Cryptocurrencies Admitted in Latvia in order to be Taxed

Aimed to gain its share of the profits, the Latvian government might accept cryptocurrencies as a legal means of exchange
13 April 2018   1413

Tax filing campaign of 2018 is taking place and authorities don’t have much time. Two parliamentary committees and the Ministry of Finance have revealed their views on the matter this week. Latvians may owe the state tax on their gains from crypto transactions very soon.

Some lawmakers admonished to their colleagues and constituents that cryptocurrencies are not considered a legal proposal in the Baltic state and come with speculative bubbles and financial pyramids. Members of the Financial and Capital Markets Committee, nevertheless, noted that cryptos can “function as a means of exchange”.

The Ministry of Finance claimed that the Latvian government is thinking comprehensive cryptocurrency regulations. The Prime-Minister`s working group stated by Māris Kučinskis has been directed to prepare the proposals. It is going to  study market risks, but also evaluate potential benefits associated with cryptocurrencies.

Cryptos are being strongly criticised by the Latvian politicians for failing to perform one or more of the functions of fiat money – means of payment, medium of exchange, unit of account, and store of value. The “means of exchange” labeling now gives Latvian officials a possibility to tax cryptocurrency transactions. Maybe if they think about VAT, a “means of payment” status will also be attributed. No tax is presently due on crypto purchases of goods and services in Latvia.

There is no Latvian law to regulate cryptocurrencies like Bitcoin but authorities in Riga say revenues from crypto trading are subject to personal and corporate income tax. The country has a flat income tax rate of 23%. Incomes from dividends and interest are taxed at 10%. 15% tax is due on capital gains from shares, real estate, and intellectual property. The standard rate of Value Added Tax is 21%. Financial transactions are released from VAT. Tax returns in Latvia are filed between March 1 and June 1 of the year following the taxation year.

Israeli BTC Investors to Face Catch 22

They need to pay taxes from Bitcoin investing in order to avoid their property arrest, but banks don't take their money due to AML issues
06 August 2019   127

Bitcoin investors in Israel are faced with the impossibility of paying taxes, as local banks refuse to accept funds received from the sale of cryptocurrencies because of the risks of money laundering and terrorist financing. About this writes the local edition of Haaretz on August 6.

Bitcoin is not recognized as a currency in Israel, therefore, individuals must pay 25% of the income from cryptocurrency trading to the treasury, and legal entities - 47%.

Investor Ron Gross told the publication that he acquired bitcoins in 2011 and reported his income to the tax office. In 2017, the bank that served Gross began to refuse to accept funds received from the sale of bitcoins. The investor met with representatives of the bank to demonstrate to them a 70-page history of bitcoin transactions as confirmation of the origin of the funds, but failed to convince them.

The tax authority is aware of the problem, but they say the ball isn’t in their courts. I’ve tried working with almost all the banks, but the minute they hear the word ‘Bitcoin’ they freeze up.
 

Ron Gross

Bitcoin investor from Israel

 

Since Gross was unable to pay taxes on time, his bank account, home, and even scooters were arrested. According to the investor, the tax authorities know about the problem, but can do nothing.

According to Haaretz, the tax office is aware of $ 86 million in unpaid taxes on income from cryptocurrency trading. It is possible that the real amount may be significantly higher.

Roy Arav, another Bitcoin investor, kept the proceeds from trading Bitcoin in an account with Israeli bank Discount under the control of the Bit2C exchange. The bank refuses to transfer money to Arava’s personal account under the pretext that its politicians forbid it to transfer funds related to virtual assets to client accounts due to the risks of money laundering and terrorist financing.

Arav also could not pay taxes and was forced to sue the bank. According to the investor, the authorities entered his position and granted him a deferral of time for the consideration of the claim.