Though nothing concrete has been settled about the classification of bitcoin among other cryptocurrencies, the profits and income from crypto are certainly the point of attention for global regulators. When it comes to European Union, the different member nations are taking different routes for crypto taxation that brings specific challenges to the individuals.
EU member-states take different routes to crypto taxation
Bitcoin is treated differently in different countries all over the globe and the absence of a uniform approach means different regulatory parameters and crypto taxation rules. As the recent G20 summit hasn’t been able to come up with a consensus, in the short run, each region has to make their own decisions.
The same goes for the European Union where the absence of Pan-European guidelines has led the member-states to go with the decision of EU’s Court of Justice. In the ruling of 2015, the application of VAT to cryptos drew a comparison between the fiat money and digital currencies, when used for payment.
Following with this decision, the German authorities declared that bitcoin won’t be subject to the VAT when changed into fiat, rather the tax will be paid when crypto is used to buy goods or services. Additionally, crypto mining is not taxed and crypto exchanges are also given tax breaks. But crypto trading by individuals is subject to capital gains tax where gains from long-term holdings and profits less than €600 are exempted from tax.
Governments like Estonia has adopted similar rules by levying VAT and capital gains tax on cryptocurrencies, where crypto is considered both an investment and a mode of payment. Individual crypto trading doesn’t have any tax in Slovenia but crypto incomes are taxable for both individuals and businesses at the yearly rate of, from 16 percent for less than €8,000 to 50 percent for more than €70,000.
EU Cryptocurrency taxation ranges drastically from 0-50%
The Financial Services Authorities in Denmark taxes crypto companies just like any other business whereas individual investors trading crypto aren’t subject to taxes. As for Spain, it is considering tax breaks for the businesses that utilize cryptos and blockchain technology.
Though Belgium doesn’t have any official stance on crypto taxation, it has been reported that 33 percent taxation might be in order for anyone who indulges in crypto trading. Similarly, Bulgaria hasn’t said anything about the legal status of cryptocurrencies but imposes 10 percent capital gains on crypto income.
Losing patience with no firm decision from EU,
- The finance minister of Dutch called for a coordinated international approach while describing the current framework insufficiently equipped.
- Furthermore, the Netherlands government is planning to adopt the new cryptocurrency regulations by the end of this year.
- Belarus, however, is taking a different approach by embracing crypto and introducing tax breaks for crypto activities.
The member states are looking to Brussels for guidance but the lack of any concrete decision from the EU is resulting in different approaches to cryptocurrency taxation that ranges drastically from 0 to 50 percent.
What are your views on crypto taxation and bitcoin tax? Which jurisdiction do you think is handling this concept much better than others? Share your thoughts with us!
Having a background in writing, I worked on a wide array of industry topics and have recently entered the world of Blockchain and Cryptocurrency.