Spain Gives Europe Another Boost for Bitcoin Business

By Ian Jackson Nov 25, 2014 5:19 PM EDT

LONDON (InsideBitcoins) — Spain is a land of contradictions. A powerhouse economy exists side by side with the highest youth unemployment in Europe; coastal tourist traps give way to the architectural magnificence of its interior. Languages mingle and define identity, Spanish Catalan, Basque and Galician, each provide nuance and texture to a country that has rightly become the playground of Europe. Spain is a land of contradictions and it may too, become a land of bitcoin.

Bitcoin’s greatest failing stems not from a confused and often hostile public perception, but from its immaturity. At only around five years old, it has survived the complete dependency of its first awkward months, taken its first steps into the terrible twos and ultimately, it has found its voice.

Yet like most children, the currency has not learned to play well with others and has balked at authority figures whose rules seem inconsistent, irrational even. This is a child that has flexed its sense of individualism — that has consistently refused to be pigeon-holed and in doing so has left those immersed in the world of fiscal regulation scratching their heads.

China has forbidden its banks to operate with it; New York wants to license it, Australia subjects it to a barely fathomable tax, Russia plans to ban it outright and the EU has begun to articulate plans for a  sluggish debate that will no doubt stretch on for years.

What is to be done with this wayward child?

The answer it would seem, is to find it a good home for it, a place where it can grow within a regulatory environment that can be both nurturing and, when necessary, strict. And where better to find bitcoin’s foster home than in North America? The USA is still the world’s largest economy, possessing of a Federal system that would allow for an asymmetric set of rules; the USA is also a country well known for its entrepreneurial spirit and rapid uptake of new ideas.

And yet, the less certain political system in place in Europe seems to be at long last nipping at the USA’s heels in this regard. Whilst the word ‘federal’ is avoided at all costs in Europe, the EU is not only moving in that direction, it’s already dipping its toes in the warm waters of tighter fiscal integration. Member states are beginning to make their own mind up about bitcoin and the conclusion that they are reaching is starting to look dangerously like a consensus.

Spain is bitcoin’s gain

Spain, the fourth largest economy in Europe, waded into the debate this month with what turned out to be a further fortification of the currency’s position in Europe. As reported in Elconfidencial, the national treasury has chosen to define bitcoin as “a convertible virtual currency that can be exchanged between users, and also can be converted into dollars, Euros or other currency.”

In short, bitcoin is money, and that means it is exempt from VAT.

The addition of a Spanish position to the debate is not an insignificant one. They have joined the UK, Finland and Poland in adopting a pro bitcoin stance, leaving the largest economy in Europe, Germany, looking somewhat isolated in its desire to add a tax to all bitcoin transactions, a position that to date has only actually been implemented in Estonia.

What we are left with is one pertinent question, is bitcoin a matter for individual states or is it a matter for the European parliament? Such a question is not easily answered. The EU as a whole will almost certainly attempt to include the arguments of all its member states and each and every one of them can, if they wish, put the breaks on imposing unnecessary regulation.

However, the recent developments from across Europe suggest that a member state vote that might be considered favourable towards the currency would achieve at the very least, a simple majority.  Such a gesture may well decide the issue — and if it does, Europe’s attitude will become homogenous, unambiguous and very definitely pro bitcoin.

Ian Jackson is an Inside Bitcoins correspondent based in the U.K.
Photo: Old Town Marbella, Spain, via Two Steps Behind

  • Ian Jackson

    Thanks for the input, Marcin. I was referring to the idea of a tax on transactions not mining. My understanding is that profits from mining are taxed the Polish VAT rate of 23%. This is a very different prospect to the idea of taxing the transaction itself i.e when used as a method of payment; that scenario would in effect make bitcoin lose one of its chief advantages over Fiat, namely how cheaply it can be transferred. Having said that, the Polish mining tax probably does mean that it’s not strictly correct to describe Poland as ‘bitcoin friendly’ though recent developments in Poland are certainly more encouraging than they have been elsewhere in parts of Europe such as Germany.
    As always, it’s great to have a healthy debate about these things so again, thanks

  • Marcin Chorąży

    “They have joined the UK, Finland and Poland in adopting a pro bitcoin stance, leaving the largest economy in Europe”..
    not Poland…. should be Nederland (in some languages close to Holand)… but in Poland Bitcoin stays (unfortunatelly) still VAT included.

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