An important year for Cryptocurrency taxes of the world for the past year
2019 is, without a doubt, an important milestone for crypto taxation. Countries around the world realize that cryptocurrencies are here to maintain and adjust their cryptocurrency tax policies. This year alone, a number of countries have been busy setting up and revising cryptocurrency tax laws. Governments around the world have published guidelines to update and change cryptocurrency tax rules and use cryptocurrency tax benefits to attract highly networked individuals, while some even ban completely electronic money. Looking at the worldwide crypto tax law in 2019, one thing is clear: No one can refuse cryptocurrency tax anymore. Cryptocurrencies are considered an asset and therefore subject to tax. Whether you pay them or actively choose to avoid them, you are aware of the meaning of your actions.
Let's take a closer look at 2019 crypto tax laws around the world:
United States: New instructions, changes to tax forms and enforcement letters:
It was a busy year for Internal Revenue Service.
After sending thousands of letters to crypto investors to clarify their tax liability, the IRS has issued two new guidelines for taxpayers to participate in digital currency transactions. In addition, the standard tax form 1040 Schedule 1 has been updated to include a broad statement of crypto holdings or transactions.
The new guide includes Revenue Rules 2019-24 and 43 frequently asked questions. But not all are clear in the U.S. cryptocurrency tax territory: An exchange like, basically means a tax exemption on the exchange of a cryptocurrency, was officially banned by the IRS in 2018, but the reports for 2017 have not been deleted.
Messages from the IRS representative on this issue are contradictory and official guidelines have yet to be published.
Bermuda: Pay taxes electronically
Unlike the state of Ohio that suspended the tax payment service in Bitcoin, Bermuda will be the first government to accept their own stablecoins, USD Coin (USDC), to pay taxes, according to financial services company full. Bridge.
Cryptocurrency tax payments are part of a broader initiative, with the Bermuda government supporting the use of stablecoins and decentralized financial services and protocols. Bermuda's dollars are based on currencies supported by the U.S. dollar, and it seems the Bermuda government is leading the cryptocurrency payment industry. Circle co-founder and CEO Jeremy Allaire said:
Today, Bermuda has announced more widely that stablecoin holdings are the future of the financial system, focusing on fintech innovations that can bring value not only to the villagers, but globally. through companies licensed under their Digital Property Business Act.
Portugal: No personal taxes
Portugal is one of the few countries that has taken advantage of the cryptocurrency tax situation to attract high net worth individuals into its territory.
Last August, the Portuguese Tax Authority announced that cryptocurrency transactions and payments in cryptocurrency would not be subject to value added tax. The notice follows a ruling from 2018, stating that proceeds from the sale of cryptocurrencies to individuals will be tax exempt. Any transaction or exchange of cryptocurrencies is not eligible as capital gains, usually holding a 28% tax rate in the country. In addition, cryptocurrency transactions will not be considered investment income, which is also subject to the 28% tax rate in other cases.
However, it should be noted that this only applies to individuals, as businesses based in Portugal are still subject to a number of taxes, including VAT, social security and income taxes.
Will Portugal succeed in establishing itself as a strong nation of cryptocurrencies? Only time will tell.
United Kingdom: The traditional approach Queen Queen started with cryptocurrencies
Tax authorities, payments and UK customs, Revenue and Customs for the Queen, or HMRC, recently updated tax policy documents on cryptocurrencies for businesses and individuals. multiply.
The traditional position of the authority is reflected in this policy document, saying that HMRC does not consider cryptocurrencies as currency, and instead uses the term cryptocurrency.
As in most countries, the policy document for individuals considers cryptocurrency activity to be a personal investment subject to capital gains tax. Any sales, exchanges, gifts, goods, or services of cryptocurrency in the U.S. are subject to tax.
Capital gains tax is often used to tax crypto operations in many countries, such as the United States and Israel. However, while other countries are struggling to draw the line between personal activity and professional trading, HMRC claims that cryptocurrencies fall into the definition of business activity only in those cases. in particular, continue:
HMRC expects individuals to buy and sell cryptocurrencies with such frequency, organization level, and sophistication that this activity has created a financial transaction.
The policy article further states that employees' salaries and operations are subject to income tax.
