In October 2019, the US Internal Revenue Service updated its rules and guidance for the taxation of cryptocurrencies. WITHOn the one hand, these rules answered previously unresolved questions, and on the other, added new reasons for discussion.
Since it's 2020, it's time to let you down.some results and evaluate the plans of the authorities of various states in the direction of taxation of cryptocurrencies. As part of the material, we will clarify whether there are countries where there is no taxation of bitcoin and other cryptocurrencies, and if so, on what terms.
A small spoiler: almost all countries that are positioned as countries without Bitcoin taxation actually tax cryptocurrencies in different situations. Is that, except for Belarus ...
Cryptocurrency: money, asset, property, security?
Let's start with the most important thing: there is still no global understanding of what cryptocurrency is. In different countries, it is perceived differently. In Japan, cryptocurrencies were recognized as legal tender, although they are not considered currency. In Australia and the USA they are considered property, in Germany - private money.
The most undecided are British officials. They can consider a crypto as an asset or money (private money) depending on the court decision in each case.
However, the good news is that in all more or less developed countries, regardless of what type of asset cryptocurrencies are, they decided to exclude VAT and sales tax.
At the same time, taxes of the following types remain: capital gains, corporate tax, personal income tax, etc. In some countries they are fully assembled, in others - partially or under certain conditions.
And we are not talking about ICOs yet (an analogue of IPO incryptocurrency world). Here, the authorities are mainly inclined towards a system of “securities”, which requires serious preparation by companies conducting the procedure for issuing digital tokens. Due to this “small feature”, even Pavel Durov with his TON, the cryptocurrency for the Telegram messenger, which raised 1.7 billion, suspended the coin issuing process so as not to get problems with the law in the USA.
So the question remains extremely complicated and confusing, at least because the very direction of cryptocurrencies continues to develop.
Change is the key to survival
Despite all the retardation of the bureaucraticapparatuses in any country, the authorities are gradually following the rapidly developing asset. The main goal: the fight against illegal circulation of funds, as well as taxation. And if, with the first paragraph, frankly speaking, the successes are extremely relative, then the second paragraph begins to please the bottomless wallets of the state treasury.
By the way, some experts believe that exactlytaxation will save cryptocurrencies from sanctions and prohibitions: sensing real money, the authorities are unlikely to give up another source of income. They will try to formalize and use it more fully.
Therefore, all cryptocurrency users are activetraders, HODLers, interested persons, individuals and professional companies - should be prepared for the fact that the legislation will continue to change and adjust. Or, which often happens, adjust the owners of the asset to the interests of the state.
Although each country chooses its own path.For example, in Singapore, which is now called a tax-free jurisdiction for cryptocurrencies (which is not entirely true), they are considering an initiative to exclude digital assets from VAT taxation. If this idea is approved, it will come into force on January 1, 2020. In this case, Singapore will become much more like a country where they do not pay taxes on cryptocurrencies.
At the same time, Singapore proposes to designate stablecoin (Tether and others) as financial services and control them accordingly.
If we talk about the United States, which largely remaintrendsetters in matters of control over the money of the population, here they generally discuss the issue of total control over individuals using cryptocurrencies. The IRS tax service suggested checking posts on social networks, interviewing relatives, and even checking the history of downloaded programs, requiring Microsoft, Apple, and others to share similar information about suspects.
All in order to tax the profits of persons who so far do not want to share information.
By the way, that’s why many companies relatedwith blockchain and cryptocurrencies, they organized head offices in other countries, in particular in Switzerland, where taxes exist, but the policy regarding users of digital assets is more loyal and calm. For example, not only the Ethereum Foundation is working in Switzerland, but also the Facebook project - the Libra Association.
Who and how much will pay taxes for cryptocurrency?
Now let's see what taxes will payinvestor in cryptocurrency, if he is a resident of a particular country. We will talk about the features for both individuals and legal entities. The fact is that in some countries, for example, in Portugal, a private investor is exempt from taxes on crypto, and a legal entity is obliged to pay corporate and / or other taxes.
USA
The financial center of the world, which considers cryptocurrency property. VAT (sales tax) is not applicable, but there is a capital gains tax.
Profit is paid from the profit received, based onselling prices minus purchase price. Moreover, the tax, according to the new rules, is calculated from any amount, including if you buy goods/services with bitcoins. So, if you spent $3 on bitcoins, and then were able to buy coffee for $5 with them, then you need to pay tax on $2.
The tax on capital gains in the short term can be up to 37% (like income tax), and in the long term it can be reduced to 20%.
An important point: if you are a citizen or resident of the United States, then you remain taxed regardless of your place of residence. This also applies to income from cryptocurrency.
Singapore
We have already mentioned Singapore several times. Its feature at the end of 2019 is that any assets, including cryptocurrency, are not subject to capital gains tax on long-term investments. This applies to long-term investments, both for individuals and for business.
With active cryptocurrency trading, businesssubject to ordinary corporate income tax. To take advantage of these opportunities, you must either register a company in Singapore and conduct activities on its territory, or independently relocate and obtain resident status. Officially, there are several types of visas, including for professionals. However, due to the huge popularity of Singapore, moving here has become difficult. Plus is quite expensive.
