Signature campaigns and taxation.

[btcduster]

I see so many people wearing signatures these days.
How do you state the cryptocurrency income from signature campaigns in your tax return? The tax authorities in Europe want to provide them with a document for the purchase of cryptocurrency, I guess it's the same for USA & Canada with the AML laws.

[1715023225]

1715023225

[1715023225]

1715023225

[1715023225]

1715023225

[1715023225]

1715023225

[1715023225]

1715023225

[1715023225]

1715023225

[DdmrDdmr]

<...>

I doubt that, as yet, Europe treats this matter in a holistic manner. As far as I’m aware, and there being still quite a share of confusion when I read on the matter, in Spain for example you would (in theory):

-   Consider the earned crypto as an equivalent to work related income, and it is subject to income tax, adding in global terms to the basis of what you earn through your regular job (if applicable).

-   Since the cost price is cero, it is considered to be an income equivalent to its market price at the time you received the income crypto TX (if you get paid weekly, each TX would therefore contribute at a likely different price rate).

-   You should keep as much evidence as possible in case of a tax inspection, bearing in mind that there is no written nor in any other way formal contract (i.e. keep info. on campaign payouts, google drive docs, forum related posts, and your TX history).

Tax office personnel is often rather clueless on this matter, which adds a fair share of doubt on the whole matter, getting potentially variable responses on the procedure to follow from one desk to the next.

Sales is a different matter, but will play on the difference in price between purchase and sale or swap, processing the sold amounts if a fifo manner.

The above summarized draft will vary from one country to another.

[Welsh]

Income tax. It might vary from country to country, but I usually send it to an accountant, and he sorts it out for me. I usually get the amount of Bitcoin earned, value in GBP at the time of the transaction, and then put all of that into a spreadsheet, send it off, and then usually get a email back stating how much tax I'll need to pay that year.

Signature earnings are usually easier since you don't have to deduct how much you initially paid for the Bitcoin, since you aren't buying it. I believe, the way they do the purchasing is subtracting your initial purchase price from the total amount.  Then work out your profit, and tax accordingly.

In the UK its usually a self assessment, but depends on your situation. This might also vary from country to country. Honestly though, I always recommend getting in contact with an accountant, tax can be somewhat complex at the best of times, and that's increasingly so when dealing with cryptocurrencies. Pay a yearly fee to an accountant, declare everything, and be somewhat worry free while letting them do the hard work.

There's a few open source tools out there available via Github, that automatically reads an address, and generates a report based on the date of receiving the Bitcoin, and extracts the price at the time of transaction from various exchanges. This can be used in conjunction to an accountant, so you can generate the initial report, and then send that over to them for checking. They'll likely ask a few questions, especially if you've bought Bitcoin during this time, since they'll need to determine your intentions i.e long term holding or short term.

[ShowOff]

I haven't heard of any updates regarding our income tax issues from crypto whether it's from signature campaigns, trading, mining or investing. Some talk may have taken place previously in our local council about this but there is no certainty whether the government will also tax anyone who earns a certain amount of income each year.

Crypto status in my country is illegal as currency, but for crypto income tax I'm not sure how the government will set it. I just don't want them to tax my signature campaign proceeds of $3.8K per year because that's pretty cheeky in my opinion. ha ha ha

[Welsh]

I haven't heard of any updates regarding our income tax issues from crypto whether it's from signature campaigns, trading, mining or investing. Some talk may have taken place previously in our local council about this but there is no certainty whether the government will also tax anyone who earns a certain amount of income each year.

Crypto status in my country is illegal as currency, but for crypto income tax I'm not sure how the government will set it. I just don't want them to tax my signature campaign proceeds of $3.8K per year because that's pretty cheeky in my opinion. ha ha ha

Like I said above its varies depending on the country. However, investing compared to income tax to my knowledge is usually treated the same everywhere with one being income tax, and any investment you make is usually the purchase price deducted from your profit. That's usually how countries do it. Though, I'm definitely not up to date with every country out there.

As for your specific case of it being illegal, yeah I'm really not sure how that would work, I doubt they'll be able to claim tax from something that's illegal to use. I guess it depends on the extent it's illegal in your country. Could potentially need legal advice rather than an accountant in this instance or both.

[TheNineClub]

There still isn't a consensus in Europe as I am aware and every country has a different approach to it. Most use the two-year rule where any crypto that has been on your wallet for two years or longer is exempt from taxes. However, in some countries, they might burry you in bureaucracy when trying to get to those earnings, and that's a hassle. But everything is still in the air so to speak, no concrete definitions for crypto.

[LeGaulois]

They wouldn't be really able to see it unless they suddenly decide to audit your accounting.
If you're paid in crypto, you usually sell it for fiat with an exchange. There is no record of who deposited what to your account. All they can see is xxBTC have been deposited the last x months, xx BTC have been sold, and xxx$ have been transferred to the bank account (your).