France: There is no electronic money to levy crypto money
It seems that France's economy and finance minister, Bruno Le Maire, is the logical voice of crypto taxation.
The French government decided not to track Western partners and, in an unusual step, declared that cryptocurrency transactions were tax-free in France.
As reported in September 2019, the French government will not tax cryptocurrency transactions but will tax cryptocurrencies when they are sold for fiat currencies.
For those who understand the practice of cryptocurrency tax, this is the only result that does not make double taxation on cryptocurrency transactions.
In many cases, the calculation of taxes on cryptocurrency transactions will result in double taxation, especially when using calculation methods such as first in, first out, or first out.
Denmark: Seek profits and losses in 2016 2015
Taking one leaf out of the guidance of the U.S. IRS, the Danish tax authority, Skattestyrelsen, has begun sending letters to cryptocurrency traders asking them to provide a complete platform of all electricity transactions. their deaths.
Skattestyrelsen specifically looks for information on profits and losses from 2016 to 2018 using the FIFO method.
The Danish tax authority focused on cryptocurrency holders who started late last year when it confirmed it was in the process of identifying 2,700 individuals who reported tax debt for the money earned from Bitcoin (BTC).
Then, in January 2019, the country's tax council authorized Skattestyrelsen to obtain information about all cryptocurrency transactions on three domestic cryptocurrency exchanges. By August, the agency had given the green light to obtain information regarding cryptocurrency transactions from 20,000 individuals.
While efforts are becoming commonplace, it is still too early to talk about the future of Danish traders.
Australia: Consistent with the leading Western countries
The Australian Taxation Office released a framework in June 2019, categorizing cryptocurrencies as forms of assets of taxable people subject to capital gains tax and reporting requirements.
In addition, the ATO views BTC-based transactions as other barter arrangements, which, although not subject to goods and services taxes, are subject to capital gains tax.
This guide is relevant for other major Western countries like the United States and the United States, and appears to be the dominant position in the world of cryptocurrency taxation.
New Zealand: Pay electronically
New Zealand's national tax authority, the Domestic Revenue Department, published guidance on salaries and bonuses paid in cryptocurrency in August 2019.
While announcing the ruling regarding cryptocurrencies may appear as if New Zealand is trying to establish it as a crypto-friendly country, IRD Commissioner Naomi Ferguson is making it clear that the New Zealand government Do not consider cryptocurrencies as currency.
In the Commissioner's view, cryptocurrencies are assets. Cryptocurrency assets are not Money Money as commonly understood (at least not currently). In particular, since cryptocurrency assets are not issued by any government, they are not legally bid anywhere. Moreover, while the acceptance of certain cryptocurrency assets as payment for goods and services is on the rise, they are not generally accepted as payments.
With the extreme volatility experienced so far, there are also a number of issues surrounding a number of crypto assets the ability to become a store of value.
The ruling only applies to wage and wage workers and does not apply to self-employed individuals, and only applies to services performed by an employee with a fixed amount and as part of often in their wages.
China: Virtual assets, but not fiat money
Surprisingly, after China banned cryptocurrency trading in 2017, a Chinese court gained legal recognition by officially describing Bitcoin as a virtual asset in July 2019. This is part of a dispute between an exchange that no longer exists and one of its users lost money.
Currently, there are no specific rules on cryptocurrency taxation in China, but this court pays attention to cryptocurrencies because an asset can cause the Chinese tax authorities to publish the crypto tax policy.
Singapore: There is no value added tax on cryptocurrencies and is exempt from VAT
Starting in January 2020, the Goods and Services Tax, or GST, which is equivalent to value added tax, will not apply to cryptocurrency transactions in state-cities.
In July 2019, the Singapore Domestic Revenue Agency announced a proposed electronic tax guide tax exemption for cryptocurrencies intended to act as a medium of exchange from the GST. Recently, in November, the draft was approved by IRAS and became official.
By the end of 2019, cryptocurrencies that function as a medium of exchange were considered a barter trade. IRAS notes that Bitcoin, Ether (ETH), Litecoin (LTC) and other currencies meet the definition of a digital payment token designed to act as a means of exchange. At the same time, stablecoins are excluded from this definition but will also be exempt from GST.
