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Taxation of cryptocurrencies in Europe

What is the cryptocurrency?

The term "cryptocurrency" has emerged as a reference to a Bitcoin-style digital currency whose property (in question and following subsequent transfers) is registered as a chain of digital signatures on a blockchain, protected by cryptography. "Currency" has a value that can be transferred, although since that value is purely speculative (and not supported by underlying assets, economic activity or a central authority such as a bank), it can be very unstable. For this reason it is often considered a digital or cryptographic resource rather than a currency. However, the rights attached to a particular "currency" of cryptocurrency (including if it is transferable) will depend on its terms of issue and not all "coins" are intended to function as a form of money. In some cases, a currency is simply equivalent to a voucher, which the holder can redeem for identified goods and services provided by the issuer.

The tax treatment of cryptocurrency varies depending on the terms, but this overview focuses on the Bitcoin cryptocurrency style intended to act as transferable accounting value.

Generally, in almost all jurisdictions there are no specific tax laws on the taxation of cryptocurrencies. The tax treatment is based on general principles and any orientation issued by the tax authorities. The guidelines issued by the tax authorities of some jurisdictions are more complete than others and some jurisdictions have not provided any guidance so far. This is reflected in the following overview.

Belgium

Direct taxes

  • For private private investors, when the investment is speculative, the realized gains are taxed at 33% more local surcharges. When investment is not speculative and is outside of any professional activity, gains on such investments may be tax-exempt and losses are not tax-deductible.
  • For professional individual investors, the gain can be taxed as professional income (subject to progressive rates from 25% to 50%, plus local taxes and social security contributions).
  • For companies subject to the ordinary tax regime of companies (the ordinary rate is currently 29.58%, reducing to 25% from 2020), profits in exchange movements between currencies (including cryptocurrencies) they are included in the taxable profits and the losses are deductible.

VAT

  • The Belgian Finance Minister has confirmed that the Bitcoin-style cryptocurrency exchange is exempt from VAT.
  • The Belgian Tax The authorities did not provide any other information on cryptocurrencies.

Transfer of taxes

No transfer fee is payable in Belgium on cryptocurrencies.

Other [19659002] The cryptocurrency portfolios are not taxable assets under the new Belgian tax on portfolios.

France

Direct taxes

  • One-off profits realized on Bitcoin-style cryptocurrencies are considered as a capital gain realized on the sale of intangible assets and taxed at a flat rate 19% plus 17.2% of social contributions (an aggregate rate of 36.2%).
  • Profits arising from cryptocurrency and mining speculation are treated as industrial and commercial profits subject to the progressive income tax regime (45% of the most marginal social contributions).
  • For companies, profits from cryptocurrencies (including currency speculation and currency extraction) are subject to tax under the general corporate tax regime for profits and losses. Currently, the corporate income tax is applied to 33.33% (28% for taxable income up to 0.5 million euros). The normal rate must be gradually reduced to 25% in 2022.

VAT

There is no specific law on VAT nor indications on the VAT treatment of cryptocurrencies.

According to the French Supreme Court, cryptocurrency activities are associated for tax purposes for intangible assets, which means that, for now, their VAT treatment should be as follows:

  • revenue received from cryptocurrency activities mining are subject to VAT as a supply of services;
  • when cryptocurrency is exchanged for legal currencies, such as Euro or Dollars, no VAT is payable on the value of the cryptocurrency and in relation to the commissions, if any, debited from the intermediary;
  • charges made beyond the value of the cryptocurrency for the organization or realization of all Bitcoin transactions, except for forex transactions with official currencies, are subject to VAT;
  • acquisitions of goods or services through cryptocurrency payments are also subject to French VAT (the value of the supply on which VAT is due will be the euro value of the cryptocurrency at the time the transaction takes place )
  • the sale of cryptocurrencies is not subject to VAT if it is not made for the purpose of obtaining income on an ongoing basis.

Transfer of taxes

No transfer fee is payable in France on cryptocurrencies.

