Legal The European Union has passed no specific legislation relative to the status of the bitcoin as a currency, but has stated that VAT/GST is not applicable to the conversion between traditional (fiat) currency and bitcoin.VAT/GST and other taxes (such as income tax) still apply to transactions made using bitcoins for goods and services.[1]:European Union In October 2015, the Court of Justice of the European Union ruled that "The exchange of traditional currencies for units of the ‘bitcoin’ virtual currency is exempt from VAT" and that "Member States must exempt, inter alia, transactions relating to ‘currency, bank notes and coins used as legal tender’", making bitcoin a currency as opposed to being a commodity.[2][3]According to judges, the tax shouldn’t be charged because bitcoins should be treated as a means of payment.[4]According to the European Central Bank, traditional financial sector regulation is not applicable to bitcoin because it does not involve traditional financial actors.[5]:5

Others in the EU have stated, however, that existing rules can be extended to include bitcoin and bitcoin companies.[6]The European Central Bank classifies bitcoin as a convertible decentralized virtual currency.[5]:6In July 2014 the European Banking Authority advised European banks not to deal in virtual currencies such as bitcoin until a regulatory regime was in place.[7]bitcoin april crash chartIn 2016 the European Parliament's proposal to set up a taskforce to monitor virtual currencies to combat money laundering and terrorism, passed by 542 votes to 51, with 11 abstentions, has been sent to the European Commission for consideration.[8]bitcoin ogni oraThe European Commission also notably presented a "parallel" proposal aimed at preventing tax evasion techniques as revealed in the Panama Papers.[9]bitcoin farm burned down

In 2017 it was revealed that the proposal will require cryptocurrency exchanges and wallets to identify suspicious activity.[10]A controversial new Congressional bill regarding digital currency has just been introduced by Sen.The bill would require the Secretary of Homeland Security to work with the Commissioner of U.S.bitcoin expo londonCustoms and Border Protection in order to put forward a "border protection strategy to interdict and detect prepaid access devices, digital currencies, or other similar instruments, at border crossings and other ports of entry for the United States."bitcoin declared currencyThis bill, if passed, would have significant implications for digital currency holders around the world.bitcoin declared currencyBill S.1241 The proposed bill, designated U.S.

Bill S.1241, was introduced on May 25 of this year and co-sponsored by Sen.Diane Feinstein (D-CA), Sen.John Cornyn (R-TX), and Sen.The bipartisan group of Senators who have put the bill forward hope that it will deter individuals entering the United States from bringing in undetected and undeclared assets in the form of digital currencies such as Bitcoin and Ethereum.A portion of the bill stipulates that the Department of Homeland Security and the U.S.Customs and Border Protection agency would devise "an assessment of infrastructure needed to carry out the strategy" of blocking these undeclared funds from entering the country.The Secretary of Homeland Security and the Commissioner of U.S.Customs and Border Protection would be required to present their findings to Congress within 18 months of the passage of the bill.Implications for Travelers Travelers entering the United States at the border are already obligated to declare any currency holdings of $10,000 or more, regardless of whether or not custom officials might have the means to detect those holdings.

While digital currencies occupy a somewhat unusual place in many portions of finance law, a report by Smaulgld suggests that the situation is relatively clear in this case.Because digital currencies technically accompany a holder anywhere that he or she goes, including across a border, that traveler would need to declare his or her entire cryptocurrency portfolio every time he or she enters the United States.This is different from the requirements of travelers who hold bank accounts and/or precious metals valued at more than $10,000 which are stored outside of the country.How would the federal government develop an infrastructure to detect foreign holdings including digital currencies?It is possible that the Foreign Account Tax Compliance Act could be expanded to regulate foreign cryptocurrency exchanges.Alternatively, a global monitoring system could be put in place to watch over blockchain ledgers.Beyond that, there are a number of measures that agencies could take at the border to deter travelers from withholding information, including extreme vetting systems and harsh penalties for nondisclosure.

Regardless, it is safe to assume that the cryptocurrency community, famously opposed to central regulation, will have something to say about this bill.Want to learn how to invest?Get a free 10 week email series that will teach you how to start investing.Delivered twice a week, straight to your inbox.No thanks, I prefer not making money.Filing Payments Refunds Credits & Deductions News & Events Forms & Pubs Help & Resources for Tax Pros News Essentials The Newsroom Topics Multimedia Center Noticias en Español Radio PSAs Tax Scams The Tax Gap Fact Sheets IRS Tax Tips myRA: Retirement Latest News Home IRS Virtual Currency Guidance : Virtual Currency Is Treated as Property for U.S.Federal Tax Purposes; General Rules for Property Transactions Apply IR-2014-36, March.25, 2014 WASHINGTON — The Internal Revenue Service today issued a notice providing answers to frequently asked questions (FAQs) on virtual currency, such as bitcoin.

These FAQs provide basic information on the U.S.federal tax implications of transactions in, or transactions that use, virtual currency.In some environments, virtual currency operates like “real” currency -- i.e., the coin and paper money of the United States or of any other country that is designated as legal tender, circulates, and is customarily used and accepted as a medium of exchange in the country of issuance -- but it does not have legal tender status in any jurisdiction.The notice provides that virtual currency is treated as property for U.S.General tax principles that apply to property transactions apply to transactions using virtual currency.Among other things, this means that: Wages paid to employees using virtual currency are taxable to the employee, must be reported by an employer on a Form W-2, and are subject to federal income tax withholding and payroll taxes.Payments using virtual currency made to independent contractors and other service providers are taxable and self-employment tax rules generally apply.