Silly Taxes, No Need For Digital CoinsSuddenly, I feel an urge to book a flight to Spain, and start looking for an apartment. Why? They confirmed digital currency free and clear of taxes.
In Spain bitcoin has always been VAT free, but it was just confirmed by the Spanish government. The confirmation is based on the interpretation of EU VAT Directive 2006/112/CE, which recognizes bitcoin as "financial service" (FinCEN anyone?).
This is as opposed to the USA's IRS, of course, who make the claim that, digital currency is really property. Yes, apparently something that doesn't exist, can be property.
In defense of the IRS (did I just say that?), the only property would be the intellectual property of which would be the private key, and access thereof, thus technically, property. It's one of the double edged sword things, we love certain laws most of the time, until they don't work in our favor, then we whine about it. Regardless, it just goes to show you that governments are going to TAX whatever they possibly can.
Legal expert, Pablo Fernández Burgueño, had this opinion on the Spanish confirmation:
"Bitcoin is mostly being used as a speculative tool, only a minority are using it as a payment form, because of this the tax office would find it impossible to levy VAT for every bitcoin transaction."
Earlier this year, a Spanish bank, BBVA, invested in the 75 Million round of D funding raised by Coinbase (D, E, C ... I've lost track actually) , and others are investing as well. This is really starting to put Spain on the map as one of the go-to Countries for BitCo's (Bitcoin related companies).
No Tax? No Government up your butt? Free to run around the wild and trade Bitcoin, naked?
There must be a catch!
Of Course, There Is A Catch
The confirmation of this tax exemption and definition of bitcoin as a "financial service, linked to payment methods which enable the transfer of money" likely falls under "special risk" activities, and that means Spanish companies transacting with digital currency will have to get AML compliant.
In the USA, it's both. The IRS list digital currency as property, while FinCen claims that it is Money Transmission, so you get both taxed. and a flashlight up the rear. Ever wonder why people sarcastically say "Only in America"? Well there you go, a perfect example.
We have to commend this and congratulate the Spanish. No tax, compliant BitCo's. Clearly defined, and well done... so let the celebration continue.