The U.S. Internal Revenue Service (“IRS”) released Revenue Ruling 2019-24 on October 9, 2019 providing guidance on the U.S. income tax treatment of hard forks and airdrops of cryptocurrency. Revenue Rulings are an official interpretation of the U.S. tax laws by the IRS and intended to guide taxpayers in addressing their income reporting and tax obligations. This Revenue Ruling supplements the first and only cryptocurrency-related guidance issued by the IRS in 2014. The IRS described…
On Jan. 14, 2019, Danish tax agency Skattestryrelsen received authorization from the nation’s tax council to collect two years of cryptocurrency trading information from three Danish crypto exchanges to ensure that its citizens have paid correct taxes. The three exchanges must now provide the tax agency with information on all purchases and sales of cryptocurrencies – including Bitcoin – made by their customers during the period from Jan. 1, 2016 through Dec. 31, 2018. Customer…
This week HM Revenue & Customs (“HMRC”), the UK’s tax authority, set out its view on how individuals should be taxed when handling cryptoassets which can be used as a method of payment, such as Bitcoin. There are no significant surprises in HMRC’s guidance, which relies on existing principles to determine whether income tax or capital gains tax applies. However, when dealing with cryptoassets, individuals should be aware that they may be subject to additional record keeping obligations and may be required to submit a self assessment tax return in some cases.
Lithuania becomes the latest jurisdiction to release guidance in relation to ICOs. On 8 June 2018, the Lithuanian Government released new Guidelines to deal with what it referred to as an “explosion of ICOs” in the country. Lithuania heralds itself as a leader in FinTech and has published the ICO Guidelines as a step towards more “certainty and transparency in the regulatory, taxation [and] accounting” requirements of ICOs, and also, importantly, to encourage the crypto…
In Ukraine, two draft laws which aim to set out the legal basis for blockchain/cryptocurrency businesses in Ukraine have been proposed. The first draft law first submitted in October 2017 is concerned with taxation and provides for decreased corporate income tax, which is to be applied to margin earned on cryptocurrency deals (rather than turnover) and provides rules for the application of VAT. The latest draft law (reported here) seeks to define distributed ledger and smart contract…
Among the many areas of law that will have to continue to evolve around cryptocurrencies is the tax law. In the United States, as far back as 2014, the Internal Revenue Service issued Notice 2014-21 which clearly stated that virtual currency is treated as property for U.S. federal tax purposes. That meant, among other things that: Wages paid to employees using virtual currency are taxable to the employee, must be reported by an employer on…