ITPAJD: paying for a property with bitcoins is a barter

When bitcoin does not function as “money” for civil-law and tax purposes

The use of bitcoins as consideration in the transfer of an asset is not, for the purposes of direct taxation (personal income tax (IRPF) and corporate income tax (IS)) and of the Onerous Property Transfer (TPO) head of Transfer Tax (ITPAJD), equivalent to a payment in money. The point has taken on particular relevance with ruling V0935-25, in which the DGT analyses the sale of a property in exchange for bitcoins and concludes that the transaction must be characterised as a barter (permuta), under Article 1538 of the Civil Code, and not as a sale for a monetary price. The reason is that cryptocurrencies are regarded as intangible assets, not legal-tender money.

It is worth noting, however, a tension within the administrative doctrine itself. For VAT purposes the DGT holds the opposite view: handing over bitcoins as consideration is a transfer of money not subject to the tax (V2407-23, drawing on the CJEU judgment of 22 October 2015, Hedqvist, C-264/14). Bitcoin is therefore an intangible asset for some taxes and a means of payment for another, and that asymmetry should be kept in mind before extending without qualification the characterisation we now examine.

The tension does not end with VAT. For Wealth Tax purposes, the DGT itself —and specifically the Sub-Directorate for Property Taxes, which is the one that ordinarily rules on ITPAJD— has treated cryptocurrencies as a “holding in foreign currency”, to be declared at their market value as at 31 December (V0590-18 and V2289-18). That a single directorate should characterise bitcoin as currency for Wealth Tax and as an intangible asset for Transfer Tax confirms that the criterion of V0935-25 is far from settled.

The consequence in direct taxation: a barter in IRPF

For the person who hands over the property and receives bitcoins, the transaction gives rise —outside a business activity— to a capital gain or loss in personal income tax (IRPF), with the mechanics specific to barters under Article 37.1.h) of the Personal Income Tax Act. The transfer value will be the higher of the market value of the asset given up and that of the asset received, and the acquisition value will be the tax cost of the property transferred, with any applicable adjustments. The result is included in the savings base.

The consequence in indirect taxation: TPO on the acquisition of the bitcoins

The most striking consequence appears in indirect taxation. This is not a doctrinal shift without earlier anchoring: the DGT had already been treating cryptocurrencies as intangible assets (V0999-18, V1149-18, V1948-21), and what is genuinely new in V0935-25 is that it expressly extends the barter rule of Article 23 of the ITPAJD Regulation —under which each party to the barter is taxed on the verified value of what they acquire, unless the value declared is higher— to the TPO head in a sale of a property paid for in bitcoins. From this it concludes that the person who transfers the property and acquires the bitcoins may become subject to Transfer Tax (Transmisiones Patrimoniales Onerosas, TPO) on the acquisition of those crypto-assets, treated as intangible movable property. The taxable base will be the market value of the bitcoins (Article 10 of the consolidated ITPAJD Act), unless the value declared or the consideration agreed turn out to be higher, in which case the greater of those amounts will prevail; the rate will be the one the autonomous community has approved for movable property (the default state rate of 4%; some autonomous communities have raised it). In practice, fixing the market value of the bitcoin at the time of accrual —price, reference venue and time— is the sensitive point in the event of an assessment: it is advisable to document the valuation method used.

The caution built into the ruling itself must be borne in mind: that liability to TPO applies provided the transferor of the bitcoins does not act as a trader or professional in the course of their activity and the transaction does not constitute a supply subject to VAT. In other words, the transaction is not exhausted in direct taxation: it also opens a front in ITPAJD that is best not overlooked.

It should also be kept in mind that the barter gives rise to two TPO taxable events with two distinct taxpayers (Article 8 of the consolidated ITPAJD Act): the person who hands over the bitcoins and acquires the property is taxed under TPO on the property at the autonomous-community rate for immovable property —in the order of 6% to 11%, depending on the community—, unless the supply is subject to VAT, in which case stamp duty (AJD) will apply where relevant; and the person who transfers the property and acquires the bitcoins is taxed, on the terms set out above, at the rate for movable property. The burden on the real-estate side is, by a wide margin, the principal one.

There is, in any event, a substantive objection to the criterion. The consolidated ITPAJD Act itself exempts “transfers of money that constitute the price of goods or are made in payment of personal services, debts or indemnities” (Article 45.I.B).4). If the authorities were consistent with the very characterisation they maintain of bitcoin as a means of payment for VAT (V2407-23, on Hedqvist) and as a “holding in foreign currency” for Wealth Tax, the handing over of bitcoins as consideration should fall within that exemption and remain outside TPO. In our view, treating them as a taxable intangible asset for TPO while, at the same time, treating them as currency for the other taxes is hard to sustain: either bitcoin is a means of payment for all purposes —in which case the Article 45.I.B).4 exemption applies— or it is not. V0935-25 does not address this provision, so the question remains open and, in the event of an assessment, the exemption argument seems to us defensible.

It is not a universal rule for any use of bitcoin

This criterion should not be extrapolated without nuance to any transaction with bitcoins. The ruling concerns a specific barter —a property for cryptocurrencies— and its outcome may be affected by the nature of the asset transferred, by the business status of the parties and by the possible VAT liability of the main transaction. It is therefore advisable to avoid simplistic messages along the lines of “using bitcoin to pay always triggers TPO”.

In any structure in which bitcoins function as consideration for a property or another relevant asset, it is prudent to review four planes separately: the civil-law characterisation of the transaction, the transferor’s IRPF or corporate income tax, the possible indirect taxation of the main asset, and the potential TPO impact on the acquisition of the crypto-asset received.

If any of the parties is not tax-resident in Spain, the analysis must be reconsidered: non-resident income tax (IRNR) and the applicable tax treaty will come into play instead of personal income tax (IRPF), with the 3% withholding payable by the acquirer on the transfer of a property by a non-resident (Article 25.2 of the consolidated IRNR Act); and the territorial scope of Article 6 of the consolidated ITPAJD Act will have to be weighed, its application to a crypto-asset lacking any physical location being far from settled.