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Norway Rejects Bitcoin As Currency; Taxes As Asset, Instead
An anonymous reader writes "Norway is the latest country to consider the legal implications of cryptocurrencies like Bitcoin. Norway's director general of taxation has come out and said '[Bitcoin] doesn't fall under the usual definition of money,' which means that it will be considered as assets and charged under capital gains laws. This sentiment was echoed last week by the European banking authority as well, where citizens were warned of using the cyrptocurrency."
If someone makes a bunch of profit on Bitcoins, how is Norway going to know if the person doesn't self report?
They won't, but if they later find out they'll nail you to the wall.
As an immediate concern, if you're making lots of bitcoins then there's not really that much to spend them on directly and so you'll want to convert them into national currency. At this point the tax man may notice and start asking questions.
When the time comes that you can easily buy a Ferrari for bitcoins they will also have a chance of noticing, and will ask you how you could afford that Ferrari.
If you go to any length to avoid the tax man noticing any of those two scenarios, you're probably guilty of some shade of money laundering which will get you nailed that much harder if they do discover you.
Also, how are capital gains taxed there? In the US, capital gains are taxed at a lower rate than most normal income, so if the choice is between normal income and capital gains, I'll take the latter every time (since I'm in the US).
I think it's much the same thing here. Capital gains is 28% or thereabouts, whereas income tax is progressive from 28% up to 50%, -ish. There may be important nuances I am omitting, being a wage slave rather than a tycoon.
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For example, tax fraud is assumed to be low in Switzerland compared to its neighbor states.
Tax fraud committed by Swiss citizens may be low . . . but tax fraud committed by citizens of its neighbor states in Switzerland is very high.
Schroedinger's Brexit: The UK is both in and out of the EU at the same time!
To follow up, and make the point even more explicitly, the same logic holds for foreign currency. if I hold Euros for more than a year and the Euro gets strong, I have to pay cap gains on that profit.
In case of bitcoins, does that mean that you have to track them individually to keep yourself informed for how long you had each one of them?
Ezekiel 23:20
I don't know about Norway's rules but in the UK, yes.
In the UK capital gains are calculated on a last in first out basis where the asset is fungible - shares, gold things like that.
However, I'm not sure exactly how it would work for an asset like bitcoin that you had mined. In theory the electricity costs should be offsetable when you cash in. When you're just buying and selling it would work like any other share or gold.
Anyone doing serious bitcoin mining now (where electricity costs are going to be a substantial fraction of any notional gain) would be strongly advised to get professional advice - it might make sense to setup a company for the mining.
God said, "div D = rho, div B = 0, curl E = -@B/@t, curl H = J + @D/@t," and there was light.