In a virtual conference held by the Bit2Me team, we had the presence of José Antonio Bravo, a renowned economics expert, tax advisor and accountant, who spoke to us about what Bitcoin is, from a legal point of view related to taxes and finances. public. Bravo, who has played an important role in teaching and transferring financial and tax knowledge in medium-sized companies in Spain, commented at length with us about his views on blockchain technology and Bitcoin.
Likewise, Bravo has maintained a constant interest in the development of new technologies. This sparked his curiosity in 2013, when he first heard about Bitcoin. Since then, José Antonio Bravo has dedicated a valuable part of his time to the study of this constantly developing technology, and everything that it implies. Even more so, considering the enormous potential that Bitcoin has as a new financial system. Knowing that the current system does not have much respect for the rights of citizens.
For its part, during this virtual conference the Commercial Director and CSO of Bit2Me, Javier Pastor, and the Director of Public Relations and Social Networks, Giovanny Montealegre, were also present. Both spoke with Bravo to learn his perspective on taxes and finances and his current and future relationship with Bitcoin.
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José Antonio Bravo: Bitcoin a tool that offers us financial freedom
Before explaining his perspective on the most important cryptocurrency so far, José Antonio Bravo told us a little about the aspects that provide real value to Bitcoin. In this sense, Bravo mentioned that:
“When you know the economy and you see how easy it is for a country… how easy it is to make a “corralito” and say the banks right now: they can't get more out of so much money… There is an intrinsic “corralito” within banking because We are not the owners of our money. Banks do what they want with our money. “The banks have our money and they can not give us our money if they want.”
In this sense, Bravo gives us a clear example of the financial and monetary control to which we live every day. That can impose on us the way we should manage and operate with our money. And it not only imposes on us the way in which we should do something and how we should do it, but it also imposes on us when we should do it. An aspect that he, in his extensive experience, knows perfectly.
Therefore, under these considerations, Bravo believes that Bitcoin is a new alternative that offers us financial freedom. Although from a legal point of view, Bitcoin is not considered a form of money, it does give us freedom. A freedom with which we can carry out our transactions and operations without the need for obstacles, delays or intermediaries.
“Bitcoin means the possibility of having ownership of your own money”, Bravo noted.
So far, In the current financial system, we do not have the opportunity to be the true owners of our money. For any movement that we want to make, the participation of a third party will be necessary. Who will be responsible for whether our operations are approved or not. Likewise, for those unbanked people, there are also many limitations in this financial system. Something that Bravo noted, pointing out that:
“There are people who, due to their economic situation, no bank is going to open an account for them.”
Pointing out one of the main problems of banks that generates an unbanked population. Something that Bitcoin can perfectly solve without problems.
Bitcoin in Spain, from a legal and Treasury point of view
From the birth of Bitcoin to the present day, there have been many attributes that this technology has earned. First of all, Bitcoin is considered by the vast majority as a payment system and a cryptocurrency. In addition to a refuge of value with which financial assets can be protected from devaluation.
However, from a legal point of view, Bitcoin is not a form of money. To explain it in detail, José Antonio Bravo tells us that:
“It is not considered to be money, but rather an intangible good… It is intangible, but it has an important characteristic that can be accepted as a means of payment.”
This definition is based on the analyzes and agreements established by the Financial Action Task Force (FATF). Who are in charge of defining the rules for the rest of the countries regarding money. Therefore, from a legal point of view, Bitcoin should be treated as an intangible asset and a means of payment, but not as a form of money.
Likewise, José Antonio Bravo points out that this is the way in which Bitcoin is classified in most legislation. Furthermore, he points out that changes in a country's laws are usually made very slowly as a measure of legal certainty. Therefore, the pace at which Bitcoin grows and develops is very different and fast compared to the time required to analyze and make changes to current regulations.
Thus, although in Spain and other countries some regulatory changes have been made to the laws to introduce Bitcoin, there is no specific law that regulates this cryptocurrency. Furthermore, as it is a global and borderless technology, it is international groups with financial and economic competence who must take coordinated measures to distribute this technology to all countries.
However, José Antonio Bravo points out that some of the measures currently sought to be implemented are quite drastic. For example, exchanges or exchange houses have to request personal data of the person to whom a transfer is going to be made. Which could mean a negative aspect for the privacy principles defended by cryptocurrencies.
If Bitcoin is not legal tender, then is it illegal?
Qualifying the general concept of money, Bravo mentions that the currency of circulation within a country is the legal money that any person must accept as a form of payment for any product, good or service. However, Although Bitcoin is not classified as legal tender, it does not mean that it is illegal.
To clarify this point, Bravo points out that anything can be used as money or a form of payment. For example, another good or product, as long as the person whose debt is paid agrees to receive it. And accept it as having a value equivalent to the debt that is canceled with it. Therefore, Bitcoin can be used as a means of payment to pay off the value or debt of anything; something that “It is absolutely legal”.
In this sense, Bravo points out that paying for a product, good or service, Bitcoin can be taken as an exchange or a barter.
“The exchange of bitcoins in exchange for any good or service is an exchange.”
Likewise, Bravo points out that in Spain, Germany and Japan Bitcoin can have similar uses to money for the acquisition and cancellation of products, goods or services.
