Bitcoin and taxes
Dr Aleksandra Bal
International Bureau for Fiscal Documentation (IBFD)
Amsterdam
Bitcoinference 2015
22 February 2015
Agenda
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Bitcoin status
Bitcoin and income taxes
Bitcoin and VAT
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Bitcoin status
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Money in economic sense
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Money in legal sense
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Medium of exchange
Unit of account
Store of value
Central management
Legal tender status
Physical carrier
Electronic money
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Link to traditional monetary system
Identifiable issuer
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Bitcoin status
Tax authorities’ views on Bitcoin status
United States
property
Australia
neither money nor a foreign currency but an asset
Netherlands
not: legal tender, financial product, electronic money
Denmark
not currency
Norway
asset not currency
Finland
not: currency, security or financial product
Finland
currency
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Bitcoin and income taxes
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Income tax rules vary from country to country. Some
countries tax everything (e.g., the United States), whereas
others only selected types of income (e.g., Netherlands).
Types of transactions relevant for income tax purposes
Exchanges of bitcoins for legal currency
Exchanges of bitcoins for other goods and services (barter)
Bitcoin mining
Distinction: business activity versus transactions performed
in private capacity
Long- vs. short-term capital gain
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Bitcoin and VAT
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VAT is harmonized in the European Union.
The Court of Justice of the European Union
is the supreme court in VAT matters.
VAT is levied on supplies of goods and
services for consideration
Types of transactions relevant for VAT purposes
Exchanges of bitcoins for legal currency
Exchanges of bitcoins for other goods and services
Bitcoin mining
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Bitcoin and VAT
VAT exemption for bitcoin transactions?
Article 135 of the VAT Directive:
Member States must exempt:
(d) transactions, including negotiation, concerning
deposit and current accounts, payments, transfers,
debts, cheques and other negotiable instruments;
(e) transactions, including negotiation, concerning currency,
bank notes and coins used as legal tender, with the
exception of collectors' items…
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Bitcoin and VAT
Tax authorities’ views on VAT exemption
Exemption
No exemption
Belgium
Norway
Finland
Estonia
United Kingdom (exceptions)
Australia
Singapore
Referral to the Court of Justice of the European Union:
Case C-264/14, Skatteverket v. David Hedqvist
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Bitcoin and taxes
Dr Aleksandra Bal
E-mail: a.bal@ibfd.org
PhD thesis “Taxation of virtual currency”:
http://hdl.handle.net/1887/29963
Summary of research on virtual currency:
https://www.youtube.com/watch?v=3PDi-ZTMCHY
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