If you have traded on Polymarket and made a profit, you are probably wondering whether you have to declare it in Spain if you pay income tax there. Generally speaking, yes. The question is how these gains are treated.
What is Polymarket and what type of taxes apply to it?
Polymarket is a decentralized prediction (or betting) market where users buy and sell shares linked to the outcome of events; these can be diverse, ranging from election results to the second coming of Jesus (https://polymarket.com/event/will-jesus-christ-return-before-2027). It is a good example of the range of bets available.
It operates using the Polygon blockchain and transactions are settled in USDC.
Regarding the transaction and the taxes that would apply, according to Spanish law, this is a capital gain or loss derived from the transfer of an asset. This is subject to tax and the law is broad enough to require the payment of taxes; binding consultations from the DGT (Directorate-General for Taxation) have already clarified this.
Are gains on Polymarket subject to personal income tax?
Yes, and they are included in the savings tax base, which is where capital gains and losses derived from the transfer of assets are included. This means that the savings brackets apply, which are as follows:
The first €6,000 is taxed at 19%. From €6,000 to €50,000, at 21%. From €50,000 to €200,000, at 23%. From €200,000 to €300,000, at 27%. And from €300,000 upwards, at 28%. These gains can be offset against losses incurred.
And by the way, gains are taxable from the moment they are obtained, not just when they are converted into euros.
On Polymarket, this can happen at two possible moments. The first is when you sell your position to another user before the market is settled. If you bought “Yes” shares at 0.40 USDC and sell them at 0.75 USDC, the profit is generated at the moment of that sale. The second moment is when the market settles and your winning position is automatically liquidated. At that moment, the change in assets occurs, regardless of whether you leave the USDC in your Polymarket wallet for weeks or months.
The real problem many clients encounter is being able to prove the profit they have made or the traceability of the movements. At Navas Cusí, we are experts in this area.
Can the tax authorities track transactions on Polymarket?
Polymarket operates on Polygon, a public blockchain. This means that every transaction is permanently and immutably recorded. Anyone can check the transaction history of a specific address. Traceability is total, and the Spanish Tax Agency has the best tools on the market.
The reality is that there are people who want to live as outlaws, that is, always hiding their assets and making it difficult to track them. This is, first of all, against the rules and, secondly, it hinders personal economic activity.
But if we don’t want to live that way, we need to use banks. When we try to withdraw money to take it to the banking world, we have to go through an exchange that has KYC. At that point, the tax authorities obtain even more information about you and your movements.
As a firm specializing in cryptocurrency taxation, we can tell you that we have seen many cases in which the tax authorities have access to client data and know all the transactions they have made. Sometimes in greater detail than the client themselves.
If you need advice on how to declare the profits you have made or want to regularize previous years, you can contact us for help.
If you have made profits on Polymarket and want to declare your transactions correctly without errors or unnecessary risks, at Navas&Cusí we can help you analyze your case. Having lawyers who specialize in taxation is key when you need to justify earnings, review the traceability of transactions, or regularize previous years. Good advice can make the difference between presenting your tax situation correctly and exposing yourself to problems with the tax authorities.
