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Bitcoin Government The Almighty Buck

Norway Rejects Bitcoin As Currency; Taxes As Asset, Instead 245

Posted by timothy
from the money-need-not-derive-from-the-state dept.
An anonymous reader writes "Norway is the latest country to consider the legal implications of cryptocurrencies like Bitcoin. Norway's director general of taxation has come out and said '[Bitcoin] doesn't fall under the usual definition of money,' which means that it will be considered as assets and charged under capital gains laws. This sentiment was echoed last week by the European banking authority as well, where citizens were warned of using the cyrptocurrency."
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Norway Rejects Bitcoin As Currency; Taxes As Asset, Instead

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  • by bentcd (690786) <> on Monday December 16, 2013 @06:48AM (#45702133) Homepage

    If someone makes a bunch of profit on Bitcoins, how is Norway going to know if the person doesn't self report?

    They won't, but if they later find out they'll nail you to the wall.

    As an immediate concern, if you're making lots of bitcoins then there's not really that much to spend them on directly and so you'll want to convert them into national currency. At this point the tax man may notice and start asking questions.

    When the time comes that you can easily buy a Ferrari for bitcoins they will also have a chance of noticing, and will ask you how you could afford that Ferrari.

    If you go to any length to avoid the tax man noticing any of those two scenarios, you're probably guilty of some shade of money laundering which will get you nailed that much harder if they do discover you.

    Also, how are capital gains taxed there? In the US, capital gains are taxed at a lower rate than most normal income, so if the choice is between normal income and capital gains, I'll take the latter every time (since I'm in the US).

    I think it's much the same thing here. Capital gains is 28% or thereabouts, whereas income tax is progressive from 28% up to 50%, -ish. There may be important nuances I am omitting, being a wage slave rather than a tycoon.

  • by PolygamousRanchKid (1290638) on Monday December 16, 2013 @07:01AM (#45702189)

    For example, tax fraud is assumed to be low in Switzerland compared to its neighbor states.

    Tax fraud committed by Swiss citizens may be low . . . but tax fraud committed by citizens of its neighbor states in Switzerland is very high.

  • by alexander_686 (957440) on Monday December 16, 2013 @08:05AM (#45702439)

    To follow up, and make the point even more explicitly, the same logic holds for foreign currency. if I hold Euros for more than a year and the Euro gets strong, I have to pay cap gains on that profit.

  • by bentcd (690786) <> on Monday December 16, 2013 @08:15AM (#45702457) Homepage

    How or why would they ever know I bought a Ferrari? Are such purchases reportable in Norway? (they aren't in the US)

    It would need to be reported one way or the other. The easiest way to try to get around it is possibly not to register it but then you won't have a number plate (unless you fake one) and so couldn't use it on public roads. Maybe you could drive it on foreign plates and hope no one notices/cares that you've been doing so for far too long. You'd still be required to list it as wealth but if you choose not to there may not be any obvious ways for the tax man to find out on his own.

    What will happen from time to time though is that someone you pissed off at some point reports you and then you may be in trouble again.

    You're right, if they do catch you cheating, the penalties are harsh... the question to ask is, what are the odds of being caught?

    If you want to drive the car on public roads it's probably very difficult to avoid registering it. Cheating one's way around this is probably possible but if you ever have an accident or otherwise end up in the spotlight it's game over.

  • by K. S. Kyosuke (729550) on Monday December 16, 2013 @08:36AM (#45702551)
    In case of bitcoins, does that mean that you have to track them individually to keep yourself informed for how long you had each one of them?
  • by locofungus (179280) on Monday December 16, 2013 @09:11AM (#45702685)

    I don't know about Norway's rules but in the UK, yes.

    In the UK capital gains are calculated on a last in first out basis where the asset is fungible - shares, gold things like that.

    However, I'm not sure exactly how it would work for an asset like bitcoin that you had mined. In theory the electricity costs should be offsetable when you cash in. When you're just buying and selling it would work like any other share or gold.

    Anyone doing serious bitcoin mining now (where electricity costs are going to be a substantial fraction of any notional gain) would be strongly advised to get professional advice - it might make sense to setup a company for the mining.

What is wanted is not the will to believe, but the will to find out, which is the exact opposite. -- Bertrand Russell, "Skeptical Essays", 1928