Norway Will Tax Bitcoin + VAT

[dancupid]

The google translation is not clear here, but aren't they just saying that you will be taxed on capital gains through bitcoin, and if you sell products and accept bitcoins you will need to pay vat like selling anything else?

[Nik1ab]

The google translation is not clear here, but aren't they just saying that you will be taxed on capital gains through bitcoin, and if you sell products and accept bitcoins you will need to pay vat like selling anything else?

You shouldn't pay any taxes to the feds, so what difference does that make at all?

[satosh007]

how will the tax plan take place if no one declares his/her selling records?
its for the most an anonymous transactions currency. right?

[TheFootMan]

The google translation is not clear here, but aren't they just saying that you will be taxed on capital gains through bitcoin, and if you sell products and accept bitcoins you will need to pay vat like selling anything else?

No. In Norway it works this way:

1. Govt. wants your money.
2. Govt. wants your money.
3. Govt. wants your money.
4. ...

What the tax department of Norway actually says is that if you do business with bitcoin, you will have to pay VAT. For sale and purchase of bitcoins. So if you want to buy a bread with btc, you first have to pay 25% tax when you exchange btc to local currency, then you have to pay value added tax when you purchase the actual bread.

The right thing to do would be to leave BTC alone.

There are exchangers and even an exchange in Norway. What the tax authorities will do about this, I do not know, but I would not be surprised if there at one point would be a court case.

Actually, in Norway bitcoins are classified as a 'electronic service', and as such you have to pay VAT for the exchange of bitcoins. Interestingly, if you have  enough BTC that you need to pay the yearly tax of your holdings, then you're taxed too.

So this makes very much sense.

1. You have to pay 25% VAT when exchanging BTC.
2. Bitcoins are an electronic service.
3. If your holdings exceed the lower limit for taxation, you have to pay tax of your BTC, ops - I mean electronic service.

What's next? Having to pay tax of your webhosting account, your cinema tickets and your bus tickets?

Let me say it again:


1. Govt. wants your money.
2. Govt. wants your money.
3. Govt. wants your money.
4. ...

Many point to Norway and think it's a great country, and in many regards it is, but many things are backwards there. For instance, recently there was a minister who built a shack for the wood at his cabin. It was 4m2. He has not applied for a license to build this, and it caused a huge uproar with the media. In general, it's too much rules, too much bureacracy, and everything public is mostly very conservative. It is very hard to drive innovation in Norway.

I hope there will be a lawsuit at one point, and that the expert witnesses can convince the court, that bitcoin is not to be taxed for exchange against fiat currencies.

Another problem is that most bureacrats in Norway do not understand Bitcoin, I wonder if even a single one of them does. Same with technology in general, the country is ruled by old folks who has no clue about technology, and this is really really bad.

So it might not after all be a hostile position, it might be the folks in the tax department trying to do their best to classify bitcoin, but there's been many news articles in Norway, where socalled 'experts' from law firms are saying that the tax department has it backwards.

It is also the responsibility of the tax department to make people pay taxes, so it would be weird if they put down their hands and said: We wont' touch this bitcoin thing - work with it as you please!

It is sad  really - and in Sweden there's also an ongoing court battle, the tax department over there wants to have people pay tax on exchanges with bitocins, so one exchanger took them to court. And now it's going to be handled in the EU. Will it be fair, or will it be politics, that's the question.

But the people are bigger and stronger than the govt. People will do what's convenient for them.

[DeboraMeeks]

Norway are difficult regarding taxes,they have allot of public services available but require sometimes very high percentages of wages.
they must have a hard time taxing btc's though,unless people cooperate *cough*  *cough* they won't be able to know if you have x btc's in a paper wallet unless they get some super-coin tracker together with cooperation of all exchangers (and the person bought directly from exchanger not from personal deals).

[Ekaros]

Norway are difficult regarding taxes,they have allot of public services available but require sometimes very high percentages of wages.
they must have a hard time taxing btc's though,unless people cooperate *cough*  *cough* they won't be able to know if you have x btc's in a paper wallet unless they get some super-coin tracker together with cooperation of all exchangers (and the person bought directly from exchanger not from personal deals).

I don't really get the point of bitcoins being hard to tax.

