The questions that arise are: Do cryptocurrencies pay taxes? What type? For tax purposes, Is it better to have them in one country than in another? Do you pay more when buying or selling? What if I treasure them? Do cryptocurrencies facilitate evasion? Should I charge a job in cryptocurrency in terms of its tax consequences?
This list of questions is of interest in relation to the crypto world as it is an innovative phenomenon whose gray areas come from what is, perhaps, its greatest virtue: decentralized control through block chains or blockchain.
This, momentarily, leaves them outside the scope of regulation of central banks and financial institutions and poses challenges for governments when exercising fiscal control.
What taxes does someone who has cryptocurrencies pay in Argentina?
In Argentina, cryptocurrencies, like any other good, are included in the calculation of the Personal Property Tax. Regarding the “Income Tax”, from the enactment of Law 24,430 (2017), cryptocurrencies were expressly included within the chapter corresponding to capital gains and are taxed at 15% on the sale result (to the extent that this result is positive, obviously).
The calculation is made on hard currency, not in Argentine pesos, so that the exchange difference is not part of the taxable profit. In addition, the Province of Córdoba has taxed cryptocurrencies with Gross Income (IIBB) and we believe that the trend will be for the other provinces to implement it in the long term.
Get paid for a job with crypto
As in a good part of the countries of the world, in Argentina cryptocurrencies are not considered as currencies, therefore, when one charges in crypto it is not considered, technically, a monetary payment but a ‘payment dation’, or payment in kind, which basically means canceling an invoice with anything other than a currency. Then, whoever charges in crypto will have to pay for what they billed for the work they did, in the same way as if they had paid it with, for example, a car. As long as an invoice, say, for $ 1,000 is canceled, the taxpayer has to tell the AFIP: ´They canceled my invoice for that amount´ and pay for that. In the case of provinces that charge IIBB to cryptocurrencies, the use of this tool could bring greater complications, or at least additional costs.
When a job is paid from abroad
When you receive a payment from abroad, it is exactly the same as when you are paid in Argentina. In our country the principle of global income governs, which assumes that the person must pay taxes in the country where they establish their tax residence, no matter where they have the asset or where they have earned what they have earned. The problem with Argentina, in particular, is when you have to enter the money, since the country has a regulation on the export of services that forces you to settle dollars in the official market, which represents an exchange loss with respect to what, it is actually worth the dollar in the local market. That is a very particular circumstance of Argentina; In Uruguay, to cite just one example, this is something that does not happen this way.
What happens in Uruguay with crypto payments from abroad? A country that so many Argentines look to or move to for tax reasons
In Uruguay, on the one hand, they are exempt from Wealth Tax, as they are assets abroadr. In that country, unlike Argentina, a principle of “territorial” type of taxation applies, albeit partially, as occurs in almost all Central American countries, and also partially in Paraguay and Bolivia, where it is paid Taxed only on what is earned in the country and nothing that is had or received abroad is taxed. Regarding personal income tax (personal income tax), they are exempt because, being active abroad, they would only pay taxes in the case of paying coupons or dividends and not for capital increases. Since the gains they generate are capital appreciation (improvement) gains, there is no tax.
What about crypto in the United States?
Although there is no law that expressly says so, the United States is assimilating, in fact, to consider crypto, in terms of its tax treatment, as a financial asset, which means that the American treasury does not charge for buying them, or for having them in the wallet. When the crypto is sold, it is considered that what is generated is a capital gain, ´capital gain´, and not one of income tax (income tax), which has a higher charge. Today the most developed countries are following the American model, that is, they do not tax the purchase, nor the possession, only the sale and at rates of capital gain, as a financial income.
Crypto in the rest of the world
The responses of the countries have been diverse; from prohibiting them, to seeing them as an opportunity to attract investment and even, more recently, adopting them as legal tender. There are countries that have even launched their own cryptocurrencies and even accept them for the payment and refund of taxes, fees and other services. Such is the case of Bermuda, which uses StableCoins (USDC), a currency linked to the value of the dollar, which has received support and investments from companies dedicated to cryptography or – going to the other end of the ideological spectrum – the Petro, the currency oil-backed Venezuela digital. Some governments have encouraged the use of these currencies through tax exemptions to attract investment, in addition to other tax incentives for non-residents. Such is the case of Portugal, which does not tax natural persons (yes, legal entities) who sell cryptocurrencies nor will it consider it a capital gain, or income from investments that are normally taxed at 28%. A novel case is that of El Salvador, which became the first country in the world to establish a particular crypto as mandatory legal tender, which means, among other things, that it forces its citizens to receive crypto as payment, which allows us to convert it to dollars without paying taxes for it and even paying taxes in said currency.
Other countries “crypto friendly”, In addition to those already mentioned, such as Bermuda or Portugal, are the following: Andorra, Switzerland, Germany, Singapore, Belarus, Malaysia, Georgia, Slovenia, Malta, Japan and South Korea. These are States that have understood that this new technology has certain advantages and have created a favorable environment for its development.
Despite the detail of the cases that I describe, I do not advise generalized and exhaustive answers in relation to the tax aspects of the crypto world.
On the one hand, because we are still in an extremely green area in relation to what we know of the phenomenon, which determines that any official regulation, based on which it can be started to tax them, today will always be very partial since we are facing a phenomenon that has not yet deployed its full potential.
Lawyer, founder and CEO of @UntitledLegal, a legal services boutique specialized in international estate planning and the establishment of investment funds.