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Tax: security token vs cryptocurrency, not taxed alike

Quick answer: a security token is taxed as a transferable security and a cryptocurrency as a crypto-asset. Both can generate gains in the savings base, but they differ in something decisive: a security token can produce investment income subject to withholding, and its reporting obligations are not those of Modelo 721.

The criterion that separates the two worlds: legal nature

Technology does not determine taxation. What decides how a digital asset is taxed is the legal nature of the rights it carries. A security token represents a transferable security (shares, bonds, holdings) on a distributed ledger; it retains its status as a financial instrument and is governed by securities-market rules (MiFID II (Directive 2014/65/EU); Ley 6/2023 (LMVSI)).

A cryptocurrency, by contrast, does not carry the rights of a security. It is a crypto-asset in the strict sense, subject to its own specific rules. MiCA (Regulation (EU) 2023/1114) draws the line clearly: it applies to crypto-assets that are not financial instruments and expressly excludes those that are (Art. 2(4)). From this arise two distinct tax regimes for assets that share the same technology.

How each is taxed under Personal Income Tax

The security token follows securities taxation

As it qualifies as a security, a security token can generate two types of income. The dividends, interest or coupons it grants are investment income. The gains obtained on selling it are capital gains, calculated as the difference between the transfer and acquisition values, applying the FIFO method where there are homogeneous batches. Both types of income are included in the savings base (Personal Income Tax Law (Ley 35/2006, LIRPF), Arts. 25, 33 and 49).

The cryptocurrency only generates capital gains and losses

Buying and selling cryptocurrencies produces capital gains or losses that are also included in the savings base. Swapping one cryptocurrency for another is a taxable event: it is treated as a transfer at market value, even where there is no conversion into euros. A cryptocurrency that distributes no income does not generate investment income; its taxation is concentrated in the gain or loss on transfer or swap (Personal Income Tax Law (Ley 35/2006, LIRPF), Arts. 33 to 35).

The savings base is shared, but the entry point differs

A precision is needed here to avoid confusion. The capital gains of both assets are taxed in the same savings base and under the same scale: 19% up to 6,000 euros; 21% from 6,000 to 50,000 euros; 23% from 50,000 to 200,000 euros; 27% from 200,000 to 300,000 euros; and 30% above 300,000 euros (Personal Income Tax Law (Ley 35/2006, LIRPF), Art. 66; Ley 7/2024 (BOE-A-2024-26694)).

The difference lies not in the rate on the gain, but in the categories of income each asset can produce. The security token adds a route the generic cryptocurrency does not have: investment income from dividends or interest. That category carries consequences for withholding and reporting.

Withholding: the most practical divergence

Investment income from a security token, when paid by a withholding agent resident in Spain, bears withholding on account at the general 19% rate. That withholding is paid over by the payer and credited by the investor in their return (Personal Income Tax Law (Ley 35/2006, LIRPF), Arts. 99 to 101).

Cryptocurrencies do not generate that type of withholding-bearing income in their usual buying-and-selling activity. Capital gains, both from cryptocurrencies and from the sale of security tokens, are generally not subject to withholding and are settled in the annual return. The practical result is that an income-distributing security token may arrive with part of the tax already paid in advance, whereas the cryptocurrency is settled in full when the return is filed.

Reporting returns: 721 versus the logic of securities

Modelo 721 (Order HFP/886/2023) requires reporting of virtual currencies held abroad when the combined balances exceed 50,000 euros at 31 December, and is filed between 1 January and 31 March. It is the natural return for cryptocurrencies held in custody outside Spain.

For the security token the fit is not automatic. As it is a security, its reporting logic is that of securities, not necessarily that of Modelo 721, which is drafted in terms of virtual currencies and crypto-assets. The exact classification of each issuance determines which obligation applies, and the boundary can be subtle when the security is represented on distributed ledger technology. It is advisable to verify with a professional before filing or ruling out the return, because misclassifying the asset carries the error through the whole reporting chain.

A mental table of differences

To fix the ideas without losing the nuance. A security token: qualifies as a security; can generate investment income (with 19% withholding) and capital gains; is governed by MiFID II and the LMVSI; falls outside MiCA; its reporting obligation follows the logic of securities. A cryptocurrency: qualifies as a crypto-asset; generates capital gains and losses (no withholding on trading); is governed by MiCA; swapping between cryptocurrencies is taxable; its foreign reporting is channelled through Modelo 721 where applicable.

Frequently asked questions

Why are two digital assets taxed differently?

Because taxation follows legal nature, not the medium. A security token carries the rights of a transferable security and is taxed as a security; a cryptocurrency is a crypto-asset without those rights and is taxed as such. The blockchain is the common medium; the legal content is what separates the regimes.

Does swapping one cryptocurrency for another pay tax?

Yes. Exchanging one cryptocurrency for another is treated as a transfer at market value and generates a capital gain or loss, even if it is not converted into euros. With a security token, the equivalent transaction would follow the rules on the transfer of securities.

Does a security token bear withholding while a cryptocurrency does not?

On its periodic income, yes: the dividends or interest of a security token paid by a resident withholding agent bear 19% withholding. Cryptocurrencies do not generate that income on trading, so their taxation is concentrated in the capital gain, with no prior withholding.

Must I declare both on Modelo 721?

Modelo 721 is for virtual currencies held abroad. Cryptocurrencies fit when the thresholds are exceeded. The security token, being a security, does not simply fit and may follow the reporting logic of securities. Verify the classification with an adviser before deciding.

What this means for you

Before calculating tax, classify the asset. Ask whether what you hold carries the rights of a transferable security or is a crypto-asset without those rights, because that answer determines the income categories, the existence of withholding and the applicable reporting return. Treating a security token as if it were a cryptocurrency, or vice versa, leads to errors in the return and in the reporting obligations. Where the classification is in doubt, consult a professional.

This content is for general information and educational purposes only. It is not legal, tax or investment advice and does not replace consultation with a qualified professional. Regulation on tokenisation and crypto-assets evolves; always check the version in force of the rules cited in the BOE (boe.es) and EUR-Lex (eur-lex.europa.eu).

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