Today, neobanks have completely transformed how we manage our money, and Revolut has positioned itself at the forefront of this revolution in Spain. Given its versatility and digital nature, it's understandable that we might have questions about how this all fits in with the Spanish Tax Agency and whether we're complying with Spanish law.
It's not just about having a pretty app to pay for coffee or exchange currency; when you generate profits, whether from interest or investments, you enter the realm of tax obligations. In this sense, it's crucial to understand the difference between the products offered to avoid unpleasant surprises when it comes time to file your tax return.
What exactly is Revolut and how does it operate in Spain?
For those who aren't yet familiar, Revolut is a digital financial ecosystem that allows you to manage accounts, invest in the stock market, buy cryptocurrencies, and handle various currencies. Most importantly, it has evolved to obtain a recognized banking license in Spain , which changes the game in terms of tax transparency.
A key point is that they now assign a Spanish IBAN (starting with ES) to their users. This greatly simplifies things, as it allows for direct deposit of salary and, above all, enables the bank to automatically report earnings to the tax authorities, meaning much of the information will already be included in the draft tax return.
Is it mandatory to declare the Revolut account on your tax return?
The short answer is yes, as long as that account is generating some income. It doesn't matter if it's a small amount; interest is considered investment income and, therefore, is subject to taxation. However, there's a slight caveat: if your only annual income were this interest and it didn't exceed €1.600 , you might not be required to file a tax return, although this is rare since most people have a salary or some other source of income.
Regarding the infamous Form 720, there's good news for those with a Spanish IBAN. Since the money is considered to be deposited within Spain, it's no longer necessary to file this form for the account balance, regardless of whether it's more or less than €50.000.
The Savings Account: The easiest way
The Revolut savings account pays you daily interest for keeping your money there. The return varies depending on whether you have the free plan or a paid plan (Plus, Premium, Metal, or Ultra). With this product, Revolut operates like a traditional bank and applies a 19% withholding tax on earnings.
Since they operate with a Spanish tax identification number (NIF) and have a physical establishment here, they report the data to the Spanish Tax Agency (AEAT ). This means that, in most cases, you'll only need to check that the figure in your draft tax return is correct and validate it, without having to perform complicated manual calculations.
Regarding taxes, these interest payments are added to the savings base for income tax purposes. Tax brackets typically start at 19% for earnings up to €6.000 , gradually increasing to 21%, 23%, and so on, reaching 30% for very high incomes.
Flexible Accounts and Money Market Funds: Beware of Mistakes
This is where things get trickier. The flexible account isn't a conventional bank account; instead, the money is invested in money market funds . This can offer higher returns, but the tax treatment is different: there are no automatic withholdings until you decide to sell your shares.
The most dangerous aspect is that, unlike a savings account, Revolut doesn't usually report this data automatically to the tax authorities. This puts the ball in your court; you're responsible for manually including these earnings in your tax return. To avoid problems, it's best to download the annual tax report that the app provides to see exactly how much you've earned.
Investments in Stocks, ETFs and Roboadvisors
If you use Revolut to trade on the stock market, you must follow some clear rules. With stocks, you only pay taxes when you sell and realize a capital gain. Dividends, on the other hand, are declared in the year you receive them, according to the savings income tax rates.
- Accumulation ETFs: They only pay taxes at the time of the final sale.
- Distribution ETFs: The dividends they distribute must be declared annually.
- Robo-advisors: Dividends generated must be included, although management fees can be used for reduce net profit.
Cryptocurrencies and the new Model 721
Cryptocurrency trading on Revolut generates capital gains that should be included in your savings. It's wise to also report losses , as these can offset gains and reduce your tax liability. Additionally, income from staking or learning programs should be declared as investment income.
A crucial legislative change is the replacement of Form 720 with Form 721 for virtual assets . If you hold cryptocurrencies abroad and their total value exceeds €50.000, this is the form you must use to report them to the tax authorities.
Risks of not declaring and fund movements
Failing to declare your flexible account or cryptocurrency holdings can have serious consequences. The Spanish Tax Agency (AEAT) has mechanisms to detect this type of income, and you could face penalties for concealing earnings . Furthermore, since Revolut is integrated into EU regulations, the Tax Agency could issue a European Account Censorship Order (EACO) to seize funds if there are outstanding debts.
On the other hand, transfers need to be monitored. Although Revolut is digital, transactions exceeding €3.000 are usually reported, and those exceeding €10.000 may require filing an S-1 form depending on the nature of the transaction.
Having money in a neobank is very convenient, but it requires us to be aware of whether the product is remunerated with automatic withholding or if it is an investment where we must manually report the profits to avoid fines and surcharges in the next tax season.