Paying the taxes can be a great cover. You can say you didn't know, and you wanted to be fair by paying an income tax. Otherwise you would not even report what you earned

Incomes and capital gains are not the same things and are reported/taxed (usually) differently. Anyone who worked at least once and or filled the annual taxes report knows it

[Welsh]

They wouldn't be really able to see it unless they suddenly decide to audit your accounting.
If you're paid in crypto, you usually sell it for fiat with an exchange. There is no record of who deposited what to your account. All they can see is xxBTC have been deposited the last x months, xx BTC have been sold, and xxx$ have been transferred to the bank account (your).

Obviously, taxation with cryptocurrency isn't always clear, and I'd say in many cases a lot of people don't actually know that you have to declare your earnings. I know its confused me in the past. This is probably due to the varying rules, and regulations around it in different countries. However, I'm not sure claiming ignorance is the best solution.

The UK government at least now have it pretty clearly written on the government website what you need to declare. Though, even then there's some things which aren't spelled out for you. Hence, my recommendation for an accountant.

Honestly, I find it difficult to wrap my head around, since you have to get the amount that Bitcoin was worth at the time of the transaction, and then you have to work out how much its appreciated. I personally just like to hand that off to the accountant otherwise if I were to do it mistakes would be inevitable since math certainly isn't my strongest point. Yeah, this means relying on an accountant, but at least you know its being done correctly then. I receive payments in Bitcoin quite regularly, however I don't always take that out immediately. I guess if you were to take the amount out immediately it would make life a bit easier since there's little appreciate of value then.  

I couldn't with a good conscious recommend anyone not to declare their taxes. As the saying goes, some things in life are guaranteed, death, and taxes. Although, I bet its quite common that someone didn't realise they needed to declare cryptocurrency when they haven't converted it to fiat, and then those people realise they need too, and will have to back date a couple of years, and pay fines if deemed appropriate.

Though, I suspect that the majority of users here on the forum aren't declaring their signature payments, and regular income via Bitcoin. Whether that's ignorance or actively looking to avoid tax. Like I said, I would absolutely always recommend everyone to declare everything even if its as you say; unlikely unless audited. I find honesty is the best policy.

[qwertyup23]

I see so many people wearing signatures these days.
How do you state the cryptocurrency income from signature campaigns in your tax return? The tax authorities in Europe want to provide them with a document for the purchase of cryptocurrency, I guess it's the same for USA & Canada with the AML laws.

Currently in the Philippines, our BSP (Central Bank) has somehow remained silent over the implications of BTC and its transactions on the country. Though they are tolerating such transaction, I doubt that this will remain for long especially that its popularity is gaining massive attention throughout the years.

Ever since I started joining this forum last 2017, I have never faced any issues regarding any taxable amount to the earnings that I received. The only problem that I seemed to experience is withdrawing a huge amount in my local exchange and directly sending it to my bank account. Our local exchange had a history of flagging accounts due to 'suspicious activity.'

[ShowOff]

As for your specific case of it being illegal, yeah I'm really not sure how that would work, I doubt they'll be able to claim tax from something that's illegal to use. I guess it depends on the extent it's illegal in your country. Could potentially need legal advice rather than an accountant in this instance or both.

As far as I know so far the government has not set any limits on the amount of income that will be taxed and I also don't know how they will do it for all crypto users including traders or investors. The government only explained that they will not ban cryptocurrencies including bitcoin like China did, but the government is trying to make stricter regulation where it will be difficult to do something illegal like tax evasion or money laundering by people who have a lot of asset.

If the government wants to do a financial audit of crypto users then I think they can do it if the exchange provides them with a recap of the user data including the amount of money that has been withdrawn to the bank account. But the government can indirectly cut income taxes from crypto users through buying and selling transactions or withdrawal on centralized exchanges regardless of whether we make a profit or a loss. So they don't have to wait for crypto user accounting reports and audits to get taxes.

[cryptoaddictchie]

I see so many people wearing signatures these days.
How do you state the cryptocurrency income from signature campaigns in your tax return? The tax authorities in Europe want to provide them with a document for the purchase of cryptocurrency, I guess it's the same for USA & Canada with the AML laws.

Actually it's gonna be hard since you dont purchase the btc or token reward for that hence earned it through services you gained from signature campaign. But those btc earned in our country can be taxed byan app which we used. So maybe that would be the way to track that. Comparing to European countries that are advanced most likely it will take time for us to do the same since we lack such knowledge yet or process about cryptocurrency.

[noorman0]

If the government wants to do a financial audit of crypto users then I think they can do it if the exchange provides them with a recap of the user data including the amount of money that has been withdrawn to the bank account. But the government can indirectly cut income taxes from crypto users through buying and selling transactions or withdrawal on centralized exchanges regardless of whether we make a profit or a loss. So they don't have to wait for crypto user accounting reports and audits to get taxes.

