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Author Topic: Cryptos and taxes  (Read 2488 times)

DoM P

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Cryptos and taxes
« on: June 18, 2014, 10:31:17 am »

In the process of creating a company working with cryptos, the  question arose as to how to handle the tax subject.

- What happens with gains made in the crypto world? If John Doe invests $100,000 in cryptos, turns it into $200,000, what happens? Should he get taxed at the end of the year based on the fiat value of his crypto positions? Or does John wait to cash out to declare profit? What if he cashes out only $100,000 and keeps the rest in cryptos, does he declare profits of a 100% of $50,000 or nothing at all?

- Company wise, if enterprise X employs John Doe and pays him with cryptos, how is that handled? Would John Doe have to reveal his real identity? With the possibility of creating many accounts, how would a tax auditor react? What if company A pays with cryptos company B to have a job done, that will allow profits for A? Can the payment to B be deduced from A's profits, knowing this is all crypted and hard to follow?

- What about VAT ?

- What is the impact of the fact that this is happening worlwide, outside of any jurisdiction?

- What regulations a company located in country A and working with other companies in B, C, and D, for customers in E, F, and G should follow ?
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v39453

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Re: Cryptos and taxes
« Reply #1 on: June 18, 2014, 02:00:03 pm »

http://bitlegal.io/ has some information.

The massive rise in Bitcoin during the last year forced most countries to clarify their policies towards cryptos. Some countries have special rules for cryptos. Capital gains are tax free in Denmark and Germany (if held for more than a year).





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DoM P

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Re: Cryptos and taxes
« Reply #2 on: June 18, 2014, 02:04:23 pm »

http://bitlegal.io/ has some information.

The massive rise in Bitcoin during the last year forced most countries to clarify their policies towards cryptos. Some countries have special rules for cryptos. Capital gains are tax free in Denmark and Germany (if held for more than a year).
Thanks. That's a start. A small step in the good direction.

I have a feeling this is not going to be an easy matter...
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ChuckOne

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Re: Cryptos and taxes
« Reply #3 on: June 18, 2014, 04:14:29 pm »

Yeah. Especially because we have a responsibility for society when being wealthy.
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TimmyD

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Re: Cryptos and taxes
« Reply #4 on: June 18, 2014, 04:20:06 pm »

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TimmyD

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Re: Cryptos and taxes
« Reply #5 on: June 18, 2014, 04:20:53 pm »

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Re: Cryptos and taxes
« Reply #6 on: June 18, 2014, 04:57:06 pm »

http://bitlegal.io/ has some information.

The massive rise in Bitcoin during the last year forced most countries to clarify their policies towards cryptos. Some countries have special rules for cryptos. Capital gains are tax free in Denmark and Germany (if held for more than a year).

Need to move to Denmark or Germany.
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DoM P

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Re: Cryptos and taxes
« Reply #7 on: June 18, 2014, 05:31:28 pm »

http://bitlegal.io/ has some information.

The massive rise in Bitcoin during the last year forced most countries to clarify their policies towards cryptos. Some countries have special rules for cryptos. Capital gains are tax free in Denmark and Germany (if held for more than a year).

Need to move to Denmark or Germany.

Are the positions of those countries definitive ?
I'm in Switzerland, and usually, free market tends to win around here.

And I like the idea of a .ch domain extension...
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rudeboi

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Re: Cryptos and taxes
« Reply #8 on: June 18, 2014, 09:15:52 pm »

Many countries in the world have started to define tax within Crypto, with most deciding that is should be taxed as a gain (known as capital gains tax in the UK), once governments have done extensive research they will most likely bring in a special cyptotax that works in a similar way to shares, but I should imagine this will take most countries years to work out and may be too complex to ever bring into effect.

Simple rules for gains are for every sale:
'Nxt sale value' less 'Nxt brought value' = Gain

You then take off yearly personal allowance (Annual Exemption) minus any other deductions you may have up your sleeve (a bit more advanced, and probably don't have any) this is your taxable gain. Multiply this by the appropriate tax % rate and thats the tax you have to pay for the year.

I'm a English Accountant by trade, so this perspective is from UK tax law, but most gain taxation works in a similar manner round the world just with different allowances/deductions.

DoM P in your investment paper that you are working on you should state that investment in Nxt is tax efficient, as tax payble in in gains is generally less than other types of tax eg: income tax, meaning that the investor pays less tax than he would if income was brought in different ways. And as mentioned above in some countries gains are not taxable as long as they are held for a a certain period, meaning tax free cash!

