Does the Bitcoin Foundation seek the taxability of bitcoins?

[MysteryMiner]

Would taxing profits from Silk Road sales make drug smuggling a legitimate business?

[1714770634]

1714770634

[repentance]

There are no taxes for gold in many countries, why should Bitcoin be treated differently?

And in many countries you'll be paying a goods and services tax (or some other kind sales/transaction) tax each time you buy or sell gold as well as tax on any increase in its value between purchase and sale.  And even if the gold itself isn't subject to any taxes, if you make something out of it and sell that product a value added or sales tax of some kind is often applied.

The manner in which something is being used often determines its taxation liability.  I don't pay tax on money per se, but I do pay tax on money I receive as income (although not on money I receive as gifts or windfalls).  I pay tax on certain types of financial transactions.  If I trade currency, then I'll have a taxation liability in respect of that trading.  "Money" per se isn't taxable where I live, but many of its uses are - although those taxes are often invisible because they're included in the cost of goods and services.

Would taxing profits from Silk Road sales make drug smuggling a legitimate business?

Nope, but by lodging a tax return and paying tax on illegal activity there's one less thing with which you can be charged if you eventually get caught.  Taxation laws have brought a lot of illegal businesses undone.  I know there've been cases here where drug dealers have tried to claim the theft of their product as a tax deduction - I'll see if I can hunt them up.

In Europe, where income and sales tax levels are high or even astronomical, it isn't unusual for private individuals and merchants to do business in cash and then conveniently "forget" about the 20+% VAT due on that transaction.

I think this is common everywhere, as is being paid cash off the books as an employee.  If you get caught, you're likely to be prosecuted though.  A massive amount of people who get caught for tax evasion get caught as the result of tip-offs from people they've pissed off (about 60%, according to my daughter who used to work for the Taxation Office).  If you're going to participate in tax evasion at any level, try not to piss anyone off.

[nobbynobbynoob]

Some good points made here by repentance.

While taxation generally is robbery [with violence], if tax rates are reasonably low enough (e.g. some Swiss cantons or the Isle of Man?), they aren't actually worth the trouble of breaking the law to avoid: one is simply miles better off just ponying up the money.

[ArticMine]

Bitcoins have been taxable since day 1. So how can the Bitcoin Foundation seek something that has already been happening for close to 4 years?

[tHash]

Here is my take.   Income is taxable, be it fiat, stock options, BTC or turnips.   If you are paid in BTC by your employer, then your wages will be reported (unless your employer is non complying), and your taxes withheld, just like now.   If you are business accepting BTC, it would be in your best interest to comply with tax laws, as you can bet there will probably be a bit more attention paid to businesses accepting BTC.

That said, there is plenty of room to hide income and dodge tax laws.  Of course, people have been doing this forever using cash.   If the government finds that too many people may be avoiding reporting income, they may move to a consumption tax rather than income.  I think it would be a positive side effect of BTC if that were to happen, as I like the idea that savers are rewarded.   A lesser of two evils.

[bg002h]

Regardless of how you earn money, you pay taxes on it. If you get paid in chickens, you pay taxes...

[FreeMoney]

(about 60%, according to my daughter who used to work for the Taxation Office).

Wonder how they get that stat.

[BkkCoins]

This question doesn't even make any sense as phrased. I'm not aware of any country that taxes money just for being money. Maybe there is somewhere - I don't know all tax regimes worldwide.

Most countries tax income of various sorts and it doesn't matter what form the income takes, though different classes of income are often taxed at differing rates. So taxability depends on your circumstances rather than what form of payment your incomes takes. For those intending to evade taxes what matters is how traceable bitcoin transactions are. So maybe this question should be re-phrased - Does the BF seek traceability and documentation of bitcoin transactions?

[repentance]

(about 60%, according to my daughter who used to work for the Taxation Office).

Wonder how they get that stat.

Government departments run on statistics.  They know exactly how many people they've busted through data matching, tip-offs from the public, information on returns which flagged the system, routine audits, information provided by law enforcement or financial regulators, etc.  They're also really, really aggressive about getting money owed to them so they investigate every tip-off.

[johnyj]

I'm confused

Do you pay tax when you buy some EURO at forex exchange?