You don't tax bitcoin, you tax the fiat involved.
1. When you sell btc for fiat, if you are a company.
2. When you receive large sum of money, you have to explain it. Capital gain -> tax...

[davedx]

Norway are difficult regarding taxes,they have allot of public services available but require sometimes very high percentages of wages.
they must have a hard time taxing btc's though,unless people cooperate *cough*  *cough* they won't be able to know if you have x btc's in a paper wallet unless they get some super-coin tracker together with cooperation of all exchangers (and the person bought directly from exchanger not from personal deals).

I don't really get the point of bitcoins being hard to tax.

You don't tax bitcoin, you tax the fiat involved.
1. When you sell btc for fiat, if you are a company.
2. When you receive large sum of money, you have to explain it. Capital gain -> tax...

What if the transaction is wholly in BTC? I buy electronic hardware from a mining company who sells it for BTC. According to most country's laws, I should pay VAT on the purchase, but as it's all in BTC, there's no fiat papertrail.

[Ekaros]

Norway are difficult regarding taxes,they have allot of public services available but require sometimes very high percentages of wages.
they must have a hard time taxing btc's though,unless people cooperate *cough*  *cough* they won't be able to know if you have x btc's in a paper wallet unless they get some super-coin tracker together with cooperation of all exchangers (and the person bought directly from exchanger not from personal deals).

I don't really get the point of bitcoins being hard to tax.

You don't tax bitcoin, you tax the fiat involved.
1. When you sell btc for fiat, if you are a company.
2. When you receive large sum of money, you have to explain it. Capital gain -> tax...

What if the transaction is wholly in BTC? I buy electronic hardware from a mining company who sells it for BTC. According to most country's laws, I should pay VAT on the purchase, but as it's all in BTC, there's no fiat papertrail.

And where did the hardware come from? Did the company selling it buy it with btc too? Depending of the country in that case it can be taxed when it's imported.

[Lewis2]

Governments taking bitcoin seriously, good for value and acceptation!

[beetcoin]

i did some travelling a few years ago and it seems to me that the norweigians/scandanavians i met were looking to get away from their form of socialistic government. then again, i think i met some guy living in thailand like a king, collecting money off his unemployment money 

[DublinBrian]

The VAT rule can be challenged on the grounds that Paypal are already selling electronic money in Norway and not charging VAT.

If you read Paypals Legal Agreements you will see that a Paypal balance is not a Euro or a Krona. It is an electronic money issued by Paypal

Funding an account

To fund an account, a User must either:
 Purchase electronic money from us via their funding source(s). In practice, this means that each time a User requests PayPal to send money, PayPal simultaneously debits the chosen amount from the User’s default funding source (PayPal balance, bank account, debit card or credit card). PayPal then sends this online payment to the intended recipient; or
Accept an online payment that has been issued by us and sent from another PayPal User
A User’s account balance represents the amount of electronic money issued by us (whether it is sent to the User by a third party or purchased directly from us)

Withdrawing funds (redeeming electronic money)

A User with an account that has a credit balance may instruct us at any time to withdraw funds from their account. By doing so, a User can redeem all or part of the electronic money represented by that balance to their registered bank account or if applicable, credit card.

https://cms.paypal.com/ie/cgi-bin/?cmd=_render-content&content_ID=ua/ServiceDescription_full&locale.x=en_US

This text can be found if you click on Legal Agreements, Key Payment and Service Information.

[Ekaros]

Bitcoin isn't money... Simple...

[sickhouse]

Sweden beat you to it!
Might also interest you we have taxes on selling in game currencies now (that's what happens when you take in too many "fugitives".. They also cut down on psych help and on elderly care )

[Savior]

- This will be settled in court, as tax administration can't decide what taxes we have or don't have. In the end there are laws that decide that.

[giantdragon]

There is also "formueskatt", or a tax on your fortunes, so if you have say 10 million dollars in your bank (or in stocks, your company etc), you have to pay 1% each year, or 100 000 $ year. Just for having money. This also applies to bitcoin according to tax administration.

Do someone pay it really!? I think rich people can just move away capitals from Norway.