An example of UK tax differences (low earner/high earner)
Gains Tax: 18%/28%
Income Tax: 20%/40%-50%

Also even if their other investment comes under gains already eg: shares, there are often other taxes that get you, e.g. in UK you have to also pay stamp duty as well on share gains.
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DoM P

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Re: Cryptos and taxes
« Reply #9 on: June 18, 2014, 09:20:56 pm »

I see, but wouldn't a tax auditor be puzzled at this?

And what about these questions ?

- Company wise, if enterprise X employs John Doe and pays him with cryptos, how is that handled? Would John Doe have to reveal his real identity? With the possibility of creating many accounts, how would a tax auditor react? What if company A pays with cryptos company B to have a job done, that will allow profits for A? Can the payment to B be deduced from A's profits, knowing this is all crypted and hard to follow?

- What is the impact of the fact that this is happening worlwide, outside of any jurisdiction?

- What regulations a company located in country A and working with other companies in B, C, and D, for customers in E, F, and G should follow ?
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FearTheReaper

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Re: Cryptos and taxes
« Reply #10 on: June 18, 2014, 09:25:23 pm »

really depends on the country.. US for example, you will need to declare capital gains tax on property sold. Gain or loss predicated on cost basis v. realized gains/loss. You don't need to declare (tax wise) anything until you sell.

However, if you have more that $10k USD (based on market value) at any point in 2013 in a foreign exchange or stock, you need to file a FBAR by June 30th, 2014. (This is non-tax related and the alot of tax-attorneys have varying opinions due to vagueness in the law)
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FearTheReaper

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Re: Cryptos and taxes
« Reply #11 on: June 18, 2014, 09:33:08 pm »

I see, but wouldn't a tax auditor be puzzled at this?

And what about these questions ?

- Company wise, if enterprise X employs John Doe and pays him with cryptos, how is that handled? Would John Doe have to reveal his real identity? With the possibility of creating many accounts, how would a tax auditor react? What if company A pays with cryptos company B to have a job done, that will allow profits for A? Can the payment to B be deduced from A's profits, knowing this is all crypted and hard to follow?

- What is the impact of the fact that this is happening worlwide, outside of any jurisdiction?

- What regulations a company located in country A and working with other companies in B, C, and D, for customers in E, F, and G should follow ?

- The valuation of the wages payable in cryto would depend on the country/state of incorporation. In fact, if the employee is in a different country, his accounting of the wages could be completely different. He may or may not have to declare anything, yet. Company A paying company B, it is the same method I believe.

- This would be a true free market. It would be huge, the social implications could be terrible without regulation.

- Again it depends on the country of incorporation. However, if Company A operates a location outside of its incorporation, it will most likely also have to follow the financial laws in which it operates.
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DoM P

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Re: Cryptos and taxes
« Reply #12 on: June 18, 2014, 09:37:14 pm »

I see, but wouldn't a tax auditor be puzzled at this?

And what about these questions ?

- Company wise, if enterprise X employs John Doe and pays him with cryptos, how is that handled? Would John Doe have to reveal his real identity? With the possibility of creating many accounts, how would a tax auditor react? What if company A pays with cryptos company B to have a job done, that will allow profits for A? Can the payment to B be deduced from A's profits, knowing this is all crypted and hard to follow?

- What is the impact of the fact that this is happening worlwide, outside of any jurisdiction?

- What regulations a company located in country A and working with other companies in B, C, and D, for customers in E, F, and G should follow ?

- The valuation of the wages payable in cryto would depend on the country/state of incorporation. In fact, if the employee is in a different country, his accounting of the wages could be completely different. He may or may not have to declare anything, yet. Company A paying company B, it is the same method I believe.

- This would be a true free market. It would be huge, the social implications could be terrible without regulation.

- Again it depends on the country of incorporation. However, if Company A operates a location outside of its incorporation, it will most likely also have to follow the financial laws in which it operates.

I think I'm gonna get myself a tax advisor... This seems too much of an uncharted territory...
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FearTheReaper

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Re: Cryptos and taxes
« Reply #13 on: June 18, 2014, 10:29:49 pm »

I see, but wouldn't a tax auditor be puzzled at this?

And what about these questions ?

