The trend of cryptocurrencies is being desired by many people across various countries, as it has a good dollar value and its rate is rising with high value and declines with a low value. The more attractive feature, there is no government to impose a tax on those cryptocurrencies. The protocols of Cryptocurrency are nicely framed so that it is secure from the hands of the government as well as malicious users. Still, many people know that cryptocurrencies are digital currency. But still there is no clear understanding of the taxation procedure. So, to overcome this issue, the experts in Cryptocurrency taxing from Europe, are trying to lay their emphasis on the financial markets of the United States and Canada.
On September 8th, Blockpit, an Austrian Crypto agreement authority, merged with its German opponent, Crypto Tax through a merger. Both these firms, Blockpit and Crypto, have together collaborated to develop tax creating tools and expand their service over the U.S, Canada, U.K, and Australia in the year 2021. Currently, these two firms are operating in Germany, Austria, and Switzerland. With the presence of a merger, these firms are prepared to extend their European presence in the U.S, Canada, U.K, and Australia. The co-founder of Crypto Tax, Klaus Himmer, has reported that the main goal of these firms is to collaborate with a new merger and expand their presence in the U.S. markets.
From the company representatives, it was found that, even after the new merger, the already existing customers of Blockpit and Crypto Tax will not be affected at any cost. In a few days, the Crypto Tax will be redesigned based on the Block pit’s frontend interface.
After Blockpit and Crypto Tax collaboration for expanding the crypto tax reporting, the Internal Revenue Service (IRS) of U.S. tax authority posted a renewal to crypto taxation rules. The IRS has laid a taxation rule that the revenue obtained from crowdsourcing or like the same another platform, is liable to taxation rule as ordinary income.
IRS taxation
The U.S. tax authority has framed a memorandum that, a taxpayer, who receives virtual currency for performing micro-tasks like crow sourcing, should be taxed. Crowdsourcing involves sharing a project or task to multiple workers. So for a single large task, the task is divided into small parts and assigned to many workers. This is called micro-tasks. Even though the workers get, small amount as a digital currency, that is convertible, the U.S. government has laid the rule to impose a tax on microtasks. This memo was planned during June 2020, but it came to public notice only on August 28th. In the present day, the U.S. government is requesting the populace of their country to reveal tax forms if they have any convertible digital assets.
With the increased usage in cryptocurrencies, the Blockpit and Crypto Tax will be having more competitors, as many local crypto tax firms are arising.
Is there any Bitcoin taxation in developed countries?
Currently, there are lots of cryptocurrencies like Ethereum, Dogecoin, Litecoin, and bitcoins usage has been increasing tremendously. Initially, the cryptocurrencies were used as payment methods. Later on, they were used for investments. Among all cryptocurrencies, the Bitcoins are being widely used cryptocurrencies almost in all developed countries. The Bitcoins are a digital currency so that the transactions can be made only with Internet technologies. Unlike other financial systems, there are no rules and regulations for the Bitcoin transaction. Initially, Bitcoins were not being prevalently used. But as the usage increased, there was a question of whether to impose taxation on this digital currency. After a few types of research and discussions, the bitcoins for U.S., Japan, Australia, Germany, and European countries are imposed taxation. Let us see how bitcoin taxation is being imposed on these developed countries.
The United States
The U.S. Internal Revenue Service (IRS), considers Bitcoin like an asset and not a currency. So, for whatever purpose, a Bitcoin is used for a transaction, the concerned citizen must report to IRS for tax reasons. The tax will be imposed based on property taxation schemes.
The U.S. citizens who use Bitcoins for the exchange of selling or buying goods; they must add the value of the Bitcoin, which they had received in their yearly tax profits. Based on the day’s Bitcoin market value, the value of the Bitcoin is calculated when the taxpayer receives the Bitcoin. When the citizens fail to pay the tax, the citizens will be imposed a penalty.
The U.K.
The countries in the United Kingdom treat the Bitcoins as foreign currency. Hence, similar to currency based taxation, the Bitcoin transaction will also be subject to taxation. The U.K. government taxation, Her majesty’s Revenue and Customs (HMRC) has defined that the Bitcoin tax will be imposed based on the citizen’s reasons and situations.
Germany
In Germany, the Bitcoins have been considered as private money since 2013. The citizens of Bitcoins transactions have not imposed any tax if they do not gain profits within one year of buying the Bitcoins. If they benefit from the Bitcoin purchase within one year, they will be subject to tax. Thus citizens who are subject to taxation, are not imposed any tax on capital gains if they hold Bitcoin for more than one year. They are termed as Private Sales like Stocks or shares.
European Countries
From European countries, the Bitcoin transactions are currency, and they are not assets. So, the European court has overruled the law of no tax for Bitcoins and imposed taxation for the citizens who obtain Bitcoins in the transaction process of buying or selling goods. The law of Bitcoin transactions varies from country to country in the European Union.
Japan
The countries in Japan are considering Bitcoins as a payment method. Hence these virtual currencies can be considered as store value of assets used for making payments and initiating the digital transaction. Hence, from July 1st, 2017, the Japan Government has released the consumption tax on Bitcoins. As per Japan government, the profits gained from Bitcoin trading are treated as selling profits, and they can be used for income and capital gain tax purposes.
Australia
In Australia, the Bitcoins are considered as foreign currency or money. But they are treated as the possession for capital gain principle. The business involving the Bitcoin transaction in Australia must precisely record the Bitcoin value, transaction date, and time in a document. The citizen or business, who receives their sum as Bitcoins must record the value of Bitcoin in AUD like normal income.
But when the Bitcoin transaction is used for personal use, they will not be taxed. For example, if the citizens use Bitcoin for exchange of goods or services, for their personal use, they will not be taxed. Similarly, if the value of the Bitcoins transaction is less than AUD 10.000, they too will not be taxed. The bitcoin transaction used for the business purpose alone is taxed in Australia.
So, the Bitcoin treatment and transaction varies from country to country as per their rules and regulations. Some may consider Bitcoin as currency, some countries may think of it as a foreign currency, and some may think of it as an asset. SO based on the country’s jurisdictions, the taxation rule may vary.