[Haidang1796]

That is not fair -.- Bitcoin should never be taxed

[elektibi75]

http://e24.no/digital/handler-du-bitcoins-maa-du-ut-med-skatt-og-moms/22639792


(google translate):

http://translate.google.com/translate?sl=auto&tl=en&js=n&prev=_t&hl=en&ie=UTF-8&u=http%3A%2F%2Fe24.no%2Fdigital%2Fhandler-du-bitcoins-maa-du-ut-med-skatt-og-moms%2F22639792&act=url

Tax Administration has decided:
If you buy Bitcoins must
with both tax and VAT
Tax Administration has decided that Bitcoins is neither a currency or a financial service. It will turn right into your tax return if you have shopped with online currency.

========================================================

Norway: "All Your Bitcoins are Belong To Us!"

Well, what ya expect from the guys that gave Fuhrer Obama da Nobel Peace Prize?

I thought Obama was good for the USA 

[BitcoinWalker]

Since BTC does not flow through the traditional banking system, it will be hard to enforce the law if people won't cash out their coins.

[Michael_S]

I hope there are some savvy adult people in this forum to explain this properly...:

* I understand the "capital gain" part of it: If I buy 1 BTC for 500 EUR and sell it 10 days later for 800 EUR, I pay tax for the capital gain (300 EUR) I made. E.g. if capital gain tax rate is 28%, I have to pay 28% of 300 EUR = 84 EUR tax in this example.
This is the same principle as in Germany by the way (with the special German thing that capital gain tax is 0% when there is >1 year between buy and sell).

* But I do not fully understand the VAT thing (above translation / explanation is not clear) - can anyone adult & savvy explain this?

Here is my *understanding*, explained in concrete examples - -please can anyone savvy confirm if my examples are correct, or clarify otherwise?

Example:
1.) I as a Norwegian private person buy 1 BTC for 500 EUR from another Norwegian private person (e.g. via bitcoin.de German "bitcoin escrow service", i.e. the Euros flow directly from private to private and not via bitcoin.de). Who pays VAT at this moment (and how much and based on what)? Me, who buys the BTC?? Or the other private person, who sells it?? Or nobody? I assume, nobody, I assume, the only tax that is involved here is the capital gain tax for the seller, in case he/she sells the BTC to me at a higher price than what he/she had purchased it for earlier.

2.) I buy a bread from a Norwegian baker for 10 mBTC (0.01 BTC) that I pay from my Android smartphone's Bitcoin wallet. Since the price of the bred anyway includes VAT (same when I buy with EUR, the 5.00 EUR includes the VAT), I suppose it is the same in the Bitcoin-payment scenario. Or is there any extra VAT involved in this transaction, and if so, which amount exactly? My understanding would be that the baker has to write this in his books as if I pay him 5.00 EUR for the bread, assuming that *at the time of purchase* the value of 10 mBTC equals 5 EUR. So the baker will pay the VAT irrespective of how I pay.
- If the baker converts the 10 mBTC to EUR immediately for 5 EUR, that's all, and he will fill is books as if I paid him 5 EUR.
- If the baker keeps the 10 mBTC for a few days or weeks and then exchanges them for 8 EUR, he will additionally have to pay capital gain tax of 28% (or VAT of 25% because he is a business?) for the 3 EUR that we made as extra profit.
- In the case that he sells the 10 mBTC for only 4 EUR some days later (because exchange rate has evolved unfavorably for him), I assume the baker can write-off the 1 EUR as operational loss into his books to reduce his overall profits and correspondingly, his tax burden.

3.) In the 3rd example, I am a professional BTC exchange in Norway, and I am buying and selling Bitcoins professionally to and from private persons let's say. Let's assume I have only two clients Alice and Bob, both from Norway as well. Alice wants to sell 2 BTC, Bob wants to buy 2 BTC. They use my exchange for this. I take 0.5% commission from each of them, so we can consider this as follows:
- I buy 2 BTC from Alice and pay her 995 EUR.
- I sell (these) 2 BTC to Bob and he pays me 1005 EUR for this.

