Cryptocurrency - What's VAT got to do with it? Deloitte ...
Why is Bitcoin worth anything?
My Crypto taxes in Germany - 2017(18), actual status
Ola ppl, yesterday I finally had my "date" with my official tax accountant from a major German tax union in Hessen. He does all my official tax work and is legally responsible for my tax return. Since I had some trades in 2017 with BTC, (and a lot in this year!), I was looking forward to this meeting to get all my crypto-tax questions cleared. The state is as follows: The German Finanzamt doesn't know how to tax crypto, again. There was a EU judgement (case „Hedqvist“, C-264/14) in 2015 which defines Bitcoin and Crypto as currency and therefore can’t be taxed. This view has also been strengthened by the German Federal Financial Supervisory Authority (BaFin) in this year (2018) which has the same view on Crypto. This resulted in the "mess" that we are in (for us in Crypto in Germany it is great actually) tax regarding. To sum it up, this was told to me from my Tax-man, for a private person doing private trades:
I dont need to report anything Crypto related. Not my BTC buys, not my binance trades, no airdrops, no mining, no passive income from holding, nothing.
The German Finanzamt simply doesnt care for cryptos now, the volume and tax amounts are insignificant and it is now defined as currency-type again. If you are not dealing with SIGNIFICANT amounts of €-value in Cryptos, nobody will even ask you about anything. If you are dealing whit amounts which raises the questions of the "Finanzamt" (hence "Significant"), it is about money laundering and the likes of.
The "Finanzamt" has, for now, no LEGAL way of requesting/tracking trades on crypto-exchanges (except for cases when they go to court), since exchanges are not official banks/financial institutions, they have no legal authority over them. In turn, Crypto exchanges have no official/standardized way of reporting taxable trades/buys/etc... like financial institutions have. No one is going to manually track and calculate your trades unless they are said to do it by court (again, example money laundering and such cases)
I can and should keep a record of my trades IF the legal situation changes. It is highly unlikely, but you never know.
I should never invest more than I can afford, and don’t put everything in Crypto
Cheers tl;dr: For now, in Germany are NO TAXES to pay on anything crypto related. Cryptos are defined similar to currency and not taxed. EDIT: I see this is blowing up, I will try to directly talk to the "Finanzamt" about this since the opinions and experiences range from: " You are fucked and going to jail" to "Great, thats it". EDIT 2: German "Finanzamt" doesnt give statments regarding procedures, I shall contact a legal tax adviser or preferably a union. You cant make that shit up. Back to square 1, will make a second meeting with a different adviser to check it explicitly on that matter. What a legal swamp....
Portuguese Tax Authority Issues Ruling on ICO and VAT: Expert Take
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, so you should conduct your own research when making a decision. This text should not be considered as legal or investment advice. Transactions involving cryptocurrencies are raising interesting questions and concerns in the field of taxation. The supply of electronic goods and services has implications in the field of consumption taxation, which has been harmonized in the European Union through the implementation of the value added taxation (VAT) system. Following a recent tax ruling issued by the Portuguese Tax Authority (PTA), this article discusses VAT-related implications of cryptocurrencies, tokens, and initial coin offerings (ICO). https://preview.redd.it/b4mubbseo8111.jpg?width=725&format=pjpg&auto=webp&s=a9d7e8fcf88ac8bda1f965fd802599d6f35f5709 On the nature of tokens and VAT system Tokens have an essential role in initial coin offerings, where tokens may be used as a medium of exchange with a function similar to a fiduciary currency, e.g. Bitcoin (currency or value tokens). However, tokens can also be used in several other contexts and leverage functionalities enabled by smart contracts. Thus, they may embody various functions and characteristics depending on the specific circumstances in question. For instance, tokens can be used as smart contracts related to financial instruments and securities, including stock, loans, and derivatives (securities and equity tokens), they can provide access to a product or a service, or permit the contribution and participation in a certain job (usage or work tokens; utility tokens), and may correspond to an underlying physical asset such as gold or real estate (asset tokens). According to VAT regulations, VAT applicability, liability, and exemption from VAT all depend on the nature of the goods or the services subject to supply as well as certain other circumstances, e.g. the parties of the transaction. As tokens can be used for several purposes, VAT implications of a single token may vary based on its characteristics, functionalities, and final use. Furthermore, VAT implications of virtual products as electronic goods and services are still somewhat unestablished, leaving room for interpretation. Following this legal uncertainty, the PTA recently issued a binding tax ruling (only in Portuguese) addressing the VAT liability of a token in the context of an initial coin offering. Tax ruling by the Portuguese Tax Authority The tax ruling request arose from an ICO and the token in question, which had been built on top of Ethereum, was described to be similar to Bitcoin. However, the scarce information provided indicates that it actually seemed to resemble a utility/usage token. The essential question brought up in the request was whether VAT exemption could be granted to the token by applying the exemption foreseen for transactions concerning currency, banknotes, and coins used as legal tender. Other matters to be discussed concerned the rendering of services through an electronic platform in the light of VAT purposes as well as the registration on the Mini One Stop Shop (“MOSS”). The PTA concluded that, in principle, transactions containing a token may be considered an onerous transfer of goods and, thus, prima facie liable to VAT. Notwithstanding, the Tax Authority confirmed that the transfer of tokens may be exempt from VAT under the exemption foreseen for transactions concerning currency, banknotes, and coins used as legal tender. Furthermore, it was established that the VAT exemption only applies if the transfer of tokens consists merely in an alternative form of payment. In other words, attention