Countries across the globe have started accepting cryptocurrencies and putting them in mainstream uses as the number of crypto traders and investors are keep growing. However, how these digital assets are going to be taxed is still vague. Cryptocurrency taxation has become one of the main concerns among the growing number of users, traders, and investors. The VAT tax is among the many taxes that creates an extreme level of confusion among the traders and investors when filing the returns. VAT or value-added tax is one the tax that most countries levy on the trade of services and goods. The number of countries, including members of the EU, have exempted cryptocurrencies from various types of taxes to boost their mainstream application.
Recently, Georgia has joined the list of the nations that don’t ask the crypto holders to pay taxes on their trading. And it earned bitcoin-like digital currencies a status of real currency. Apart from Georgia, the jurisdictions of many other countries have also approved the proposal of exempting cryptocurrencies from tax. However, the comprehensive regulations are still not implemented by the government of any nation regarding the taxes on cryptocurrencies.
According to an order signed by Georgia’s finance minister Ivane Matchavariani no individuals or companies associated with trading cryptocurrencies will not have to pay VAT to the government in Tbilisi. the order is aiming to clarify the certain aspects of crypto taxation for crypto miners, traders, and investors and it will be effective by the end of June.
‘Residents of the South Caucasian republic exchanging coins to local or foreign fiat currency will not be obliged to pay the value-added tax,’ as Forbes Georgia reported. In addition to that, any resident of the country dealing with crypto transactions will not have to pay income tax either. When it comes to Miners, the companies will have to pay VAT unless they are not registered in Georgia. Georgia has also made significant process in offering cheap electrical energy generated by its many hydropower plants and become one of the favorite countries for crypto miners.
Not only Georgia but members of the EU have also been trying to regulate and figure out the taxation on cryptocurrencies. Bitcoin is treated differently in different EU countries. For instance, in Germany the purchase of cryptocurrencies is considered as an investment however the capital gain tax will only be levied if the holdings are sold in less than a year. In Switzerland, on another hand, crypto investors and traders will have to pay incomes & capital gain tax on their crypto holdings. UK teats Bitcoin-like cryptocurrency as foreign currency. Countries such as Estonia levy an only capital gain tax on crypto trading while Slovenia has exempted Bitcoin from capital gain tax.