Local Publication Criptonoticias has announced that Spanish Authorities are interested in implementing a Tax up to 10-47% of Profits on Cryptocurrency Miners in order to regulate Blockchain Technology more
Spain has been a cryptocurrency and Fintech-friendly jurisdiction in recent years, there has been little Government intervention, this is set to change as Authorities are keeping a close eye on these highly dynamic markets
Regulations concerning Cryptocurrencies minting are gradually falling in place, Spain may the first country to implement such hefty taxes on its Miner. In order to Regulate and curb Criminal Activities of Permissionless Cryptocurrencies Market
There is talks of 10-47% Tax for individuals who mine Digital Currencies, however note that Bitcoin, STEEM and other Alt-coins are still tax-free currencies when it comes to conducting sales transaction. This means that only those who engage in the process algorithmic mining via computing power are required to file for taxes.
While a lot of countries have yet to implement laws, the Spanish tax authorities have labeled Bitcoin and Alt-coin mining operations as an official economic activity. This new classification makes Cryptocurrency mining taxable.
”Not only Spain, but generally the European Union has been actively trying over the past years to establish a regulatory framework, to be implemented in hopes of regulating Decentralized Cryptocurrencies”
The latest notice, penned by the National Directorate of Taxes of Spain requires Bitcoin and Alt-coin mining companies, as well as individuals to register themselves in system. Failure to do so will have consequences and it’s an expected practice to pay taxes. The government expects its citizen to respect the law or face punishment for illegal activity; not paying Taxes.
The Government motives for the new tax measures is to curb money laundering, tax evasion and the ‘possible’ relation to cybercriminal activity. Recent reports of individuals losing their Bitcoin or Alt-coins through exploits, hacks and fraud has raised concerns over legal obligations of the Government, thus authorities have clarified how the country’s existing tax laws should be applied to losses incurred by the collapse of a Bitcoin or Alt-coins exchanges, the result of a scam or a situation of insolvency
By implementation a new Taxation scheme, considering that Mining Cryptocurrency is officially recognized as an economic activity, Governments will be more willing to provide more judicial security through law enforcement, thus Authorities can take legal action against individuals who engage with the Cryptocurrency Market.The NSA remarked that “The AES-256 and SHA-384 algorithms are symmetric, and believed to be safe from attack by a large quantum computer.
The concern of Money Laundering and legal aspects of Cryptocurrency raises a big concern, there is a rising trend in online theft & fraud associated to Cryptocurrencies. Spain may the first country, however if every country in the world starts to tax their miners, it could cause a new type of War; ”War on Miners” , where any individual who mines Cryptocurrencies without paying tax will be categorized as a criminal.
Not only do Miners earn rewards but they essentially keep Cryptocurrency networks secure, if it’s unprofitable for individuals to mine and there is risk of being punished by the law it will only make large scale mining facilities profitable! This makes easier for Government to monitor regulate the Crypto-market as there is less work to be done, there is still doubt on how Authorities will enforce taxes domestically
For Mining to be a profitable activity, there is the constant need to upgrade equipment and with an increasing mining difficulty, it will also lead to increased power consumption. In such a situation, whether these tax deductions will act in favor of profitable mining or not is a growing concern at the moment.
However, you can expect the Government to begin regulating cryptocurrencies in order to earn some potential revenue while imposing laws to deal reduce and punish criminal activities. Spain Authorities have yet to take action but it may likely begin with taxing domestic Miners!