Declaring profits in the European Union

[ashler]

Are you an European Union citizen or resident? If yes, when are you declaring your cryptocurrency profit?

1) Everytime I have a profit
2) If profit greater than e.g. 5,000 EUR
3) I don't declare profits

If 1), when do you this declaration? at the end of one year? every month?
If 3), did the tax office knocked your door to ask about the unusual deposits in your bank account?

Thanks!

[OrganicCoin]

For me: 1) when I do my tax filing (once a year) but I guess that depends on the law in your country of residence...

[ashler]

For me: 1) when I do my tax filing (once a year) but I guess that depends on the law in your country of residence...

and what do you attach as evidence? deposits, withdraws etc?

[aleeis]

For me: 1) when I do my tax filing (once a year) but I guess that depends on the law in your country of residence...

and what do you attach as evidence? deposits, withdraws etc?

-------------
It is funny to see this. We must understand what the taxes for using BTC is?
There are two cases:
1 IF it is the payment to Creator of your money THEN you have nothing to pay. Because the BTC was not created by Mr. Rothsield's bank. You already have paed to creator of your BTC.
2 IF it is the payment like for your owner ... THEN yur government is criminal "roof" because you are the free and not slave. In this case you have nothing to pay them
3 ... third not exists, nothing else, all other taxes you already pay in EUR...

[ashler]

It is funny to see this. We must understand what the taxes for using BTC is?

There are always taxes if you have a profit, no matter if the profit comes from a an exchange of Bitcoin to Euro, gold, a tomato or a bet in Bwin. So that's the reason of my question. If you're a EU citizen or resident and have done this, it would be helpful to share your experience.

Thanks!

[darkangel11]

For me: 1) when I do my tax filing (once a year) but I guess that depends on the law in your country of residence...

and what do you attach as evidence? deposits, withdraws etc?

You are supposed to do it when your profit exceeds the non-taxable minimum, also called personal allowance. I'm talking here about countries where it's taxable, because in some countries like Germany and recently Belarus you don't have to pay anything.
You do it once a year and usually the transfer from an exchange to your bank account is the only proof that you'll need (in case they ask) you don't have to attach it to your annual report. You also can keep emails from the exchange with dates that show when you've deposited and withdrew your money.

[ashler]

You are supposed to do it when your profit exceeds the non-taxable minimum, also called personal allowance. I'm talking here about countries where it's taxable, because in some countries like Germany and recently Belarus you don't have to pay anything.
You do it once a year and usually the transfer from an exchange to your bank account is the only proof that you'll need (in case they ask) you don't have to attach it to your annual report. You also can keep emails from the exchange with dates that show when you've deposited and withdrew your money.

Thank you! I think in Germany is taxable if you convert to fiat BEFORE one year. After one year is not taxable.

Where I live apparently I don't need to declare anything if profits are not greater than 500 EUR. Any other profit needs to be declared. So OK, is just tax declaration and they take my word for it, and if they want to digg more they will contact me etc. Got it.

Thanks!

[aleeis]

It is funny to see this. We must understand what the taxes for using BTC is?

There are always taxes if you have a profit, no matter if the profit comes from a an exchange of Bitcoin to Euro, gold, a tomato or a bet in Bwin. So that's the reason of my question. If you're a EU citizen or resident and have done this, it would be helpful to share your experience.

Thanks!

I'm resident, but this is new experience for me too. I see here great misunderstanding close to the nature of the taxes. It is time to remaind about the reasons of every taxes we must pay. We need to get  more strongly definitions of the most important conceptions: "profit", "taxable trade", "VAT",  and so on... At a moment I do not know any string in the EU income declarations with strictly specific rule about mining cryptocurrency as a profitable, taxable business. There are a lot of the game online with similar actions... this is problem to sort it and create logical concept for the cryptocurrencies make taxable.
Thank you.

[posi]

Are you an European Union citizen or resident? If yes, when are you declaring your cryptocurrency profit?

1) Everytime I have a profit
2) If profit greater than e.g. 5,000 EUR
3) I don't declare profits

If 1), when do you this declaration? at the end of one year? every month?
If 3), did the tax office knocked your door to ask about the unusual deposits in your bank account?

Thanks!

In EU, the relating tax treatment of bitcoin for tax purposes differ depend on each EU country. However, purchasing and selling bitcoin does not incur VAT but bitcoin transactions may be subject to other taxes, such as income tax.

[ashler]

In EU, the relating tax treatment of bitcoin for tax purposes differ depend on each EU country. However, purchasing and selling bitcoin does not incur VAT but bitcoin transactions may be subject to other taxes, such as income tax.

In no moment my question was about VAT. My question is related only to the profit you can make from converting Bitcoin to Euro, after you bought it for a cheaper price. Easy example: you buy 1 BTC for 1K EUR, you sell it six months later for 10K EUR. You made a profit of 9K EUR. I suppose you need to pay a tax for that 9K EUR profit.

[ashler]

Found this: http://www.thisismoney.co.uk/money/experts/article-5019947/Do-pay-tax-sell-bitcoin-big-profit.html

If the bitcoins have been purchased HMRC will regard any increase in value as being liable to capital gains tax. Tax will only crystallise when the bitcoins are converted into another currency, be it sterling or dollars or even another cryptocurrency. Capital gains tax is currently charges at ten per cent or 20 per cent (or a mixture ) depending on the level of the taxpayer’s other income.

Therefore in the situation above, the bitcoin seller is liable to capital gains tax on the gain arising. As the current price of a bitcoin is approximately £4,500 that would lead to a capital gain of £4,495,000 (£4,500,000 less £5,000) which after a capital gains tax exemption of £11,300 leaves a tax liability for a higher or additional rate taxpayer of £896,740.

