The Spanish government plans to tax Bitcoin mining profits up to 47 percent, following official hints that mining will become a taxable activity.
Spain 47% Mining Tax ‘Hard To Implement’
At the end of August, the Spanish Ministry of Finance and Public Administrations said Bitcoin trading and use as a payment method is segregated as tax-free activities. In response, bitcoin miners said their activities “should be linked to tax regulations governing economic activities.”
Spain has been a cryptocurrency and fintech-friendly jurisdiction in recent years. But obligations on miners, if the new tax is enforced, would be considerable.
Speaking to Criptonoticias, economist and tax advisor Jose Antonio Bravo Mateu confirmed miners’ tax rates of up to 47% on profits. As with many legislative schemes aimed at cryptocurrency, however, Mateu foresees stumbling blocks in enforcing the concept.
“The new responsibilities the Spanish Ministry of Finance holds will not be easy to implement,” he said.
In a Twitter discussion, BTC.com’s Alejandro De La Torre questioned the government’s plans to identify permissionless and unknown miners.
De La Torre said the government would hire bitcoin and cryptocurrency specialists “to help assist with the effort of identifying these [miners].”
Nonetheless, the ability for industry expertise to keep on top of actual developments in long-established mining practices remains uncertain.
Spanish U-Turn Unlikely
Mateu meanwhile reiterated Spain’s previous track record concerning the growth of cryptocurrency.
“On the legal side, Spain is one of the fastest countries to focus their attention on the cryptocurrency sector, establishing Bitcoin as a tax-free currency in sales transactions and similarly being a driving force lobbying the authorities of the European Union to establish a regulatory framework for this nascent economic ecosystem.”
The government will in turn be wary of falling behind its more immediate competition, amid concerns tax moves could be eyed and repeated across South American jurisdictions.
In July, for example, Gibraltar unveiled news that it was co-creating Europe’s first-ever Bitcoin exchange-traded instrument (ETI). The asset was approved for release on both the local sotck exchange and Germany’s Deutsche Börse.
Commenting on the unveiling at the time, Gibraltar’s minister for financial services and gaming Albert Isola stated that the government “[continues] to work with the private sector and our Regulator on an appropriate regulatory environment for operators in the digital currency space.”
What do you think about Spain’s latest proposal? Let us know in the comments section below!
Cover image courtesy of Shutterstock.
If you’d like to find out more about the way Bitcoin is taxed by governments, head over to the Bitcoin.com Forum and ask the community your questions.