I have given my assumptions here about direct tax deductions when transacting on the exchange (maybe I could be wrong). Regarding the tax from signature campaign income, it may not be taxed as long as the tax payment has been fulfilled in the country of origin of the company where you work (direct tax). You can read the full reference in Indonesian here.

[ShowOff]

I have given my assumptions here about direct tax deductions when transacting on the exchange (maybe I could be wrong). Regarding the tax from signature campaign income, it may not be taxed as long as the tax payment has been fulfilled in the country of origin of the company where you work (direct tax). You can read the full reference in Indonesian here.

Yes, I read it and it is true that this has become a provision in the tax regulations in Indonesia. Maybe it could still change if the government is very adamant about profiting from cryptocurrency users in Indonesia and this will hurt users because of overlapping tax cuts. I really didn't expect that to happen because obviously the signature revenue isn't a huge amount.

[hugeblack]

You cannot get a clear answer. Many countries have different tax systems, but in general it is considered as an income tax, but in my country there is a new tax called "content creators" where taxes are imposed on those who create content on YouTube and other platforms, but in general you will not They can link your address with you except when you make a sale, so if you transfer bitcoins to your bank account once every few months, you will pay one income tax or in the annual report.

[TheBeardedBaby]

There's a few open source tools out there available via Github, that automatically reads an address, and generates a report based on the date of receiving the Bitcoin, and extracts the price at the time of transaction from various exchanges. This can be used in conjunction to an accountant, so you can generate the initial report, and then send that over to them for checking. They'll likely ask a few questions, especially if you've bought Bitcoin during this time, since they'll need to determine your intentions i.e long term holding or short term.

That's interesting, what kind of tools you are referring to? Would love to save my shitty work on that.
Thanks for the info btw.
In Norway everything is clearly defined, they have covered the DeFi as well. Here's a link in case someone is interested. Basically its in English but not everything.
https://www.skatteetaten.no/en/person/taxes/get-the-taxes-right/shares-and-securities/about-shares-and-securities/digital-currency/

[Lucius]

I see so many people wearing signatures these days.
How do you state the cryptocurrency income from signature campaigns in your tax return?

If the state doesn’t know I’m in the signature campaign, doesn’t know my identity and BTC address, and I’m not so stupid as to use a centralized crypto exchange that requires KYC, should I care about taxes at all? Especially when it comes to some small amounts that most campaign participants earn these days.

For example, I would have to pay a tax on other income, which is about 20%, and those who are not employed should pay all possible contributions that are otherwise paid by the employer (pension, health insurance ...), which means about 40%+. The absurdity of the whole procedure is that the tax return should be done after each payment, which means that I should visit the tax office every week and fill out a pile of paperwork.

[AakZaki]

~snip~.

If the government wants to do a financial audit of crypto users then I think they can do it if the exchange provides them with a recap of the user data including the amount of money that has been withdrawn to the bank account. But the government can indirectly cut income taxes from crypto users through buying and selling transactions or withdrawal on centralized exchanges regardless of whether we make a profit or a loss. So they don't have to wait for crypto user accounting reports and audits to get taxes.

True, to date there are no official rules regarding crypto taxation in my country. Currently the system here has no direct audit, therefore if the crypto actor is aware then he will voluntarily register as an income voluntarily.

It's a little bit of a worry if the government is going to do that. Because I know my country's government is not careful with data. In addition, it could be that later Crypto ownership becomes anonymous anymore. But if the state has given the rules of course I will abide by them.

[HCP]

How do you state the cryptocurrency income from signature campaigns in your tax return?

My guess would be that, rightly or wrongly, most people just don't declare it at all. After all... "Bitcoin is aNoNyMoUs!"

Some countries have defined laws now regarding cryptocurrency and income and capital gains and how this should be declared etc... some don't. And I dare say that there is probably a significant proportion of people who don't even realise they are required to pay taxes on their crypto assets and income derived from such.

However, generally as far as the taxman is concerned... "Ignorance is not an excuse"

[tranthidung]

You only be taxed if you sell your Bitcoin and if you let your government knows about that.

I don't say it is a good way to avoid tax but if you don't sell your Bitcoin on centralized exchanges with KYC, and you use mixers to mix your Bitcoin or use centralized exchanges to swap your Bitcoin to privacy coin like Monero.

Then, move it around and in the end, nobody knows you own Bitcoin.

I know Bitcoin professionals don't have to use Monero as a middle coin, they can do all steps with Bitcoin, Coin Join transactions or mixers.

[rhomelmabini]

My country isn't yet has this kind of clarification but as to the recent expo we watch that was on our local board there's the an explanation from one of the employees of central bank that they include it on their SALN. Likely it's a must for these government officials but it isn't yet clear since many or likely most will never disclose it (who knows there are government employees that doing signature campaign as well here).