OECD studies Bitcoin taxation in 50 countries

The Organisation for Economic Co-operation and Development (OECD) published a review of cryptocurrency tax regimes in 50 jurisdictions.

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In most of the analysed countries, for tax purposes cryptocurrency is treated as property.

“Under this definition, countries classify virtual currencies differently, treating them as intangible assets, commodities or financial instruments,” the OECD noted.

A smaller number of countries regard virtual currencies as foreign fiat currencies (Italy) or as a “digital representation of value” (Poland).

Because there is no official guidance on the classification of virtual currency for accounting purposes, each asset type should be classified based on its economic properties, the researchers note:

“Security tokens, which provide the holder with a contractual right to receive cash, may be treated as a financial asset under IFRS. Utility tokens may be regarded as prepayments for certain goods and services.”

Following this logic, cryptocurrencies are generally treated as intangible assets, though they do not fit neatly into an existing class. A number of major accounting firms suggest classifying them as “intangible assets other than goodwill,” rather than creating a new asset class.

Taxes may be levied on the creation of cryptocurrencies (airdrops, ICOs, mining and staking) and on their disposal.

Mining cryptocurrencies triggers tax consequences in Andorra, Austria, Colombia, Croatia, Estonia, Finland, Japan, Luxembourg, New Zealand, Slovenia, South Africa, the United Kingdom, and the United States.

Disposing of cryptocurrency is taxed in Croatia, the Czech Republic, Denmark, Estonia, France, Latvia, Lithuania, Poland, Slovakia. However, there is no single approach in these countries as to what constitutes disposal—an exchange for other virtual currencies, exchange for fiat, or payment for goods and services.

In Italy, the Netherlands, Portugal and Switzerland, disposal of cryptocurrency by individuals is generally not taxed.

Separately, the OECD found that in virtually all countries, exchanging digital assets for fiat or another virtual currency is not subject to VAT.

“The use of cryptocurrencies to acquire goods or services is also not within the scope of value-added tax. However, the provision of taxable goods and services paid for with a virtual currency remains subject to VAT, with some exceptions. For example, in France and Italy, no tax is charged for obtaining new tokens through mining,” the analysts explain.

In the vast majority of countries, services related to exchanging virtual currencies are not subject to VAT, though in some non-EU countries the standard tax rules apply.

As noted in 2018, the OECD urged financial regulators worldwide to establish standards for taxing developing technologies, including cryptocurrencies.

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