- Company wise, if enterprise X employs John Doe and pays him with cryptos, how is that handled? Would John Doe have to reveal his real identity? With the possibility of creating many accounts, how would a tax auditor react? What if company A pays with cryptos company B to have a job done, that will allow profits for A? Can the payment to B be deduced from A's profits, knowing this is all crypted and hard to follow?

- What is the impact of the fact that this is happening worlwide, outside of any jurisdiction?

- What regulations a company located in country A and working with other companies in B, C, and D, for customers in E, F, and G should follow ?

- The valuation of the wages payable in cryto would depend on the country/state of incorporation. In fact, if the employee is in a different country, his accounting of the wages could be completely different. He may or may not have to declare anything, yet. Company A paying company B, it is the same method I believe.

- This would be a true free market. It would be huge, the social implications could be terrible without regulation.

- Again it depends on the country of incorporation. However, if Company A operates a location outside of its incorporation, it will most likely also have to follow the financial laws in which it operates.

I think I'm gonna get myself a tax advisor... This seems too much of an uncharted territory...

haha, a very good idea.. I would get more than one opinion, and save the correspondence. If anything happened, it would hopefully prove you weren't negligent. Negligence fines can be astronomical.

Are you heading up the crypto/Isle of Man stuff?
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DoM P

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Re: Cryptos and taxes
« Reply #14 on: June 18, 2014, 10:35:13 pm »

I see, but wouldn't a tax auditor be puzzled at this?

And what about these questions ?

- Company wise, if enterprise X employs John Doe and pays him with cryptos, how is that handled? Would John Doe have to reveal his real identity? With the possibility of creating many accounts, how would a tax auditor react? What if company A pays with cryptos company B to have a job done, that will allow profits for A? Can the payment to B be deduced from A's profits, knowing this is all crypted and hard to follow?

- What is the impact of the fact that this is happening worlwide, outside of any jurisdiction?

- What regulations a company located in country A and working with other companies in B, C, and D, for customers in E, F, and G should follow ?

- The valuation of the wages payable in cryto would depend on the country/state of incorporation. In fact, if the employee is in a different country, his accounting of the wages could be completely different. He may or may not have to declare anything, yet. Company A paying company B, it is the same method I believe.

- This would be a true free market. It would be huge, the social implications could be terrible without regulation.

- Again it depends on the country of incorporation. However, if Company A operates a location outside of its incorporation, it will most likely also have to follow the financial laws in which it operates.

I think I'm gonna get myself a tax advisor... This seems too much of an uncharted territory...

haha, a very good idea.. I would get more than one opinion, and save the correspondence. If anything happened, it would hopefully prove you weren't negligent. Negligence fines can be astronomical.

Are you heading up the crypto/Isle of Man stuff?

I was planning in registering in Switzerland. But I am going to read the whole IOM thread to see if that would be better.
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The-Lawyer-of-NXT

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Re: Cryptos and taxes
« Reply #15 on: June 18, 2014, 10:39:36 pm »

Each country has its own regulation and taxation.

We will be talking about these questions in NXT LEGAL, but we only have people from SPAIN, PORTUGAL, USA and ( UK, France and Switzerland soon )

If anyone wants to help, please email me. We will start next week.

Thanks


http://nxtlegal.org/




DoM P

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Re: Cryptos and taxes
« Reply #16 on: June 18, 2014, 10:43:53 pm »

Each country has its own regulation and taxation.

We will be talking about these questions in NXT LEGAL, but we only have people from SPAIN, PORTUGAL, USA and ( UK, France and Switzerland soon )

If anyone wants to help, please email me. We will start next week.

Thanks


http://nxtlegal.org/

Thanks, I'll follow that site.

If I find myself a financial advisor, do you want me to try to hire him so he can work we you?
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The-Lawyer-of-NXT

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Re: Cryptos and taxes
« Reply #17 on: June 18, 2014, 11:24:59 pm »

Each country has its own regulation and taxation.

We will be talking about these questions in NXT LEGAL, but we only have people from SPAIN, PORTUGAL, USA and ( UK, France and Switzerland soon )

If anyone wants to help, please email me. We will start next week.

Thanks


http://nxtlegal.org/

Thanks, I'll follow that site.

If I find myself a financial advisor, do you want me to try to hire him so he can work we you?

I would wait because soon we will make this for free. ( or at least we will try )

SPAM: and a video of the PAYEXPO https://www.youtube.com/watch?v=ceToZhGOyG8&feature=youtu.be   ;D ;D
 

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