There is an ongoing debate whether it is good or even possible to introduce taxation to cryptocurrency users being that this form of business transaction has certain characteristics one of which is its decentralized, unregulated and anonymous nature. But is it the end of its unregulated, anonymous and decentralized nature?
Recently, Samantha Chang posted an article in investopedia titled "IRS Wants to Tax Your Bitcoin Gains: Orders Coinbase to Hand Over User Data"
If you made money from bitcoin's skyrocketing prices, you may have to share your profits with Uncle Sam soon. The IRS ordered top cryptocurrency exchange Coinbase to turn over data on 13,000 customers.
Coinbase – the world's most popular bitcoin exchange – alerted users in a sobering note on its website: "On February 23rd, 2018, Coinbase notified a group of approximately 13,000 customers concerning a summons from the IRS regarding their Coinbase accounts."
Pursuant to a November 2017 court order obtained by the IRS, Coinbase will turn over taxpayer IDs, names, birth dates, addresses, and transaction records for customers who conducted transactions worth more than $20,000 on its platform between 2013 and 2015. (See more: Coinbase Loses Court Case Vs IRS: Must Hand Over User Info.)
More so
The latest IRS notice comes three weeks after Coinbase issued 1099-K tax forms, reminding customers to pay taxes on their crypto gains.
Not surprisingly, many Coinbase customers are not pleased. Some feel that the decentralized and unregulated nature of cryptocurrencies make the investments immune to taxation, but alas, this apparently is not the case.
Many users were also furious that Coinbase had not given them more-advanced notice that they would have to file taxes on their crypto investment gains.
See IRS notification plus other details from coinbase via source here
However, In a different approach in far away Europe, Nikhilesh De article in Coindesk titled "Germany Won't Tax You for Buying Coffee With Bitcoin" portrays a different approach...;
Germany won't tax bitcoin users for using the cryptocurrency as a means of payment, the Ministry of Finance has said.
The guidance, published Tuesday 27th Feb 2018, sets Germany apart from the U.S., where the Internal Revenue Service treats bitcoin as property for tax purposes - which means that if an American buys a cup of coffee with bitcoin, it's technically considered a sale of property and potentially subject to capital gains tax.
Instead, Germany will regard bitcoin as the equivalent to legal tender for tax purposes when used as a means of payment, according to a new document.
The Bundesministerium der Finanzen based its guidance on a 2015 European Union Court of Justice ruling on value added taxes (VAT).
The court ruling creates a precedent for European Union nations to tax bitcoin while providing exemptions for certain types of transactions.
Notably, the new German document justified its tax decisions by regarding cryptocurrencies a legal method for payment, stating:
"Virtual currencies (cryptocurrencies, e.g., Bitcoin) become the equivalent to legal means of payment, insofar as these so-called virtual currencies of those involved in the transaction as an alternative contractual and immediate means of payment have been accepted."
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For tax purposes, this means that converting bitcoin into a fiat currency or vice versa is "a taxable miscellaneous benefit." When a buyer of goods pays with bitcoin, an article of the EU's VAT Directive will be applied to the price of bitcoin at the time of the transaction, as documented by the seller, according to the document.
However, as per the EU ruling, the actual act of converting a cryptocurrency to fiat or vice versa is classified as a "supply of services," and therefore a party acting as an intermediary for the exchange will not be taxed.
Payment fees sent to digital wallet providers or other services can likewise also be taxed, according to the document.
Other aspects of the cryptocurrency ecosystem will not be taxed. Miners who receive block rewards will not be taxed, as their services are considered to be voluntary, according to the document.
Similarly, exchange operators that buy or sell bitcoin in their own name as an intermediary will receive a tax exemption, though an exchange operating as a technical marketplace will not receive any such exemption.
From the above, it is clear we are seeing two different views and approaches by two leading world economic powers, one in North America and another in Europe. So, my question is, what is your own views as regards cryptocurrency taxation which includes your steem and sbd earning, will you submit your earnings willingly for taxation or will you resist this by moving your business to where taxation may not exists for the mean time.
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In my opinion I would even like government to tax cryptocurrency but they should stop attacking the market so that price can stabilize. So long as the tax will be on the gain made.thanks for sharing. Upped
I understand. Welcome