Cryptocurrency taxation policies in EU member countries
Bearing in mind that Kriptomat’s mission is to provide as simple as possible access to cryptocurrencies for all citizens of the European Union, this article deals with the taxation policy on its territory, since this is a very important question for anyone who wants to enter the crypto market.
As in any part of the world, Europe has no harmonized tax policy in relation to digital currencies. However, cryptocurrencies attract a lot of attention from regulatory bodies. Each member state has enacted its own regulations, while certain countries follow the decision of the European Court of Justice. The great news is that the court has ruled out that the bitcoin represents a form of currency, and that transactions should be exempt from VAT (Value-Added-Tax). Now, let’s take a look at different policies in some of the individual member states since this is probably what our readers are interested in the most.
Germany
The German Ministry of Finance has aligned its decision with the European Court of Justice. VAT is charged neither on the exchange of fiat currency for bitcoin nor on mining. However, the tax is charged in case cryptocurrencies are used for purchasing goods and services. Exchange services are allowed to perform tax-free trading of digital currencies, but not individuals, who have to pay a tax on profits greater than €600 or if they hold it for less than one year.
Italy
The Italian Ministry of Economics is working on regulating the use of cryptocurrencies. Since the third quarter of 2017, there’s no taxation on cryptocurrencies.
Estonia
Although it is among the most progressive countries when it comes to crypto and blockchain in general, Estonia has introduced a capital gains tax and VAT for digital currencies. From the perspective of the Estonian government, digital currencies are not just a means of payment, but also an investment. This is somewhat logical because Estonia offers great incentives for starting crypto-related businesses.
The Netherlands
In the land of windmills and tulips, using bitcoin and other cryptos is considered as the exchange of goods, or something similar to bartering. Dutch laws are very liberal, in general, so why shouldn’t they be when it comes to this, too: crypto holdings are taxed according to users’ basic income tax rate.
Bulgaria
This Balkan country still hasn’t determined how cryptocurrency incomes and purchases will be taxed. However, the Bulgarian National Revenue Service has declared that a capital gains tax (10%) is applicable to generating profit from trading cryptocurrencies.
Slovenia
In one of Europe’s most crypto-friendly countries, individual investors who trade digital currencies are not subject to capital gain taxes, since that is not considered as their income. However, all individuals and businesses that generate profit in crypto are obliged to report their income for taxation.
Spain
Tax authorities in Spain are in the process of collecting information about all parties involved in digital currency transactions. Nevertheless, tax relief for crypto entrepreneurs is being considered. The Spanish government has submitted a law proposal to the parliament that will offer incentives for small businesses in the crypto sector.
Belgium
Although bitcoin and other digital currencies still do not have a legal framework in this country, the Belgian authorities are demanding from their citizens who traded on foreign crypto exchanges offices to pay a tax of 33% for their profits.
Denmark
This Scandinavian nation is another example of a crypto-friendly country. In accordance with Denmark’s goal to create the first completely cashless economy in the world, the Danish Financial Services Authority doesn’t require individual cryptocurrency traders to pay taxes. That will not be the case with crypto-related businesses, though, because it’s been announced that they will be taxed like any other form of entrepreneurship.
France
The French Council of State recently announced that the tax rate for retail crypto traders will be significantly reduced. The profits earned from digital currency trading are considered as “industrial and commercial gains”, but this only applies to those making regular earnings from bitcoin trading. Gains generated from occasional transactions are regarded as noncommercial profits.
We hope that this article has provided you with useful information that will help you while deciding on whether or not to invest in digital currencies. And don’t forget, Kriptomat is launching soon — the service will provide the most user-friendly way to buy and store digital currencies for all citizens of the European Union. You’ll get localized support available in 28 European languages, in line with the GDPR that will soon come into force. Until then, follow us on your favorite social network:
