Joining a host of other countries in clamping down on cryptocurrency earnings, Bulgarian tax authorities announced on Monday that they would be looking at companies that deal in digital assets to determine whether or not they owe tax.
More specifically, the National Revenue Agency (NRA) said that they would be looking at companies that sold cryptocurrency. According to the tax authority, there are nine companies operating in Bulgaria providing cryptocurrency related services.
The NRA won’t only be looking at the companies to ensure they are paying their taxes. They will also be looking at the people making transactions on the platforms they operate to determine if there are Bulgarians avoiding tax by holding cryptocurrency.
Any profits made via the sale of cryptocurrencies would fall under the NRA’s definition of income. That means that an individual would have to include any profits made via cryptocurrency trading in their regular income tax report.
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For those of us unfortunate enough to dwell in countries with income tax rates that border on the criminal, this may sound harsh. Fortunately, Bulgarians have a 10 percent flat tax rate which means the government will only pinch a tenth of your cryptocurrency earnings there -whether it’s $10 or $10 million.
The NRA is also not the only governmental organization looking to start picking away at cryptocurrency traders’ earnings. Just last month, a cryptocurrency tax was discussed at a G20 meeting in Buenos Aires.
In Western Europe, Spanish authorities have made a number of strides towards taxing cryptocurrency earnings and, across the world in Japan, the government has put in fairly comprehensive rules that will allow it to track cryptocurrency earnings.
Perhaps the most interesting approach to cryptocurrency taxation was taken by the US state of Ohio. Late last year, authorities ruled that companies and individuals could pay state tax in Bitcoin – something that American retailer Overstock decided to do at the start of this month.