Now who has to pay what kind of tax and how much?
* Alice, who sold 2 BTC to me for 995 EUR, has to pay taxes or not depending on how *she* has purchased these 2 BTC before, acc. to example 1 above.
* Bob, who has bought 2 BTC from me for 1005 EUR, does not have to pay any extra taxes at this moment, he only has to pay capital gain taxes at a future point in time when he sells his 2 BTC at a higher price than 1005 EUR. But at this moment, this 1005 EUR is a price "incl. VAT" already, so the VAT is the matter of the exchange, that is "me", as follows:
* Me, as the exchange operator, I have bought the commodity "2 BTC" for 995 EUR from Alice. Since she is a private person, there is no VAT involved in this operation. Next, I as an exchange operator sell (the same) 2 BTC to Bob for 1005 EUR, so my service added 10 EUR additional value to this "2 BTC" commodity (formally speaking). So I have to pay VAT relative to this 10 EUR. E.g., if the VAT rate is 25% in Norway, I have to pay 2.50 EUR tax for this operation. And that's all.



So far this is my understanding of what capital gain tax and VAT is all about in Norway. Even though everybody would like a "taxless bitcoin", I do not understand all these negative headlines. To me all this appears quite reasonable from the state's point of view, he puts tax to BTC like for any other commodity, which means the state acknowledges BTC's rank as a commodity and treats it equally to other commodities, which appears fair enough.

As can be seen from above examples (if they are correct), there is no particular disadvantage involved in Bitcoin compared to using Euros when purchasing goods or services. So there is no obstacle for Bitcoin to evolve in the ecosystem and to be used as a means of payment.

The main disadvantage about "the VAT thing" in Norway is that Norwegian exchanges cannot really compete to e.g. German exchanges if the latter do not have to pay VAT. But that's a competitive disadvantage for Norwegian (exchange-)companies only, but not for the "Bitcoin User/Consumer".

Taking above Example "3":
In the case "with VAT", the exchange pays 25% VAT for the 10 EUR, what remains is a profit of 7.50 EUR. Assuming the exchange has no other costs (electricity, wages, etc.), there remains a profit of 7.50 EUR at the end of the year when I have to pay the normal taxes for my profits. Assuming that these are 25%, I pay 25% on 7,50 EUR = 1.875 EUR tax, so the net profit that remains is 5.625 EUR.

In the "no VAT" scenario, the profit is the full 10 EUR, and so after 25% profit gain end of year I have a net profit of 7.50 EUR for my Norwegian Bitcoin exchange company.

So far my understanding, hope this clarifies it, and please correct me if I got something wrong, or confirm if you think I got it right.

[TheFootMan]

Your text was somewhat long to be read in full.

But the tax department of norway classify bitcoin as an asset class, but also at the same time as an electronic service. They state that anyone buying btc from a company is supposed to pay 25% VAT. This will of course kill bitcoin in Norway if enforced, and currently none of the bitcoin companies selling bitcoins adhere to this.

You said you wanted an adult view. Here's one for you:

Everything in regards to technology in Norway is usually very slowly adapted, esp. so in the public sector. And you really cannot handle bitcoin with current rules and regulations, they're not made for cryptocurrencies.

There was recently a story about a man who catched an ID-thief. The thief stole his passport and bank card and took out a loan and rented a tv in the victim's name. Once catched, the victim contacted the thief, and togheter they went directly to the police in Oslo to have the thief being questioned by police. They were abruptly hushed away as the police didn't have the time for such cases.

So, if you were to do something or anything that's against the law, and you're not dealing in millions, chances are nobody will bother one bit.

There exist many laws in Norway, many of which are never enforced. For instance both steroids, narcotics and prostitution is illegal, but you can get hold of all of that within a 0.5 km radius from where the government work and play daily.

The politicians are mostly concerned about themselves and their own positions. Much of the politics that you see take place are symbol politics. Nice words, and not much more than that.

So, unless you're absurdly attached to the idea that you need to do everything within the law, there's nothing to be afraid of. If you exchange bitcoins in private between private persons, there's in practice very little, if anything, to be afraid of. Too many people obsess over trivialities and technicalities while an entire lifetime can pass by without anything ever happening.

And of course, if you want to have the mature adult viewpoint of things, why do you not contact the relevant departments directly yourself? Be prepared for months of waiting time, and when you finally receive an answer, the case is probably handled by some low level bureaucrat that doesn't understand two bits about bitcoin. And if you want to get a legal binding answer to any question, you have to pay quite a lot of money, and even then it will take months before you get your answer.

Meanwhile, the govt's more than happy to collect all sorts of possible taxes. Everything's taxed. It's just a matter of time before the fresh air in the mountains are taxed.