Countries in which Bitcoin is legal

 


Australia


Initially, Australians were potentially subject to goods-and-services tax when they either purchased or spent a cryptocurrency. Often, consumers could effectively bear this tax twice: once when they purchase the cryptocurrency and once again when they’ve used it in exchange for goods and services subject to that tax.


Just recently, in a move aimed at paving the way for more potential fintech investments into the country, the Australian government has finally provided a legislative end to the double taxation of Bitcoin and other digital currencies.


Bulgaria


Bulgaria was the first European Union member state to officially recognize Bitcoin as a currency, instead of treating it as a gold-like commodity.


Canada


Bitcoin is currently classified as an intangible asset. It is expected to be regulated under Anti-Money Laundering and Counter-Terrorist Financing laws. This provision is yet to become active, but when it is, ‘dealers in digital currency’ will be regulated as Money Services Businesses.


China


In 2013, People’s Bank of China (PBOC) banned all financial institutions from handling Bitcoin-related transactions, prohibiting pricing in, buying and selling of Bitcoins. Trading Bitcoins by individuals is still legal in China.


The Chinese government has been cracking down on cryptocurrencies use in their country, urging multiple exchanges to stop withdrawals, without providing any lawful paperwork. In September 2017, all Chinese virtual currency exchanges were urged to stop trading by the end of the month in order to remain compliant with the regulations.


Additionally, Chinese regulators introduced bans on cryptocurrency exchanges and ICOs. However, while those bans were undoubtedly harsh and unprecedented, they weren’t able to completely stamp Bitcoin out of China. In their latest attempt to do so, Chinese regulators will begin adding both onshore and offshore platforms related to virtual currencies and ICOs to the Great Firewall.


Estonia


The Estonian Ministry of Finance has ruled that there are no legal obstacles to use Bitcoin and other similar cryptocurrencies as a payment method. Traders must identify the buyer when establishing a business relationship or if the buyer acquires more than €1,000 worth of the currency a month.


Finland


The Finnish Tax Administration decided to treat Bitcoin transactions as private contracts equivalent to contracts for difference for tax purposes. If you’re buying goods with Bitcoins or converting BTCs into flat currency, any increase in price will be taxable, while losses are not tax-deductible. Mined Bitcoins are considered earned income.


Finnish Central Board of Taxes has gone against the conventional EU approach and classified all services around Bitcoin and other similar digital currencies as financial services, making them VAT exempt.


France


In 2014, the French Ministry of the Economy and Finances has outlined regulations to be put in place for financial institutions and users of digital currencies. The regulations required Bitcoin distributors to limit the level of anonymity by identifying and verifying their users. The treatment of digital currencies is required to be clarified for tax purposes as well, with currencies becoming subject to capital tax gains. A threshold of €5,000 was proposed on the margin tax to allow the population to try, invest and develop business with Bitcoin before paying tax.


Germany


In Germany, Bitcoin is recognized as private money. This decision enables users of Bitcoin to continue using it without any interference from the government and gives the authorities an opportunity to tax the profits of companies using the digital currency.


Iceland


According to a 2014 statement from the Central Bank of Iceland, transactions with Bitcoins and other digital currencies are subject to restrictions.


In 2017, the Central Bank introduced a new set of rules, according to which wide and general exemptions were granted from the previously imposed restrictions.


Israel


As of 2017, the Israel Tax Authorities view Bitcoin as a taxable asset, instead of currency or a financial security. According to this policy, every time a Bitcoin is sold, the seller has to pay a capital gains tax of 25 percent. Miners and traders are treated as businesses, which makes them subject to corporate income tax and a 17 percent VAT.


Just recently, it was reported that Israel is to begin taxing Bitcoin and other cryptocurrencies as property. This means that it will be taxed by the capital gains tax, which in Israel stands at 25% for private investors, while a marginal rate for businesses stands at 47%. As cryptocurrencies are considered an “intangible asset”, private investors won’t have to pay VAT, while the businesses will still be subject to VAT.


Japan


Japan is one of the very few countries where Bitcoin is recognized as a legal form of payment. In 2017, the tax on Bitcoin trading was eliminated and Japanese financial authorities started issuing cryptocurrency exchange licenses.


Jordan


According to the Central Bank of Jordan’s current policy, banks, exchanges, financial companies and payment service companies are prohibited from dealing in Bitcoin and other digital currencies. Both the Central Bank and the government of Jordan issued warnings discouraging people from using Bitcoins, but small businesses and merchants still accept them.


Mexico


Mexican parliament is currently considering a legislation aimed at regulating the country’s rapidly-growing financial technology sector, which includes Bitcoin and other cryptocurrencies. The legislation proposes a clear set of rules for fintech companies, aimed at reducing costs and driving competition in the sector. It is also set to ensure financial stability and prevent money laundering and financing of extremists.


Slovenia


According to the Slovenian Ministry of Finance, Bitcoin can neither be considered a currency, not an asset. Bitcoin transactions are not subject to capital gains tax, but Bitcoin mining and businesses selling goods and services for the digital currency are taxed.


Sweden


When it comes to acceptance of Bitcoin and other digital currencies, the Swedish jurisdiction is one of the most favorable in the world. The Swedish Financial Supervisory Authority has publicly proclaimed digital currencies like Bitcoin a legitimate way of payment. Moreover, the Swedish tax authority has even decided to tax Bitcoin mining depending on how successful it is.


Certain businesses, which are mainly exchanges, are required to file an application for a license and comply with all the regulations applicable to more traditional financial service providers, such as Anti-Money Laundering and Know Your Customer policies.



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