Belgian Tax Authorities Going After Crypto-Currency Investors

It is no surprise, that the Tax authorities in Belgium, the Special Tax Inspectorate (STI) have begun to monitor investments involving Crypto-Currencies.

The STI have started investigating cases where citizens of Belgium have traded in digital currencies on foreign exchanges, and similar to many other countries around the world, the Belgium tax authorities are checking to see if these investors have been claiming their dealings and paying the 33% Capital Gains tax.

This gain would be reported in the “other income” section on a Belgian tax return.

Belgian tax authorities have found the taxation of Crypto-Currency challenging as every other county has, because the management of these assets takes place on foreign trading platforms and there is no jurisdiction around virtual space… Yet.

Likely, the Belgian tax authorities will follow suit of other countries and tax the gains as a commodity based on the location and / or residence of the trader.

The incentive to report will come in the way of significant penalties and interest when the STI finds the taxpayer before the taxpayer reports.

STI opened the investigations after receiving information from a foreign tax authority about the Crypto-Currency dealings of several Belgian citizens.

Information sharing among all tax authorities increased effective January 1, 2018 with the signing of The Multilateral Competent Authority Agreement (MCAA).

The MCAA is a multilateral framework agreement which provides a standardised and efficient mechanism to facilitate the automatic exchange of information in accordance with the Standard for Automatic Exchange of Financial Information in Tax Matters (Standard).

This new framework avoids the need for several bilateral agreements to be concluded, which means each participating country has ultimate control over exactly which exchange relationships it enters into and that each countries’ standards on confidentiality and data protection always apply.

In case you are ready to deem this framework illegal, the legal basis for MCAA rests in Article 6 of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters (Convention) which provides for the automatic exchange of information between Parties to the Convention, where two Parties subsequently agree to do so.

So as it becomes easier to get information on local citizens from international tax regimes, you can expect government tax authorities, like the STI to continue to approach trading platforms, and other governments  directly to obtain more data about Belgian citizens and their transactions related to digital currencies.

In December 2017, the Belgian tax agency, STI, agreed that a 33% withholding amount would be applied to profits and incomes from Belgian citizens who were involved in speculative trading of Bitcoin and other Crypto-Currency.

The tax is imposed on private individuals who trade in digital currencies with the intention of earning profits from the price fluctuations.

When the crypto trading is conducted by a business, or by an individual as a business, the tax rate might be as high as 50%.

Governments believe that Crypto-Currency companies should be obliged to cooperate with tax authorities, or as in the case of the US, where the IRS sent legal requirements to a firm, who were then required to do so by law.

In Belgium, Crypto-Currency are neither legal, nor illegal, however, the government have not announced a comprehensive policy yet, and like other EU Countries, appear to be waiting for a common European policy.

If you have been dabbling in Crypro-Currency, and not reported it on your Canadian Tax return, you should reach out to us at inTAXicating Tax Services, and we can help you amend your return, report the gaims, claim the losses and get filed before the CRA finds you!

info@intaxicating.ca

 

Advertisements

IRS Targets Crypto-Currency Exchange Coinbase and Wins!

A Popular cryptocurrency exchange, Coinbase, has been forced by a US court order to hand over a list of 13,000 of it’s customers’ names and assorted personal information to the Internal Revenue Service (IRS) so that the IRS can determine who has been reporting their Crypto-Currency transactions and to tax and penalize those who have not.

The link to the original article is here;

https://news.bitcoin.com/coinbase-compelled-by-irs-to-provide-13000-customers-information/

Coinbase, a San Francisco-based cryptocurrency exchange notified thousands of customers, to provide the IRS with “taxpayer ID, name, birth date, address, and historical transaction records for certain higher-transacting customers during the 2013-2015 period.”

While 13,000 is a lot, if you have used Crypto-Currencies in the US, or in Canada, you might want to get filing, and fast.

Apparently, Coinbase received a summons from the IRS in late 2016 asking for a wide range of records relating to approximately 500,000 Coinbase customers.  Coinbase fought this summons in court – not sure if they won and the 13,000 is the win or if that matter is still pending but the 13,000 is a different attempt by the IRS to gather information they are entitled to under the IRC.

Still shocking to us at inTAXicating is how few Canadian and US crypto enthusiasts had even bothered to address the tax issue.

Many on both sides of the border claims that both the IRS and the CRA have been really vague on how they plan to address Crypto-Currencies, however than cannot be further from the truth.

On March 25th, 2014, the IRS issuesd this release; https://www.irs.gov/newsroom/irs-virtual-currency-guidance; and

On March 17, 2015, the CRA issued a release about how the Canada Revenue Agency will be handing Crypto-Currencies and they have been on top of it with the most recent detailed release being January 18th, 2018.

Whether you believe in taxation or that taxation is theft – something brought in from the BNA Act of 1867, or there are privacy rights stemming from the 3rd Amendment in the US, the bottom line is this.

If you don’t report your interactions with these digital currencies, you are going to pay that tax plus penalties and interest.  Why give the government more than they are asking for?  Include the currencies on your tax return, pay the tax, and be fully compliant.

If you have failed to include your adventures in Crypto-Currencies on your tax returns, you are in trouble.  You need to contact inTAXicating and we can assist you in filing your returns to reflect those amounts.

Remember, the CRA’s Voluntary Disclosure Program is changing as of March 1st, 2018.  Once that loophile closes, it’s going to be very difficult to get a fair shake from the government.

Don’t wait, hoping there is going to be miracle court order or that the CRA or IRS will decide that they have enough taxes already.

File!

inTAXicating can be reached at info@intaxicating.ca to book an appointment.

Copy of Court Order;

Coinbase Compelled by IRS to Provide 13,000 Customers' Information
There’s plenty of misinformation regarding tax preparation and how to report digital currencies, however the CRA and IRS have been very clear.

If you have transacted publicly on any centralized exchanges such as Coinbase and are US or Canadian residents – and regardless of your opinion on the morality of tax – the IRS and the CRA have courts on their side and they can sentence you to jail.