11–20 of 36 posts
how does some gov determine the bitcoin income? isn't the mining and trading anonymous?
Is there a one sentence TLDR in English to summarize?
The example 2 in section 2.1.2 is curious. It essentially says that the value of goods purchased with bitcoins is determined by the eur-btc exchange rate at the time of purchase. I find that idea problematic because there afaik is no official exchange rates for bitcoin.
how does some gov determine the bitcoin income? isn't the mining and trading anonymous?
but all transactions are public [1] Thus once you inform gov which are your bitcoin wallets, they can look through the block chain. Ironically, this means they will have much much more info on you than if they just had your bank account number. [1] https://en.bitcoin.it/wiki/Transactions
Is there a one sentence TLDR in English to summarize?
BTC is not currency or security. BTC is treated as any other asset outside currencies and securities. Person must pay taxes for capital gains but they can't do tax deductions from losses. Taxes hit every time BTC is used to buy something. Mined bitcoins are taxed as earned income.
The example 2 in section 2.1.2 is curious. It essentially says that the value of goods purchased with bitcoins is determined by the eur-btc exchange rate at the time of purchase. I find that idea problematic because there afaik is no official exchange rates for bitcoin.
It doesn't mean an offer to buy/sell at those exact rates (e.g., EUR/USD spot rates at every second will definitely be different from the 'official' accounting rates), but it's a guideline to evaluate value of things nominated in that currency.
Earlier quoted context omitted.
BTC is not currency or security. BTC is treated as any other asset outside currencies and securities. Person must pay taxes for capital gains but they can't do tax deductions from losses. Taxes hit every time BTC is used to buy something. Mined bitcoins are taxed as earned income.
Mined bitcoins come with plausible deniability. Connecting them to a specific person is impossible. So good luck with that, tax man.
Step 2: Buy stuff with bitcoins, possibly laundering them.
Step 3: Go to jail for intentional tax fraud. Good luck.
You need to spend those bitcoins to get some use of them - if you do it on a small scale, noone cares about losing 20 cents in tax; if you do it on a large scale, it becomes linked to you. For example - seller reports (for tax purposes) who/where they delivered goods; any bitcoin-money converter links your identity to this income; any bitcoin-vs-stuff barter can be a police sting operation, etc. Denying and laundering income is an old, traditional crime - and the same policing approaches that work with cash laundering will tend to work with bitcoin laundering as well.
Paying taxes costs some amount of money - but saying "good luck with that, tax man" can easily go over to crime/jail category; think twice if you want to go over to that road.
how does some gov determine the bitcoin income? isn't the mining and trading anonymous?
The example 2 in section 2.1.2 is curious. It essentially says that the value of goods purchased with bitcoins is determined by the eur-btc exchange rate at the time of purchase. I find that idea problematic because there afaik is no official exchange rates for bitcoin.
AFAIK there is no official exchange rate for EURUSD or any other currency pair.
I don't know if they quality as "official", but probably good enough for taxation purposes.