Austria to introduce income tax on Bitcoin (BTC) earnings
The Austrian Ministry of Finance equated Bitcoin and other cryptocurrencies with stocks and bonds. Austrians will have to pay 27.5% of income from trading crypto assets to the treasury.
Brand new tax system
The Federal Ministry of Finance claims the new tax will make crypto and traditional assets trading more equal. “We are taking a step in the direction of equal treatment, to reduce mistrust and prejudice toward new technologies,” follows the latest statement.
The new tax is planned to be introduced in March 2022 and will be applied only at the time coins and tokens are sold. Any exchange of one crypto asset for another won’t be taxed. Moreover, investors can expect some compensation calculated against potential losses.
How the EU deals with crypto taxes
The Organisation for Economic Co-operation and Development (OECD) has called on the world’s financial regulators to create certain standards for the taxation of emerging technologies, including cryptocurrencies. In 2020, the OECD published an overview of crypto taxes in 50 jurisdictions.
Taxes regarding cryptocurrencies depend on the country. For instance, crypto assets in Switzerland are treated as cash and are subject to property tax. Tax rates aren’t clearly defined.
The French Council of State abolished tax instruction on cryptocurrencies and reviewed the whole payment procedure. Capital gains tax related to cryptocurrency is charged at a flat rate of 30%, including social insurance contributions.
Austria has become the first country in Europe to treat cryptocurrencies as stocks and bonds. However, the crypto market cap is approaching $3 trillion (~£2.22 trillion), prompting other countries to also consider the introduction of income taxes on digital assets earnings.
Back in 2020, the Austrian Financial Market Authority (FMA) registered 278 reports of potential financial crimes. Two-thirds were related to cryptocurrencies.
Cryptos are weaseling their way into the fully recognized assets ranks, still not without a fly in the ointment. Austria’s recent decision to treat cryptos as stocks will force citizens to pay 27.5% of income from trading. We’ll see if the move will bear any fruit to the cryptos position in the financial sector.
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