled through several models. It is helpful to have at least a basic understanding of them:
- Form 100 (Individual Income Tax): The usual one. Enter all capital gains and losses resulting from the purchase and sale of cryptocurrencies in the specific boxes provided starting this tax year (1800–1814).
- Model 721: Informative declaration regarding cryptocurrencies held abroad. Any tax resident in Spain who holds cryptocurrencies on foreign platforms must file this declaration if the total value exceeds 50,000 euros as of December 31. It is filed between January and March, before the income tax filing season.
- Models 172 and 173: They aren't reported by the investor. They are reported by the exchanges and brokers themselves. They are the reason why the tax authorities already know what you have.
How to Calculate Profit or Loss: The FIFO Method
For those who aren't familiar with it, the FIFO method (First In, First Out) is the rule that the Spanish tax authorities require you to follow when you sell cryptocurrency. This means that when you sell, it is assumed that you are first selling the units you purchased earlier, in chronological order.
This has direct implications for your tax liability. If you bought 1 Bitcoin in 2021 for $30,000 and another in 2024 for $70,000, and you now sell one for $74,000, the tax authorities will consider that you sold the one from 2021. Your taxable gain would be $44,000, not $4,000. A mistake in the wrong box, an omission of a foreign wallet, or incorrect application of the FIFO method can trigger penalties that sometimes exceed the profit earned.
Penalties: What Your Negligence Could Cost You
Failing to file a tax return correctly is not just a technical error. The financial consequences are very real. Penalties range from 50% to 150% of the unpaid tax, plus late-payment interest.
To put this in context: if you failed to report a profit of 10,000 euros, the tax you should have paid is around 1,900 euros (at the 19% rate for the first tax bracket on savings). The penalty on those 1,900 euros can range from 950 euros to 2,850 euros, plus interest. This is a much higher cost than it would have been to report it correctly from the start.
The Most Common Mistakes, Summarized
To wrap up, here’s a quick look at the mistakes Spanish investors make year after year:
- Failure to Report Losses because they believe it isn't necessary if there are no profits. It's the most costly mistake in the long run.
- Failure to Report Crypto-to-Crypto Transactions, thinking that it only counts once it's converted to euros.
- Forget About Fees: Gas fees and exchange commissions are expenses that can be deducted from the sale price. In high-frequency trading and DeFi, these commissions can amount to thousands of euros in deductible expenses.
- Confirm the draft without reviewing it: Many digital investors treat the draft as final, even though it may not reflect returns from foreign platforms, cryptocurrencies, or fintech accounts.
- Failure to File Form 721 when you have more than 50,000 euros in foreign platforms.
Conclusion
For many Spanish investors, the crypto market in 2025 was a year of losses. The good news is that those losses have real tax value and can significantly reduce your tax bill over the next four years, if managed correctly. The bad news is that this value is lost if they are not reported on time.
The Treasury already has the data. Exchanges now report automatically. The margin for unintentional error has been drastically reduced. In this context, filing your taxes correctly is not just a legal obligation—it is, quite simply, the smartest financial decision a cryptocurrency investor in Spain can make in 2026.
Legal Notice: This article is for informational purposes only and does not constitute financial advice or investment recommendations. Investing in cryptocurrencies involves a high level of risk. Always consult with a qualified professional before making investment decisions.