Bitcoin Taxation Explained, Expert Accounting Tips
And yes, soon 10 years for Bitcoin and finally very little knowledge on the treatment of Bitcoin taxation . So let’s make a point together on the tax aspect of this cryptocurrency.
Bitcoin is an electronic money
As a reminder, Bitcoin is a functioning currency with no central authority unlike currencies depending on countries like the Euro or the Dollar. However, it is a means of transaction payment used in most countries. Bitcoin is sometimes illegal in other countries like Russia.
The operation of Bitcoin
Bitcoin is a virtual currency, so no need to buy a leather wallet to store it. Indeed, Bitcoin is stored as data on a phone, a computer or some electronic cards . Be careful not to lose your electronic support because you can say goodbye to your electronic savings at the same time.
Security is based on an algorithm programmed in 2009 by a certain Satoshi Nakamoto. The technology would be tamper-proof because it is shared among all users and permanently traces all flows.
How much is a Bitcoin worth?
A Bitcoin has its own value that fluctuates according to speculation . As such, the price of Bitcoin is very volatile.
How to buy Bitcoin
There are 2 ways to buy Bitcoin. Either buy it on the internet or make it yourself! And yes, there is a way that consumes time and energy; but which allows the manufacture of Bitcoin: mining.
Taxation of Bitcoin
The tax administration quickly understood the challenges of Bitcoin taxation and the probability of personal enrichment based on the speculative. The Bofip (the bible of the tax administration) considered Bitcoin as a virtual unit of account that can be valued and used as a speculative tool . Clearly, making money with Bitcoin is taxable.
You earn a bit of money with Bitcoin as a particular
Occasional gains from the sale of Bitcoin units are subject to income tax in the Non-Profit ( NBC ) category. In this case, it is necessary to complete a specific declaration.
You earn money regularly with Bitcoin as a private individual
If the activity is carried out as usual, it is part of the industrial and commercial profits tax system (BIC) . For information, it is primarily a matter of appreciation to determine whether the taxpayer exercises occasionally or regularly . But, in case of control, it will be judged from the intention of the taxpayer. Thus, if it has organized a large-scale “mining” activity by acquiring computer equipment in large quantities, it can not pretend not to exercise it in the usual way.
You earn money with Bitcoin with your company or company
Some leaders (and they are more numerous) try the cryptocurrency. Naturally, price increases become fiscally taxable as the main activity of your company. However, we will see the different accounting treatment during the Bitcoin resale transaction or when it is valued at the end of the balance sheet each year.
VAT on Bitcoin?
After much debate, the European Court ruled on the VAT system applicable to exchanges between euros and Bitcoins. Thus, Bitcoin is only an instrument of exchange , it is not considered a good subject to VAT.
To conclude, do not forget Bitcoin accounting in your business books .