Taxation of individuals

As there is no specific provision on the specific matter, we quote our opinion until the Ministry of Finance issues an opinion on the matter and we consider that these incomes are gains from capital transfer capital gains and are taxed in accordance with article 43 of the Tax Code at a rate of 15%. It is worth noting that these incomes are also subject to a solidarity levy.

The goodwill (Net sales value – Purchase cost) acquired by a natural person, which results from the difference between the sales price received during the sale and the acquisition price paid by the taxpayer-investor for purchase as stated in article 42 paragraphs 3 and 4 of Law 4172. Expenses directly related to the purchase or sale of crypto-currencies are included in the acquisition or sale value, therefore supply costs of the digital platforms on which the purchases and sales are made form the final result that will be taxed.

Here is a small example:

Example

If an individual buys crypto-currencies worth 1,000 euros and pays expenses directly related to their purchase (e.g. exchange commission) 50 euros and then sells the above cryptocurrencies for 3,000 euros and at the same time incurs expenses of 50 euros, the final amount of goodwill on which 15% tax is due amounts to 1900 euros (1,000+50 =1,050) Acquisition cost, (3,000-50 = 2950) Net sales value.

If the individual has made successive acquisitions of crypto-currencies and then sells all or part of them, the average acquisition price resulting from the total acquisition value of the crypto-currencies by their quantity is taken as the acquisition price of the sold crypto-currencies. (pol. 1032/2015 and pol. 1082/2018).

The time of the sale of the cryptocurrencies is taken as the time of taxation of the capital gains and not the transfer of the profits to the bank accounts. E.g. if a sale was made at a profit in December 2021, this profit will be taxed upon the submission of the 2022 return, regardless of whether these remain on the digital platform and are transferred to the investor's bank account at a later time, either in full or by successive remittances.

Particular attention should be paid to the amounts paid for the acquisition of cryptocurrencies which are presumptive and should be justified. These amounts will be entered in code 743 of table 5 of form E1 of the tax return in the year of their purchase.

In the event of a sale, the amount of the capital collected minus the transaction costs, will be entered in code 781 of table 6 of the E1 form of the tax return, in the year of their sale.

With regard to any capital gain arising from the sale of cryptocurrencies, it will be reported in code 865 of table 4E of form E1 of the tax return (gain from the transfer of foreign securities).

Importantly, if a loss arises from the sale of cryptocurrencies, it can be offset against future profits from the same income category within the next 5 years (pol. 1032/2015). In this case, code 871 of the E1 form of the tax return is filled in.

The taxpayer must keep detailed statements accompanied by the supporting documents of the digital platform where the purchases and sales took place and be able to prove how the amounts entered in the tax return codes are derived. It should be noted that digital cryptocurrency trading platforms own the personal information of each trader and do not offer anonymity.

Also, special attention should be paid to incoming remittances to bank accounts from digital platforms, which are the product of liquidation of cryptocurrencies. In order for these amounts to be tax-deductible, they must have been declared at the time of their sale.

Legal entities that have purchased crypto-currencies as an investment product and liquidate them in the future, any resulting capital gain will be taxed according to the general legal entity taxation provisions and the applicable tax rate when submitting the tax return.

Regarding the accounting management of the market, SLOT has issued opinion 104 EX 27.2.2018

Here we should mention that in accordance with the C-264/14 decision, the European Court ruled that among the transactions that are exempt from VAT are also the transactions that consist of the purchase and sale of conventional currencies against Bitcoin and vice versa, which are considered currency exchanges.

Also in the decision C-264/14 of the European Court of Justice it is stated: According to the tax law committee, the virtual currency "bitcoin" is a means of payment that is used like legal means of payment).

Accounting Department | AFS#mazimegalonoume