A digital payment token must not be valid based on the value of anything else. Therefore, any digital token denominated in any fiat currency or with value attached to any fiat currency (e.g., stablecoin) will not be eligible for the token. Digital payment notification.
It is possible that IRAS is ready to release Libra, as the guide specifies GST tax exemptions for stablecoins supported for a currency basket.
Instead, tokens that are pegged or backed by any fiat currency, a basket of currencies, goods or other assets that are derivative instruments are currently exempt under paragraph 1 (j) of Part I of the Fourth Schedule of GST Act. The provision of these tokens continues to be exempt from GST.
Thailand: Blockchain used for tax
While Bermuda accepts cryptocurrencies to pay taxes, the Thai government refunds taxes using blockchain.
On November 25, CEO of Patchara Anuntasilpa told the Bangkok Post that the Thai Special Consumption Department would change its existing tax refund operations by introducing a blockchain-based tax refund system, which is expected. will be implemented in mid 2020.
Anuntasilpa explained that the future tax reimbursement system would require oil exporters to pay excise taxes and require overpaid taxes after they shipped fuel. Block chain technology will help the department check tax payments more efficiently.
Currently, oil exporters are required to submit documents for tax exemption, but the inspection is not as thorough as possible.
Iran: Tax carrots and cryptocurrency mining sticks
In the fight against illegal cryptocurrency mining, Iranian authorities are offering a bounty to anyone who exposes illegal mining operations in the country. In contrast, authorized Iranian mining companies will enjoy tax benefits.
In September, the Iranian National Tax Agency announced that domestic mining companies were eligible for tax exemptions if they agreed to repatriate their overseas earnings.
As reported, INTA has introduced a repatriation duty similar to the regulation it provides non-oil exporters.
INTA considers cryptocurrency mining to be a taxable business like any other industrial activity, and therefore believes it should follow the requirements set by the Iranian Central Bank in repatriating its earnings in the country. out of them.
Georgia: There is no value added tax and no payment is allowed in cryptocurrency
The Georgia government is joining the list of countries that choose to exempt cryptocurrency. In June 2019, Georgia Treasury Secretary Nodar Khaduri signed a bill to regulate the taxation of cryptocurrency trading or mining entities. However, the tax exemption does not apply to mining companies still need to pay VAT unless they are registered abroad.
In Georgia, foreign currency cannot be used as a means of payment and for that reason, the country will not allow the use of cryptocurrencies for payment.
Brazil: Obligation to report all cryptocurrency transactions
The Brazilian government has every intention of closely monitoring cryptocurrency traders in Brazil.
In May 2019, Brazilian Federal Revenue instructed all Brazilian citizens related to cryptocurrencies to report on their transactions. This new measure applies to individuals, companies and brokers involved in all types of crypto-related activities, including buying and selling, trading, deposits, withdrawals and other other activity.
As reported, RFB believes that the digital currency market in Brazil has more investors than Brazil's second oldest stock exchange, which has about 800,000 customers. Considering the size of the market, it is not uncommon for the RFB to require monthly reports on cryptocurrency activity, which will be considered a major burden until tax reporting goes.
The rules also require local cryptocurrency exchanges to notify RFB of all activities. There is no minimum threshold for reporting requests. Crypto traders on foreign exchanges or anyone who trades with peers has a minimum threshold and will only have to report on transactions with amounts higher than 30,000 Brazilian reals per month.
By applying this measure, the authority against illegal activities such as money laundering, tax evasion and terrorist financing, and those who do not comply will face a fine of up to 3%. Amount of transaction not reported.
2019 will be marked as the year of changing crypto tax policy. After 11 years of Bitcoin's existence, countries around the world are making it clear to taxpayers regarding cryptocurrency activities. Now, we just need to wait and see if after all that has been said and done, 2020 will be the last year to show a significant increase in tax records.
The views, opinions and opinions expressed herein are those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Or Lokay Cohen is vice president at Bittax, a cryptocurrency tax platform. Or have 10 years of experience with regulatory, leading a leading tax consulting firm. She holds an LL.M. by law, by B.A. in communication and a master's degree in management and public policy. In his work at Bittax, Or promote the goal of connecting cryptocurrency with tax reality to enable tax reporting under a clear legal framework and specific methods of determination.