The classification of Bitcoin and cryptocurrency differs globally, however, some countries are moving forward with guidelines and rulings. The burning question – Is Bitcoin an Asset, Property or Currency?
Here are some reasons why Bitcoin represents a new Asset Class:-
Is Bitcoin money or property? A Judge of the 11th Judicial Circuit Court of Florida ruled Bitcoin was property. “It is uncertain whether the Florida decision will have wider implications for bitcoin regulation. It does reflect the current thinking of the IRS, which regards virtual currency as property and calculates it as such for tax purposes.”
Check out the IRS Virtual Currency Guidance : Virtual Currency Is Treated as Property for U.S. Federal Tax Purposes; General Rules for Property Transactions Apply
While down under in Australia, the Tax Office also decided bitcoins are assets, not currency.
Interesting to note, new documents suggest Italy’s top tax office is treating bitcoin as a form of currency. Italian Tax Authorities clarify treatment of Bitcoin transactions for VAT and Corporate Tax – however, exchanges are exempt.
In 2015, the EU’s top court ruled that Bitcoin Exchanges are Tax-Free
Currently, Bitcoin is not taxable in South Africa using either classification, however, authorities are looking into the situation.
In a move to implement consumption tax, Japan initiated an 8% tax on Bitcoin purchases and other exchange fees, however this will be abolished by mid July 2017. Japan is the first country to take a huge step forward, Bitcoin will be a legal method of payment in Japan in two months. The bill with provisions for cryptocurrencies recently passed through public consultation and will be in force during April 2017. Capital gains resulting from trading activity in Bitcoin are subject to income tax – Click here to read more on taxation in Japan.
As Bitcoin gains more value, the regulation of Bitcoin business will become more wide spread globally. In November, the IRS presented Coinbase with a summons requiring the company to disclose client transactions between 2013 and 2015. Coinbase has been fighting back however, the IRS won’t give up anytime soon. “Coinbase, Armstrong writes, has “worked to comply with all IRS guidance in our space, beginning with the March 2014 guidance on virtual currency.” Why? Armstrong says that he believes that “Coinbase and the IRS fundamentally want the same thing: for all U.S. users of virtual currency to pay their taxes.” Read more here
Tax Day Is Coming! Be ready.
Don’t evade you Tax… remember what happened to Al Capone!
Why do Bitcoins have value and is it set? Why does Fiat currency have value? Is it because we say so?
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