Write your own ideal Lex Bitcoin coming into effect 1.1.2014

[apetersson]

We are preparing a position paper regarding bitcoin which we plan to distribute to european politicans.

one of the reasons for this was : https://bitcointalk.org/index.php?topic=77311.0
currently only industry expert from banks, credit cards are represented in this forum, and we hope that the opinions from the bitcoin community will also be heard there.

so please tell me your ideas.

we will let you know when we have finished the first draft of this document.

[ArticMine]

If there is one critical thing here it is VAT. Bitcoin must be treated as currency or money for the purposes of VAT otherwise there would be chaos with Bitcoin being used as a means to avoid and evade the VAT. The paradox here is that if the EU tries to tax Bitcoin with VAT not only will the EU governments not get additional VAT, Bitcoin could literally undermine the entire  collection and administration of the VAT in Europe.

By the way I am in Canada where we have a similar tax called GST.

[lonelyminer (Peter Šurda)]

I am sorry but I do not understand how one can use Bitcoin to avoid VAT if it is classified as "digital service". Services are also subject to VAT, in fact there is a EU directive for VAT on e-services which standardises the procedures. Assuming Bitcoin is not a financial instrument or currency from the perspective of VAT, if you're exchanging something for Bitcoins then, you need to add VAT on top of it. For B2B or C2C transactions, the net result is zero, because either the VATs cancel each other out or there is no VAT. For B2C transactions, if the business is "paying" with Bitcoins, they need to add VAT upon it (from account perspective, subtract the VAT from the sum paid out). This might have effects on salaries being paid in Bitcoin, but I see no other practically relevant situation.

Am I mistaken?

Also, I don't understand why it would be a problem if Bitcoin users could use a legal loophole to lower their taxes. On the contrary, that would be beneficial both for the users and for the spread of Bitcoin.

[ArticMine]

The key is that was used to be a B2C transaction now becomes a B2B transaction as consumers register for VAT since they are now in the business of selling "digital services" when they purchase anything with Bitcoin. In many cases the will be forced to register for VAT because they will go over the minimum in transaction volume. Now if you turn every transaction into a B2B transaction there is never any "value added" and hence no tax.

There is a reason why every jurisdiction that has a VAT or GST, does not apply the VAT or GST to money. It is the only way such a tax can work.  By the way VAT or GST is a very common type of tax. The only major economy that does not apply this tax is the United States. http://en.wikipedia.org/wiki/Value_added_tax

I do agree with one thing. If a country is so bureaucratic that they try to apply a VAT or GST to Bitcoin, this could could drive the value of Bitcoin sky high once people figure out how to avoid the VAT or GST using Bitcoin.

[lonelyminer (Peter Šurda)]

The key is that was used to be a B2C transaction now becomes a B2B transaction as consumers register for VAT since they are now in the business of selling "digital services" when they purchase anything with Bitcoin. In many cases the will be forced to register for VAT because they will go over the minimum in transaction volume. Now if you turn every transaction into a B2B transaction there is never any "value added" and hence no tax.

I see, thank you for the explanation. I need to think about it but I am intrigued.

By the way, I had a somewhat similar case in the past where an unexpected quirk caused a benefit to me. In the EU, I need to be resident in a country in order to have a health insurance there. However, because I have a business registered in a country where I'm not resident, I am obligated to have health insurance in that country as well, even though I pay the minimal contribution. This allows a broader spectrum of services being available to me.