needs to be paid to the characteristics and functions of the token in question, which typically requires a case-by-case analysis. Lastly, the PTA considered that the VAT exemption may also apply in other EU Member States since VAT is a harmonized system. The view adopted by the PTA is in line with the previous decision issued by the European Court of Justice (ECJ) on the Hedqvist case (C-264/14), where the ECJ established that the exchange of traditional currency for Bitcoins and vice versa constituted the supply of services under the VAT directive. However, the supply of services in question was regarded as exempt from VAT under the exemption concerning legal tender. It is to be noted that the ECJ also founded its conclusion on the common factual ground (in the specific circumstances of that case) according to which “the ’bitcoin’ virtual currency has no other purpose than to be a means of payment,” which is also indicative of a need for a case-by-case analysis, namely with close attention to each token’s functions and characteristics. With regard to the supply of electronic services, the PTA stated that, pursuant to the Portuguese VAT Code, the electronic rendering of services is taxable in the state of the acquirer, whether the latter is a consumer (B2C) or a company (B2B), and regardless of the state of the supplier. Consequently, the supplier must assess the VAT even if the acquirer is a resident in another state. Apart from the possibility to register in each state where the supplier renders electronic services, the supplier may also register at MOSS, which enables all VAT obligations to be complied with in one EU Member State. Other tax aspects: Income tax exemption on the sale of cryptocurrencies In addition to the VAT-related implications discussed above, cryptocurrencies have raised other tax-related questions in Portugal. The PTA has already deliberated on income taxation of the sale and purchase of cryptocurrencies in a previous tax ruling (only in Portuguese). According to this ruling, also touched upon at Cointelegraph, the Portuguese personal income taxation regime did not apply to the income derived from the sale of cryptocurrency, as no income category covers cryptocurrency gains, provided that the sale is not performed in the context of a business activity. Thus, there was no legal basis in Portugal for income taxation of cryptocurrency gains in those circumstances. However, as opposed to consumption taxation, income taxation is not harmonized at the European Union level. Consequently, the views adopted by the PTA regarding income taxation and cryptocurrencies have primarily only a domestic impact. Source
The European top court said in a ruling that puts virtual currencies on a more equal footing with traditional cash.
Value added tax -- a type of sales levy -- needn’t be applied because the business involves “the exchange of different means of payment,” the EU Court of Justice in Luxembourg ruled Thursday. The case was triggered by a dispute in Sweden, where David Hedqvist set up a service for the exchange of mainstream money for bitcoin and vice versa. “Transactions to exchange traditional currencies for units of the bitcoin virtual currency (and vice versa) constitute the supply of services” under the bloc’s law “since they consist of the exchange of different means of payment,” the court ruled. As such they are exempt from value-added taxes, it said. I think that we who are holding VirtaCoins are in a whole new and exciting ballgame. The value of VirtaCoin can only keep going up. What do you think. Please comment.
No VAT to pay on bitcoin exchange transactions, says top EU court
This is an automatic summary, original reduced by 61%.
Bitcoin exchanges do not have to levy value-added tax on the margins they make when exchanging bitcoins for conventional currencies, the European Union's highest court ruled Thursday. Would-be bitcoin operator David Hedqvist and the Swedish tax authority, Skatteverket, had asked the administrative court whether Hedqvist would have to charge his clients VAT when exchanging bitcoins for Swedish kronor. The Swedish court asked the CJEU to rule whether the exchanging of bitcoins for traditional currencies in return for a margin or commission constituted the sale of a service, and if so, whether that service benefited from one of the exceptions in Article 135(1) of the directive. The exchange of bitcoins cannot be considered the sale of goods, the CJEU said, as bitcoins are not tangible property, having no purpose other than to be a means of payment. The court said, it was obliged to consider the purpose of the directive, rather than the precise wording of national laws, since the directive's goal was to harmonise the treatment of goods and services for the purposes of VAT across the EU. Bitcoins are to be treated like money itself, because they can be directly exchanged, the court said. As a result, the CJEU ruled Thursday, bitcoin exchanges based in the EU need not charge VAT on the margins they make or commissions they charge when swapping bitcoin for traditional currencies, making doing business in bitcoin that little bit cheaper.
SUBJECT: CJEU Case C-264/14 Hedqvist: Bitcoin. ... 5 Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ L 347, 11.12.2006, p. 1). 6 Hedqvist, paragraph 31. 7 A direct link is established if there is a legal relationship between the provider of the service and the ... 13. The referring court states that the transactions envisaged by Mr Hedqvist would be carried out electronically via the company’s website. That company would purchase units of the ‘bitcoin’ virtual currency directly from private individuals and companies, or from an international exchange site. To put the value of 1 bitcoin in relation to something, let's compare it to the equivalent amount of gold, i.e. the same fraction of the total supply. There is roughly 190 million kilograms of gold in the world so owning 1 bitcoin is like owning roughly 9 kilograms of gold. The price of 9 kilograms of gold is right now at around 350,000 dollars. Bitcoin.se is an independant site about Bitcoin, cryptocurrency, blockchain technology and economics run by me, David Hedqvist, since 2012. Read more about me and the site on about bitcoin.se . If you need help, first check out the forum where I go under the name D.H. Regarding purchases of Bitcoin on bitcoin.se, contact [email protected] . Bitcoin.se is an independant site about Bitcoin, cryptocurrency, blockchain technology and economics run by me, David Hedqvist, since 2012. Read more about me and the site on the page about bitcoin.se.
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