Other

Cryptocurrency portfolios are not taxable assets under the new French real estate tax

Germany

Direct taxes [19659002] Tax treatment is not completely regulated by law. Depending on the facts, profits will be taxable as capital gains, current income or not at all.

  • Cryptocurrencies will generally be considered as a resource for tax purposes.
  • The extent of taxation will depend in particular on whether the cryptocurrency is held as a private or business activity, although companies are considered as holding all their activities as business activities.
  • If held as business activities, all profits will be taxed, including commercial tax. This includes situations in which non-residents are traded in Germany through a permanent establishment.
  • If held as a private activity, profits from loans are generally taxed as income. Capital gains are subject to tax only if the acquisition and sale take place within a year (or in the case of previous loans, within ten years).
  • Payments made in cryptocurrency are treated as a sale of the cryptocurrency and lead to the tax consequences described above
  • The mining of cryptocurrencies may be subject to tax as business income, depending on the circumstances .

VAT

The German tax authority issued the following guidelines on VAT treatment:

  • Revenue extraction activities of cryptocurrency are generally outside the scope of application of the tax authorities. VAT.
  • Revenue received for the supply of "portfolios" for which specific charges are envisaged are subject to VAT.
  • When exchanging cryptocurrencies for euro or for legal currencies such as Sterling or Dollars, the criptovalute transfer is exempt from VAT.
  • The fees for the provision of a platform for the exchange of cryptocurrencies are considered a technical service subject to VAT.
  • Cryptocurrency payments are not considered a service for VAT purposes and are therefore outside the scope of VAT. For cryptocurrency payment as consideration for goods or services, the cryptocurrency is converted into the currency of the country in which the transaction takes place at the exchange rate at the time of the transaction.

Transferring taxes

There are no transfer taxes in Germany on cryptocurrencies.

Other

The issue or transfer may be subject to inheritance tax or gift tax – both would be considered "transfer taxes" under German tax law.

Italy

Direct taxes

There are no specific rules on the taxation of cryptocurrency in Italy. The Italian tax authorities provided the following indications:

  • For natural persons, only speculative activities are taxed – at 26%. The Italian tax authority believes that there is a speculative activity if, during the fiscal year and for at least 7 consecutive days, the threshold of ownership of the cryptocurrency exceeds about 51,000 euros.
  • Cryptocurrency traders are subject to income tax on profits. This includes non-residents who trade in Italy through a permanent establishment.
  • For companies subject to corporation tax, profits or losses on exchange transactions between cryptocurrencies and other currencies are taxable.

VAT

There is no & # 39; VAT specifies rules in Italy concerning cryptocurrencies. According to the indications of the Italian Financial Administration:

  • the purchase and sale of cryptocurrency in exchange for euro or other currencies is considered a transaction in foreign currency and the transaction margin is exempt from VAT.
  • For the payment in cryptocurrency for goods or services, the value of the supply to which VAT is due shall be the value in euro of the cryptocurrency at the time the transaction takes place.

Transferring taxes

There are no transfer taxes in Italy on the cryptocurrency. Cryptocurrencies are unlikely to constitute a "security" for the purposes of Italian stamp duty

Spain

Direct taxes

  • For natural persons if cryptocurrency is considered an investment, cryptocurrency will be considered as a resource for capital gains tax. The capital gain is chargeable when the cryptocurrency is delivered by the tax payer.
  • For companies subject to corporation tax, profits or losses arising from exchange movements between cryptocurrencies and other currencies are taxable. Like natural persons, income from encryption is deductible for businesses.

VAT

  • Expenses exceeding the value of the cryptocurrency for the organization or execution of cryptocurrency transactions are exempt from VAT. [19659008] Revenues received from mining cryptocurrency activities are generally outside the scope of VAT.

Transferring taxes

  • There are no transfer taxes in Spain on cryptocurrencies. The law exempts the delivery of money in exchange for goods.

