El Salvador and Bitcoin: tax guide for Spaniards residing or active there

In September 2021, El Salvador became the first country in the world to adopt Bitcoin as legal tender alongside the US dollar. This has practical implications for Spanish residents in that country and for those doing business with El Salvador.

Bitcoin as legal tender: what does it mean?

In El Salvador, businesses are required to accept Bitcoin as a form of payment. The government issued the Chivo wallet, which allows you to pay with BTC and has automatic conversion to dollars.

Implication for Spaniards residing in El Salvador:

• If you receive a salary in BTC → the Salvadoran businessman pays you in Bitcoin, which is legal currency.
• If you buy food with BTC → it is an everyday transaction, like using euros.

Is it taxable in El Salvador to use Bitcoin?

The government of El Salvador declared that capital gains from Bitcoin are not taxed in El Salvador. This was part of the incentive to attract crypto investors.

However, this only applies to tax residents of El Salvador. For a Spaniard:

Tax residence: am I a resident in Spain or El Salvador?

If you have been outside Spain for more than 183 days a year, you may be a non-Spanish tax resident:

• You would be taxed mainly in the country of effective residence.
• If that country is El Salvador (no capital tax on BTC) → huge advantage.

But attention: Spain applies anti-evasion rules:

• The Exit Tax is activated when changing residence if you have latent capital gains in crypto > €4M (or if the participation in a company is > 25% with a value > €1M). For smaller portfolios, the exit tax does not apply.
• Residence in El Salvador must be real (not just registration: you must live there 183+ days a year).

Spain-El Salvador double taxation agreement

Spain and El Salvador do not have a double taxation agreement. This means:

• If you are a Spanish resident and earn income in El Salvador → you are taxed in Spain without reduction rights under the agreement.
• If you are a Salvadoran resident (Spanish resident there) and the AEAT considers that you are still a Spanish resident → residency conflict.

Where are crypto profits considered generated?

For crypto profits (Bitcoin rising in value):

• If you are a tax resident in Spain: profits are taxed in Spain regardless of where the assets are.
• If you are a tax resident in El Salvador: they are not taxed in El Salvador (exemption for BTC).

The Spaniard who maintains his residence in Spain but invests in El Salvador

If you remain a Spanish tax resident but invest in Salvadoran assets:

• Income from a Salvadoran source (e.g. rental of a property in El Salvador) is taxed in Spain.
• Dividends from a Salvadoran company are taxed in Spain.
• Profits from crypto (BTC bought and sold) are taxed in Spain even if the purchase and sale is made from El Salvador.
• There is no withholding tax in El Salvador applicable by the agreement (it does not exist).

The Chivo wallet: declare on Form 720?

The El Salvador government's Chivo wallet is technically a Bitcoin custodian:

• If a wallet address is equivalent to an "account" abroad → should it be declared on Form 720?
• Without specific criteria from the AEAT, the conservative position is yes, if the value exceeds €50,000.

Bitcoin as a salary in El Salvador: the Spaniard who works there

If you are Spanish working in El Salvador with part of your salary in BTC:

• The BTC part of the salary = value in EUR at the BTC/EUR rate at the time of payment.
• If you are still a Spanish tax resident: that salary is taxed in Spain as income from work, even if it is in Bitcoin.
• The Salvadoran employer does not practice Spanish withholding tax (you are the one who must make installment payments if applicable).

The Spanish "Bitcoin maximalists" who emigrate to El Salvador

Many European crypto investors, including Spaniards, have established residence in El Salvador to benefit from the tax exemption on Bitcoin. The conditions to be legally validated by the AEAT:

1. Real and effective residence in El Salvador (183+ days/year).
2. Consular leave in Spain.
3. Form 030 for change of residence to the AEAT.
4. Center of vital interests (family, business) in El Salvador or not in Spain.
5. Without habitual residence in Spain (or if there is one, justify that availability does not imply residence).

If these requirements are not met, the AEAT may consider that you are still a Spanish resident.

Updated: April 2026 | Fiscal year: 2025