[jojo69]

what, they going to search every piece of mail to make sure it is not part of a transaction?  What kind of world are we building?

Are you under the impression that most commerce is done by mail? What does this have to do with sales tax?

I see online commerce as a primary market for bitcoin penetration so yes, almost all online commerce is direct shipping based.  As there is no way for them to track the financial transaction the only way for them to demonstrate a taxable transaction occurred would be to search our freight.

[BkkCoins]

what, they going to search every piece of mail to make sure it is not part of a transaction?  What kind of world are we building?

Are you under the impression that most commerce is done by mail? What does this have to do with sales tax?

I see online commerce as a primary market for bitcoin penetration so yes, almost all online commerce is direct shipping based.  As there is no way for them to track the financial transaction the only way for them to demonstrate a taxable transaction occurred would be to search our freight.

Maybe if Bitcoin becomes too popular they'll change the tax structure such that it's collected by the post office and couriers, by weight... and you'll need to pay to receive. Ugh!

[Bitcoin Oz]

Gavin could sneak in code that steals 10% of all bitcoin transactions  to pay tax 

[The_Duke]

In Southern Europe, where income and sales tax levels are high or even astronomical, it isn't unusual for private individuals and merchants to do business in cash and then conveniently "forget" about the 20+% VAT due on that transaction. Surely the same could work with BTC payments, if the merchant so desires, even though this is "technically" (haha) illegal.

FTFY.

[nobbynobbynoob]

Maybe if Bitcoin becomes too popular they'll change the tax structure such that it's collected by the post office and couriers, by weight... and you'll need to pay to receive. Ugh!

It's a possibility. Customs duty can be collected in this way already.

[chmod755]

Gavin could sneak in code that steals 10% of all bitcoin transactions  to pay tax 

A built-in feature would be very difficult to implement. e.g. if I'm using Bitcoin behind TOR where should I pay my taxes and who verifies that I haven't specified a country with lower tax rates?

And in many countries you'll be paying a goods and services tax (or some other kind sales/transaction) tax each time you buy or sell gold as well as tax on any increase in its value between purchase and sale.  And even if the gold itself isn't subject to any taxes, if you make something out of it and sell that product a value added or sales tax of some kind is often applied.

The manner in which something is being used often determines its taxation liability.  I don't pay tax on money per se, but I do pay tax on money I receive as income (although not on money I receive as gifts or windfalls).  I pay tax on certain types of financial transactions.  If I trade currency, then I'll have a taxation liability in respect of that trading.  "Money" per se isn't taxable where I live, but many of its uses are - although those taxes are often invisible because they're included in the cost of goods and services.

I'd say almost every Bitcoin-accepting business is already paying taxes on Bitcoin income, because companies are converting BTC to fiat - making it taxable income.

[repentance]

I'd say almost every Bitcoin-accepting business is already paying taxes on Bitcoin income, because companies are converting BTC to fiat - making it taxable income.

That doesn't mean they're reporting that income, of course.

[nobbynobbynoob]

I'd say almost every Bitcoin-accepting business is already paying taxes on Bitcoin income, because companies are converting BTC to fiat - making it taxable income.

That doesn't mean they're reporting that income, of course.

Indeed, but most of them are probably keeping it legal. The B&B Luna Luna in Mechelen, Belg. (I'm not plugging them; have never stayed there) accepts bitcoins but issues receipts in eubles so almost certainly declare the (astronomical) VAT payments for the room, passing it onto the clients of course.

If you earn BTC income and don't "cash out" then it's pretty tough for the tax man to get at. If you cash out to a bank within your own territory then failing to report it might not be the best trick in the book. (Just my 0,02; IANAL &c.)

[repentance]

If you cash out to a bank within your own territory then failing to report it might not be the best trick in the book. (Just my 0,02; IANAL &c.)

It would be a silly thing to do here because banks send information directly to the tax office - when I go to fill out my tax return, the amount of interest I earned during the year is already pre-filled.

Of course even honest business can run into problems if they're buying things for Bitcoins from people who don't want to issue receipts - being unable to claim those expenses might make it not worthwhile to use BTC.

[Come-from-Beyond]

Imagine that everyone uses only Bitcoin, no conversion to fiat and back. Is it possible to catch tax evaders in such a situation?