Every time there are more businesses that accept bitcoins as a means of payment, and there are even many in which their biggest economic activity is based on bitcoin, which has reached a price close to $ 1,000, after the hearing on the virtual currency It was held within the Committee on National Security and Government Affairs of the United States Senate.
Among the various legal aspects that surround this figure, tax issues break records of consultations in specialized forums.
Thanks to the group of followers of this currency in Mallorca, we have had access to the resolution of a query raised in the Treasury Department about various business modalities related to “virtual currencies”.
Despite being binding, the truth is that it is a resolution that links very little and does not clear the doubts that were made. The consultant manifested, among other extremes, his intention to create a company that is dedicated to the activity of “exchanger” or house exchange virtual currencies.
Thus, the query refers, according to the resolution, to “the form of taxation in Corporate Tax, Value Added Tax and Documented Legal Acts, of various operations of buying and selling virtual currencies”.
The answer to the query, after explaining the background, begins with a cumbersome appointment of legal precepts that little help resolves the query.
The activity of the ‘exchanges’ or money changers
In general, the activity of a money changer can be approached in two ways. The first would be to consider that the money changer is buying and selling a product, as any trader can. Your benefit would be the difference between the purchase price of the product and its sale price.
But there is another option, that the moneychanger does not have the currency in his possession and his activity focuses on intermediating between a seller and a buyer, charging a commission for that activity.
And this is the assumption that the resolution seems to consider when it says that “the exchanger will deduct a commission calculated in a percentage on the amount of the operation, which constitutes its benefit for providing said service”,
After analyzing the corporate tax, with respect to which it is indicated that its taxable base will be formed by the aforementioned commissions, the resolution deals with the VAT issue in a certainly confusing way with two unconnected pronouncements when they are not clearly contradictory.
From the outset, comes to say something less than a truism to argue that, in general, the exercise of any economic activity implies that “business or professional activities would be subject to such tax” and the person who exercises it would be required to make the statements that are relevant. Another thing is the specific VAT regime to which this activity is subject.
At this point, the resolution makes another citation of legal precepts to assess the possibility that some of the exemptions provided for in the Law will be applicable.
Therefore, let us say that the resolution comes to say, up to this point, that any economic activity (among which, in principle, should be considered that of a forex trader) means that the transactions carried out must comply with the VAT regulations. It happens that you will not have to pass VAT on your services as long as you can take advantage of any of the exemptions provided for in the Law.
VAT exemptions related to bitcoins
Of all the possible exemptions, the resolution comments two. The first is related to “currencies, bank notes and coins that are legal means of payment”. The second refers to the “mediation in exempt operations described” above as the one that affects currencies.
Next, the resolution analyzes the possibility of applying for this exemption by linking it with the legal concept of “electronic money”, regulated in Law 21/2011, of July 26, of electronic money.
In this way, it goes so far as to state that “electronic currency transmission operations could be included in the scope of the exemption Now, for this it would be necessary that the electronic currency comply the defining criteria established in the aforementioned Law 21/2011, of electronic money, an issue that is not possible to evaluate by this Management Center “.
Without going into the technicalities of the Law, which defines this concept in Article 1, it is complicated, if not impossible, to consider the bitcoin or other virtual currencies as “electronic money” and for the exemption to be applicable, according to the resolution , the virtual or electronic currency should be considered “electronic money”, which, with the current wording of the Law, does not happen.
And this is despite the fact that the resolution previously comments that what the individual does is a “purchase transaction of a means of payment”, but without it at that moment extracting any relevant conclusion.
Therefore, with what the resolution says up to this point, it would have to be understood that the activity of the forex trader that it deals with would be subject to VAT and in principle it would have to be assumed that the tax base of the VAT to be passed on would be the amount of the “commission” to which reference is made.
The place of the operation as an exemption
The resolution does not deal with the subject of the VAT tax base since it deals with the precepts that in the law regulate the determination of the place of operation for VAT purposes in a way that is not understood and in apparent contradiction with previous manifestations.
In this way, certainly confusing, the resolution ends up saying that the purchases and sales of foreign currency to individuals (not to companies) would be exempt. But you really do not understand the relationship of this part of the answer with the issues that arise because it is difficult to consider that when the Administration refers to “currency” is including in that category the virtual currency, then it would be applicable the exemption that affects the legal means of payment, without the need to go around so many times.
In short, the Tax Administration has lost a clear opportunity to clear doubts in the sector and facilitate the work of economic agents who are working with bitcoin in Spain, because if the ground is not paved in this matter, as I have already mentioned in some previous occasion, we will have the risk of losing the train and millions of euros in economic activity.
If it is admitted that the activity should be subject to VAT, as the resolution seems to hold in its first part, it would have to be understood, maintaining the same line of argument as that provided for corporate tax, that the VAT base should be included in the value of the “commission” that the money changer applies, since, among other issues, compelling the application of VAT on the entire value of the transaction seems excessive and would, of course, be an insurmountable obstacle to the economic viability of this activity.
Likewise, the opportunity to clarify whether the delivery operations of goods and services paid with bitcoins have any particularity in terms of VAT has been lost, although the majority opinion in this regard has a favorable sense to the taxation.
Also published on Medium.