Most of the governmental people criticize the cryptocurrencies for replicating the fiat. For beginning, the government was warning the people about the crypto market. Now, you can pay, save or invest with Bitcoin. Slowly, the Government accepted this idea of cryptocurrencies and their benefits.
Generally, bankers think that the digital currencies don’t have the same features as fiat money. But, many times, you can pay also with cryptocurrencies, you can exchange or they are a store of value. Taxes are the main budget income for most countries with open market economies. This year’s tax campaign has highlighted the cryptocurrencies and their profit from the last year.
But how the Government can tax something they pretend does not exist, or exists without permission?
Authorities have little time until the Tax Day, that comes generally in April in many countries. That’s why we see some unexpected taxes regarding cryptocurrencies.
Failing to Be Fiat, Proving to be Money
“There is no plan to increase the use of private cryptocurrencies” – that’s what Latvia told Coppay, when the company inquired about crypto payments last year. “We consider them unable to fulfill money functions and a high risk means of payment,” the country’s central bank said in November. Latvijas Banka also “invited financial institutions and citizens to avoid engagement in crypto activities”. In April of this year, however, authorities in Riga decided that cryptocurrencies are “taxable”. They plan to collect 20% on gains from crypto deals now when the Finance Ministry recognizes them as a “medium of exchange”.
Authorities from Germany decided not to tax Bitcoin when exchanged with euros. Gains from long-term crypto holdings won’t be taxed. Isn’t that an acknowledgment that Bitcoin can store value? Crypto payments are doing well in the Federal Republik. Last summer the country’s largest online food delivery portal started accepting Bitcoin. In March, Germany’s Tourism Board announced it is also taking cryptos for its services.
A high-ranking Swiss National Bank official recently said: “Private-sector digital currencies are better and less risky than any version that might be offered by a central bank”.
Russian authorities are now working to comprehensively regulate independent cryptocurrencies, with 27 digital economy bills expected by the end of the year. One of the draft laws aims to legalize the use of “digital money” for payments.
Death, Taxes… Cryptos
No central bank or government is behind the cryptocurrencies. However, an interesting development is worth noting. It is taking place in the land where “nothing can be certain, except death and taxes”.
Until now, there wasn’t any government accepting the payment of taxes in foreign currencies. Bitcoin is not exactly a foreign one, but it’s still a different currency. It may soon be recognized as a legitimate payment option by tax authorities in at least two U.S. jurisdictions. Yes, Arizona and Georgia are working on that.