How to regulate cryptocurrency activities and operations with bitcoins is constantly being discussed by governments of different countries. As they say, who is forewarned is armed, so we call upon to prepare in advance for the regulation of all projects based on blockchain.
To understand how to pay a tax on cryptocurrency or a bitcoin tax, it is necessary to understand whether it is considered a currency, an investment, an asset or a service. Let’s consider all versions of the taxation in developed countries that have recognized bitcoin.
Australia recognized bitcoin as money
Australia became one of the first countries to recognize bitcoin. The government introduced some measures that all transactions with bitcoins and cryptocurrencies have to be taxed.
Earlier in Australia, operations with bitcoins were assimulated to operations with goods and services, so participants were forced to pay double tax GST – for purchases of goods and services for bitcoins and for their exchange for fiat.
Since July 1, 2017 in Australia, bitcoin has officially become money, the double tax was cancelled and now there is only one tax to pay – for the exchange of bitcoins for fiat money.
When investing cryptocurrency, you need to pay a capital gains tax CGT, as with real estate and shares. That is, if you bought one bitcoin for $ 1,000, and sold it for $ 20,000, then you will pay tax from $ 19,000.Also, according to the new amendments to the law, all cryptocurrency operators are required to register on the website of the financial authority (ASIC), get a license and identify all users by sending information to the AUSTRAC for all transactions over 10,000 Australian dollars, which the operator deems suspicious.
At the same time every resident of Australia can buy Ethereum in one of the 1200 newsstands from Bitcoin.com.au. Money is written off from the client’s account, that scans the QR code, and the cryptocurrency comes to the registered electronic wallet. Also, along with the world’s payment systems, you can pay litecoins through the officially registered in Australia LitePal payment.
In Singapore, sellers pay, investors do not
Since Singapore was also one of the first states that introduced the regulation of crypto-operations, the taxation system has not changed for several years.
According to the order of the Singapore tax regulator IRAS, long-term investments in the cryptocurrency are considered as part of the investment portfolio and are not taxed. If the cryptocurrency is the main activity of the company (transfers, trade), then it is obliged to pay the income tax. In this case, bitcoin is considered as a service. In transactions where bitcoins are exchanged for real goods and services, 7% of value added tax is levied.In May 2018, users submitted the first bitcoin-banknotes Tangem of 0.01 and 0.05 BTC. You can pay them easily and safely by scanning QR code of the banknote using a smartphone with NFS. Banknotes are cold crypto-portfolios with the Samsung S3D350A chip.In general, the Singapore government does not plan to limit the turnover of cryptocurrency and selling of mining equipment.
In States everyone pays
According to the legislation regulating cryptocurrencies from 2014, those who have something to do with cryptocurrencies must pay taxes.
So, if you just bought some cryptocurrency, and its price increased, you will have to pay a capital gains tax, as in the case of asset in the form of real estate. If you mine cryptocurrency, then you pay the tax on the annual gross income. If you decide to buy a hamburger for bitcoin, get ready to report this in the annual declarations of income.
Bitcoin taxation, as asset in the US led to a lack of understanding of the essence of the cryptocurrency, as well as to its price hikes. Therefore, the law can be revised. There is an offer not to tax from investments in the crypto up to $ 600 and not to force such users to report it.
In Germany, Many Germans were exempted from taxes
Amendments to the taxation law of 2018 exempted German cryptocurrency users from taxes. According to them, bitcoin is considered as a legal means of payment along with fiat money. In this case, the exchange of cryptocurrency for fiat and vice versa is considered as services; in this case a tax is levied on the intermediary who takes the commission for transfers.
Previously, bitcoins on users’ accounts could be considered as shares and bonds taxed 25% on the increase in market value.
Miners are also exempt from taxes in Germany, like brokers and traders. At the same time, the tax is levied on exchanges operating as a technical market.
In Switzerland bitcoin is an asset
Similar to US law, bitcoins and other digital currencies are considered in Switzerland as asset from which every citizen must pay tax and enter each purchase into a tax return. However, the tax to increase the market value of bitcoin will not be necessary to pay, the Swiss are exempted from this.
While engaged in mining, a Swiss citizen undertakes to pay the state income tax.
Despite the anonymity of bitcoin, the exchanges do not fall under the law on bank secrecy and, at the request of the government, are obliged to provide all data about users and transactions.
In November 2017, in the southern city of Switzerland, Chiasso even allowed people to pay taxes by bitcoins. At the same time the amount of taxes should not exceed 250 francs, if the amount is more to pay it will be possible only by fiat money. And in the city of Zug, you can pay for utility bills by bitcoins if the amount is less than 200 francs.
Bitcoin taxes in other countries recognizing it
In Japan, an individual pays income tax, and a legal entity has to pay profit tax in operations with bitcoins.
In Canada, bitcoin is considered a commodity, and value-added taxes are paid by the party selling it, companies pay income tax.
In Austria, bitcoin is recognized as an intangible asset and an income tax is paid.
Spain considers bitcoin as an asset, charging a tax on capital gains.
In Sweden, tax is paid only by business representatives with a turnover of 25 bitcoins per year.
Cryptocurrency? To jail
If you comply with the laws in the countries that have recognized the bitcoins, you have nothing to fear. But not all countries allow operating cryptocurrencies. If all your activity is connected to cryptocurrency operations, visit these countries just for vacation.
China in the autumn of 2017 completely banned trading operations with cryptocurrencies, previously banning the mining and ICO.
In Bangladesh, you risk going to prison from 2014 for crypto operations.
Ecuador, Kyrgyzstan, Bolivia and Vietnam support China and Bangladesh.