Belarus
It was Belarus that became the first country toofficially introduced the legislation related to cryptocurrencies, highlighting them in a separate direction. Today it is here in special zones where you can mine, trade cryptocurrencies and not pay taxes.
The preferential tax regime is valid until 2023. Perhaps it will be extended over time. Becoming a resident in Belarus is quite simple, but not all Russians or immigrants from other CIS countries decide to move for the sake of cryptocurrency.
Australia
In Australia, cryptocurrencies are considered property(property), do not apply VAT, but there is a tax on capital gains. Australia immediately took a rather progressive position regarding Bitcoin and other crypto projects, developed laws, rules, conditions and benefits.
Australia allowed ICO, although requirements for themthey were high right away, and now they are almost on par with the IPO. This created a healthy atmosphere and confidence in projects that are governed by the laws of this country.
At the same time, capital gains tax in AustraliaIt is part of income tax and ranges from 0 to 45%, depending on the amount of income. For capital gains tax, various exceptions and exemptions apply. For example, the assets of individuals who have owned them for more than a year are taxed at a 50% discount.
Germany
In Germany, bitcoins are recognized. They are not considered currency, but at the same time you do not need to pay VAT on transactions with them, and if you keep them for more than one year, then you are exempt from capital gains tax. This applies to individuals.
Legal entities pay corporate income tax.
Germany is generally an interesting country for business,investment and life. It is more difficult for citizens of countries outside the EU and EEA to become a resident than citizens of the EU, but they can also get a visa. The most popular way for modern investors is to create a business and find employment in it.
Portugal
In 2019, Portugal aroused great interest among entrepreneurs from around the world. First of all, in the context of company registration, entering the EU market and other countries.
At the same time, for those who invest incryptocurrency, Portugal offers its own features. Companies are required to pay corporate tax, but private individuals are not taxed. In addition, Portugal recognizes bitcoin, which simplifies cooperation in this direction. There is no need to pay VAT either.
You can relocate to Portugal usingbusiness migration or by making investments in the country's economy (golden visa). The most popular way is real estate investment. So far, you cannot buy real estate for bitcoins, like, say, in the UAE, but who knows what will happen in the future.
Japan
Japan was the first to recognize cryptocurrencies aslegal tender. This does not make them money, but makes it easy to pay for goods and services throughout the country. After this news, at one time, even the bitcoin exchange rate slightly grew (this was even before the rally to $ 20,000).
At the same time, capital gains tax is imposed on cryptocurrencies. With a quick sale, the tax can reach 39%, and with a long-term sale of an asset, the tax drops to 20%.
Malta
Daily cryptocurrency trading is taxed as a business activity. But the long retention of cryptocurrency is, like other types of assets, not taxed.
At the same time in Malta it is quite profitable to think aboutcryptocurrency trading corporate decision. According to existing rules, you have the opportunity to reduce the effective tax rate from the official 35% to a favorable 5%. So it is not surprising that a circle of crypto professionals respects Malta for the opportunities offered and registers their companies there.
Great Britain
Perhaps one of the most popular jurisdictions forregistration of financial projects, startups and just companies with a high level of protection of investor interests. However, the issue of cryptocurrencies in the UK has not yet been fully decided: to consider this an asset or property. This creates unpredictability.
In addition, unpredictability is associated with Brexit,which will either be or will not be. It seems like Boris Johnson still won the election, which means you can count on continuing the course towards Brexit ... In general, the situation is complicated and tense for long-term investments.
The UK remains an attractive market, but with reservations. Even in terms of obtaining visas for permanent residence in recent years, everything has become less clear than before.
Switzerland
It’s hard to get past a country that is known forincluding the location of the Cryptodolina. Despite this, cryptocurrencies can be taxed in Switzerland. In general, digital assets are treated loyally, accurately and even conduct experiments in which bitcoin can be paid for municipal services.
If you are mining bitcoin, thenyou will have to pay income tax for a self-employed person (as an option). A business pays as part of a corporate tax, which may vary several times depending on the location of the company. Each canton offers its own tax policy.
However, if you are qualified as an investor or trade cryptocurrencies on your personal account, then there is the opportunity to get an exemption from capital gains tax.
So where is it more profitable to store cryptocurrency?
Small conclusions from the above information:
- Firstly, not all countries are taken into account. Some copy some of the above, some are not so convenient for business or living.
- Secondly, taxation is highly dependent onwhether you trade on a daily basis or are a long-term scler. In most cases, when they talk about the absence of taxation, they say that there is no tax on capital gains for long-term ownership (from 1 year).
- Thirdly, it may seem now that taxes oncryptocurrency is a distant business and does not concern us. However, in the Russian Federation and the CIS they are developing their own laws; information exchange takes place; Popular exchanges where they buy and sell crypto increasingly cooperate with the authorities of the countries. Especially when it comes to amounts on accounts of more than a few thousand dollars.
Over time, and on this issue, the countries will agree and will be able to establish taxation, as it is now implemented with banks and automatic exchange.
At the same time, it is clearly visible that cryptocurrencies remain. It is unlikely that countries that receive tax payments from this asset will voluntarily give up an additional source of income. The only question is how this source will be determined and what percentage will be assigned.
We just have to choose: how to earn money, where to live and who to pay, so that the amount is not too large, and the quality of service from the tax authorities did not scare to shiver.
Fortunately, even today there are options where to go.
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