Other

  • It is necessary to include cryptocurrency as part of the tax payer's wealth for Spanish net tax assets. There are specific schemes depending on the taxpayer's autonomous region of residence, which means that in some cases no tax is payable.
  • Obtaining cryptocurrency through an inheritance or gift would be taxed in the same way as any other resource.

Sweden

Direct taxes

The Swedish tax authority issued a guide on the tax consequences for people who delete cryptocurrencies:

  • The sale or exchange a person of cryptocurrency would normally trigger the taxation of capital gains. If the cryptocurrency is held as an asset, any gain from the sale would be taxed as income from commercial transactions.
  • The extraction of cryptocurrencies by individuals can be taxed as income from commercial transactions or as income from work. If the mining sector meets certain thresholds, income from mining is taxed as income from commercial operations.
  • Companies carrying out cryptovalute extraction and encryption operations should normally be taxed as income from commercial transactions. However, there is a limited guide of the Swedish tax authority

VAT

According to the guide of the Swedish tax authority:

  • The exchange of cryptocurrencies for foreign currencies (including Krona) is exempt from VAT .
  • Payment in cryptocurrency for goods or services is considered a payment, provided that the cryptocurrency has the same function as a legal tender.
  • Revenues received from cryptocurrency activities are generally outside the scope of VAT.

Transferring Taxes

Netherlands

Direct Taxes

  • If a person buys and sells cryptocurrency as part of a business, any gain will be taxable as corporate income (and losses are eligible). The same applies to the gains deriving from mineral cryptocurrencies.
  • When an individual holds cryptocurrency as a private good, tax treatment will depend on whether the earnings form a "source of income" as defined by legislation (the source is income from other assets). This will depend on the facts and circumstances of each case.
  • If the gains from cryptocurrencies are not taxed according to the above rules, they are taxed as income from savings and investments (at a flat rate based on a notional weighted return on the network
  • When a company earns from the sale or the cryptocurrency, this will be subject to company income tax

VAT

  • The exchange of cryptocurrency for foreign currencies is exempt from VAT.

Transferring taxes [19659007] There are no transfer taxes in the Netherlands on cryptocurrencies

United Kingdom

Direct taxes

Depending on the facts, profits will be taxable as capital, income or not to all: [19659024] For natural persons, in which the cryptocurrency held as an investment will be considered a resource for the taxation of capital gains.

  • People who trade in cryptocurrencies will be subject to taxes on their profits as income. This includes non-residents who trade in the United Kingdom through a permanent establishment, subject to the possible application of the exemption of the investment manager (the application of this exemption to encryption is currently unclear).
  • Earnings from highly speculative transactions, similar to gambling, may not be taxed (nor are losses that can be relieved).
  • Residents not domiciled in the United Kingdom are subject to tax only on income of non-UK origin and gains on the "base remittance". The "source" of the cryptocurrency is not clear and there is no opinion expressed by the UK tax authority.
  • For companies subject to corporation tax, exchange rate gains or losses between currencies (including cryptocurrencies) are taxable as income.
  • VAT

    The UK tax authority has issued guidelines on the provisional VAT treatment of cryptocurrencies, as follows:

    • Revenues received from cryptocurrency activities are generally outside the scope of VAT application.
    • Revenue received by miners for other activities, as for the provision of services in relation to the verification of specific transactions for which specific charges have been made, is exempt from VAT.
    • When cryptocurrency is traded for pounds or for other legal currencies, such as euros or dollars, no VAT is due to the value of encryption.
    • Charges made beyond the value of the cryptocurrency for the organization or execution of Bitcoin transactions are exempt from VAT.
    • For the payment in cryptocurrency of goods or services, the value of the supply to which VAT is due shall be the sterling value of the crypt at the time the transaction takes place.

    Transferring taxes

    There are unlikely to be any taxes on the UK transfer due to the issuance or transfer of cryptocurrencies.

    General comments on the tax treatment of cryptocurrencies

    The above guide defines the current tax treatment known, but this is an area in evolution. It is probable that for each jurisdiction further laws or directives will be promulgated

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