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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."
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).
So if I am mining bit coin, and it costs me more in electricity than I am getting in return from the bit coin I make, does that mean I get to write off my electric bill?
Or lets say I am making money, is my electric bill the cost basis for the bit coin? But I also needed a computer to mine, can I factor that into the basis?
I don't think they realize there are other legal ways to get bit coin besides buying it. Or perhaps then they just figure the basis is $0 and tax you 100% on the actual value.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
It's a common error in European fiscal policy that assets can be taxed. In reality only financial savings and income are taxed, and the final percentage applied is variously disguised as "capital gains tax", or other quibbles.
to clarify further: for an asset to be taxed, in my small world of financial analyst, it must either produce a taxable financial income, which is then taxed, or it must be an acceptable mean of exchange with no or negligible frictional costs. Houses are only an indexation parameter in taxes, since no tax authority whatsoever accepts a lien on 10 square feet as payment: they want hard cash. If the owner-occupier of a house had the opportunity or willingness to put the house in a separate company, it would be clearer still: the company would never make one cent, and it would be taxed on a fictional rent, which by itself is part of the owner's income. Therefore, the owner's income is taxed twice.
So, on bitcoins, the problem is magnified: if it is a mean of exchange, like banknotes, by itself it should not be taxed. the relevant transactions could be taxable, but not the means of exchange: after all, if I buy a car by bank draft or money transfer I do not pay either X or Y depending on how I paid. the effort of the authorities is to preserve the monopoly on fiat currency, that's it.
"If a boss demands loyalty, give him integrity. But if he demands integrity, give him loyalty." (John Boyd, 1927-1997)
They very clearly state that bitcoins have not been banned as a currency, only that it's status still has to be decided by Finanstilsynet (almost like SEC, but with a broader mandate).
The Norwegian IRS does not have the authority to claim it is a currency or not, only Finanstilsynet. All they do is tax what they see as an asset until Finanstilsynet gives other directions.
Nettvalutaen Bitcoins beskattes /. heading.
Translated
Quite different heading than the
Translated it just means "Bitcoins are to be taxed".
No but they are treated as such. Just ask every CEO who is paid with stock.
This is a sig. This is only a sig. Had this been an actual sig you would have been informed where to tune for more sigs.
If it is not an asset and I were to sell some bitcoin, would I need to charge VAT (I am VAT registered as I am self employed) ? VAT is 20% in the UK at the moment, so it is a large cut. The person buying the bitcoin could reclaim VAT but only if they are VAT registered ... it is getting complicated.
It's an infographic. Were you actually expecting it to be terse, accessible, or relevant?
Seriously, I'd love to chat with any makers and fans of those things, and by "chat with" I mean "throttle".
You can hold down the "B" button for continuous firing.
Sounds like a currency to me.
It's far too unstable to be a real currency. It's more like, eg. gold - something with limited supply that has a value to other people.
Except that right now it's far too unstable to even be compared to gold. It's more like a stock in a smallish company - the value goes up and down wildly every day.
No sig today...
I've followed the alternative currency movement off and on for some time, and it's interesting to see how governments take issue with them. What is more interesting here is that, while Norway obviously doesn't necessarily recognize a legal bucket a bitcoin can easily fit into, it's nevertheless viewing them as having some worth or profitability, and not participating in the normal flow of currency exchanges. In that sense, at least bitcoins seem to be taking on an intrinsic worth that isn't necessarily a characteristic of fiat currencies. While I don't have experience using bitcoins, this is definitely an interesting development.
it will be interesting to see how much pressure inevitabley gets placed on them by citizens using bitcoin to purchase.
My ism, it's full of beliefs.
It's pretty much useless as a currency though. It's so volatile that by the time a Bitcoin transaction has been confirmed, the value of the bitcoin concerned may have moved by 30%. If it moves the wrong way the merchant may make a loss on the sale.
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At this point it's more like a kind of bullion than a currency, per se. You can store and transfer raw value in BTC without much trouble, but other than a few notable-but-narrow exceptions, you can't walk into a store and buy something with it.
Since it doesn't act much like a currency yet, and probably isn't going to within the next five years or so, it doesn't make much sense to treat it as a currency yet. But you have to treat it as something, so for now, treating it as an asset makes the most sense. When and if the situation changes, the laws can also be changed.
How can you be found guilty of something that isn't a crime to begin with?
So you're saying they have to get a conviction before they can even begin investigating? How the fuck is that supposed to work?
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
I disagree. It's none of the governments business. If I want to voluntarily trade with another person using bitcoins (or chickens, or shells) then no third party has a right to get involved. This applies double-so to the government.