Here at Indirect Tax Partners, the most complex and difficult indirect tax matters are often considered over a beer and a dip in the pool. As we see main stream companies such as Expedia start to adopt the Bitcoin as a payment option, the question of how they should be treated for tax purposes has been front and center of my mind during those
pool thinking moments.
I’ll start with my conclusion – Bitcoins should be treated in the same way as other forms of currency from an indirect tax perspective.
Why I hear you ask. That is not the easiest of questions to answer in a blog post, so I have built out a lengthy paper that is going to address all the areas of contention, namely:
- History of non-traditional payment options
- Characteristics, similarities and differences
- Indirect, Direct and Other Tax considerations
- Double & Non Taxation issues
- Taxpayer and User Certainty
- Accounting rules
- Fiscal Neutrality
- Regulatory, Fraud, Security and Competition
The EBA recently set out there views on Bitcoins – not surprised by their position -but I would point out that even with massive regulation (mortgage and banking folks sit up please), there is still no certainty that any financial transaction will be safe or secure. Bitcoins are here to stay unless a large government buys them all and refuses to resell.
I’ll post a link to the paper once it has been completed. Feel free to chime in here with any thoughts from your experiences.