[LoyceV]

Are you an European Union citizen or resident?

The EU isn't one country with one tax system, it's all different countries with different taxes.

If yes, when are you declaring your cryptocurrency profit?

I can only speak for the country I live in, and split it up my tax declarations in two categories:
-Trading or increase in value: never! Trading on a non-commercial basis isn't taxed, there is no capital gain tax. We have an annual tax based on the value of everything we own though.
-Earnings: always For income tax I declare the euro value the moment I earn it.

when do you this declaration?

Taxes are filed once per year here.
Note that I'm talking for consumers only, if you're a company, or earn Bitcoin from mining, it gets more complicated.

If 3), did the tax office knocked your door to ask about the unusual deposits in your bank account?

This is the exact reason why you shouldn't try to hide your crypto from taxes. If it's ever worth enough to buy something big, you want to be able to do so (without being treated as a drug dealer).

My question is related only to the profit you can make from converting Bitcoin to Euro, after you bought it for a cheaper price. Easy example: you buy 1 BTC for 1K EUR, you sell it six months later for 10K EUR. You made a profit of 9K EUR. I suppose you need to pay a tax for that 9K EUR profit.

No, I don't
It would help for your question if you say which country you live in.

[ashler]

My question is related only to the profit you can make from converting Bitcoin to Euro, after you bought it for a cheaper price. Easy example: you buy 1 BTC for 1K EUR, you sell it six months later for 10K EUR. You made a profit of 9K EUR. I suppose you need to pay a tax for that 9K EUR profit.

No, I don't
It would help for your question if you say which country you live in.

Slovakia.

[stompix]

Let's break this down a bit as the questions are just all over the place.

- Being a EU citizen means nothing when it comes down to taxes.
If you live in the UK (they are still in the EU) you will have to report it , if you live in Poland you will also have to do it, but looking at the latest news if you're in Romania they are too stupid to come up with a tax plan so...you're free to play around with all the money.

-Nobody is paying taxes every time it makes a profit.
You pay taxes for all the times you made a profit but this only at the end of the year (for private gains) , 4 times a year in most countries as a private entrepreneur or in worst cases monthly. But again it depends on legislation in every country.
Since you're from Slovakia (hello neighbor!!!) sadly, I don't have a clue  

-nobody is knowing at your door and probably won't
All transactions over 5000-15 000 euros are forwarded (at least in eastern Europe, Poland, Latvia,Czech Republic and Hungary....this I know for sure) to the financial authorities , this is a must.
But the bank also flag down smaller transactions and this is done by their own regulations.

Now , the worst case ...
In your country you must pay taxes, you don't ....there is going to be a lot of paperwork, citations, frozen accounts and everything but it will take a while and only in the extreme cases when they will have to put your apartment for sale for unpaid taxes you're going to hear knocks at the door.

LE:
Just checked, for private gains you fill the taxes once a year in all the countries in EU.

[LeGaulois]

You're supposed to report once a year the same way you report your annual income but:
For European citizens, it varies from country to country. For example, you pay zero tax in Belgium, in Germany zero tax if you were holding your coins since at least 1 year, France is planning to racket up to 60%

The National Bank of Slovakia (NBS), stated[114] that bitcoin does not have the legal attributes of a currency, and therefore does not fall under national control.[note 1] European legislation, including the Slovak law, does not define the activities associated with virtual currency

The problem for most European countries is that they are not sure what status to give to Bitcoin and so how to tax it (or not). They are still lost and not sure. For example, in my country, they don't want to consider Bitcoin as a currency and a payment method (surely because if they do they won't be able to steal our profits: see how vicious is it?) And when you give a call, they don't even know what is a cryptocurrency

It becomes a real problem in Europe because most countries are not clear about this, and the ones with no tax may change their mind at any time (like it happens right now for others)

And you know, since it's Europe they like to see all countries with the same laws, quotas, and so on...

[countryfree]

Nearly anyone in the EU fills a tax form once a year, and it's the same document for BTC profits, which are materialized when exchanged with local fiat currency.
You just need to ask where in that form you shall add "exceptional income" or "capital gains".
An example, now.

If you bought BTC for €1,000 in 2013, you may have €50,000 now, so you will declare €49,000. If the tax rate is %30, you will have to pay €14,700. It might be less than that if you've kept your investment for more than a year, but you must look for info in your country. I believe very few people here are familiar with the Slovakian tax system.

[Samarkand]

Nearly anyone in the EU fills a tax form once a year, and it's the same document for BTC profits, which are materialized when exchanged with local fiat currency.
You just need to ask where in that form you shall add "exceptional income" or "capital gains".
An example, now.

...

This is not true for every country. Not in every country profits from cryptocurrencies are taxed
as capital gains.

E.g. in Germany selling BTC is a "Privates Veräußerungsgeschäft" (selling of private goods) and is
taxed with your personal income rate instead of the rate for capital gains taxes.

Regarding the original question of the OP, I suggest talking to a tax advisor, who is familiar
with the situation in Slovakia. I don´t expect that anyone in this board is familiar enough
with Slovakian tax legislation.

[AlexInTheOcean]

I'm wondering how it works if you got huge profits from crypto, like 1mln USD. Can you still pay the tax and be clear?

[ashler]

I'm wondering how it works if you got huge profits from crypto, like 1mln USD. Can you still pay the tax and be clear?

of course, as long as you show that the Bitcoins you are exchanging for fiat were acquired in a licit way.

[Enjorlas]

I'm clever so i don't cash out so i don't declare anything and wait to see what happens