“In Spain, it is accepted, as in all of Europe, that Bitcoin is accepted as a means of payment. And in fact I have sometimes spoken of Bitcoin as quasi-money… It would be something that I can exchange, like gold, for some good or service without any problem.”
Features of Bitcoin as money
For its part, although Bitcoin is not yet considered money, Bravo points out that it meets 2 of the 3 most important characteristics that an element needs to be taken as such:
- Reserve of value: For many today, Bitcoin represents a refuge of value with which to protect their assets, even better than gold;
- Payment system: As already mentioned, Bitcoin can be used as a fast, secure, and reliable means of payment. effective and transparent for all those who accept it;
- Unit of account: In this sense, Bravo points out that it is the currency in which all invoices, purchases, statements and other actions in the administration systems must be indicated.
By complying with all of these 3 characteristics, Bitcoin can be considered money. However, because each country has its own currency, the unit of account of each state depends on its legal currency. For example, in Spain all billings must be reflected in euros. In this case, account statements, tax returns, purchase invoices, among others, cannot be presented in Bitcoin. Therefore, this cryptocurrency is not considered money, from a legal point of view.
So why is it considered money?
However, for many citizens, Bitcoin is a better form of money than the fiat currency imposed by governments. Something that Bravo noted, pointing out that:
“Money is better first because it better fulfills its property of reserve of value, because in the medium or long term the value always increases... Look at a year ago, how much it has risen; Look, 4 years ago, it has risen.”
This is a fact that can be seen in Bitcoin because it is a scarce commodity. A quality that adds greater value and importance to any form of money that can be used today.
Likewise, as a medium payment, Bravo also considers that it is a system that perfectly complies with this aspect. Because it is a currency that cannot be counterfeited, as is the case with fiat money, and even with gold. Furthermore, the printing “out of thin air” of a specific amount of fiat money is what leads to the imminent devaluation of the currency itself. If more goods are not produced, but a greater amount of money is printed, then the effect of devaluation is applied to the currency.
“The absolute devaluation of money, meaning that they can print out of nothing… If goods do not change, all goods will have to rise in price. Because they will be worth more, by magic.”
Jose Antonio Bravo: There is still a long way to go in Spain regarding Bitcoin Taxation and Public Finance
In the specific case of Spanish companies, paying 100% of salaries to workers in goods such as Bitcoin is not yet considered, Bravo noted. Since it is considered an intangible asset, the workers' statute only allows the cancellation of 30% of the salary in this currency or any other asset.
Furthermore, Bravo considers that there is still a need to develop maturity in the knowledge, understanding and comprehension of Bitcoin by society in general. So that unnecessary problems are not generated due to the volatility of this currency. For example, a worker could be affected by thinking that his salary has gone down, because he has lowered the price of Bitcoin at a given time.
For its part, with respect to self-employed workers, the payment in Bitcoin of the cost of work or salary can be carried out completely. Since it is up to each independent worker to accept the risk of receiving bitcoins as a form of payment.
“The majority of self-employed people are in simplified direct estimation.”
This means that they do not need to keep an accounting of their income. Therefore, when they receive bitcoins as part of payment, they form part of their assets.
Likewise, José Antonio Bravo also explains that those businesses that wish to receive payments in Bitcoin can do so and then exchange the cryptocurrencies for fiat money. This is to keep track of accounting with the unit of account accepted in each country. Or, in the event that businesses want to keep their cryptocurrencies, Bravo recommends doing so with only the amount that can be assumed as risk.
However, Bitcoin is a relatively new technology. That requires time to continue growing, developing and becoming much stronger. So in a few more years we are likely to see many more economic and financial implementations of this and other cryptocurrencies.
Learn with Academy Bit2Me: Learn more about the taxes that must be paid in Spain for having cryptocurrencies
What is the tax issue like for miners and investors who use Bitcoin?
Regarding this topic, José Antonio Bravo explains to us that miners who receive bitcoins as a reward from the network are exempt from VAT. This is because the money they are receiving does not have a defined payer. That is, there is no figure, entity, company or person that is making these payments. Rather, they are provided directly by a decentralized system that is not operated by anyone. In addition, the money miners receive rewards the operating expenses of their equipment to maintain the operation and security of the Bitcoin network.
“Bitcoin, since it is not created by anyone, what the miners charge, that remuneration they charge does not have VAT”, Bravo explained. Noting that this aspect is determined in a ruling issued by the European Union.
For its part, From the investor's point of view, if it is necessary to pay Income Tax (ISLR) based on the profits obtained. In this sense, Bravo explains to us that there are 2 bases for paying these taxes: general base and savings base. The latter being a special base that encompasses real estate capital returns and equity gains. As may be the case with Bitcoin sales.
On the savings basis, taxation is carried out in 3 brackets, ranging from 19% to 23%. If the profit obtained is up to 6.000 euros, then it must be taxed at 19%. While if the profit obtained is between 6.000 euros and 50.000 euros, it is taxed at 21%. Finally, profits exceeding 50.000 euros are taxed at 23%.
Thus, although Bitcoin is exempt from VAT, in Spain it must be taxed to the ISLR. Even if the operations are carried out abroad.
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