Two Austrian cabinet ministers have given guidance on bitcoin's status as a financial instrument and tax treatment by answering parliamentary questions submitted by a member of the legislature.
The finance minister also gave guidance on how capital gains taxes from bitcoin investments would be applied. Individuals who sell bitcoin holdings within a year of purchasing them would be subject to capital gains tax, but if the digital currency assets are held beyond a year, proceeds from a sale are not subject to CGT.
The finance minister also outlined accounting rules for businesses dealing in bitcoin. Digital currency assets have to be declared as either fixed assets or working capital. Digital currency held for the long term can be depreciated.
Financial instrument ambiguity
Mitterlehner, however, appeared to contradict the finance minister's assertion that bitcoin should not be treated as a financial instrument. Mitterlehner made reference to a German policy recognising bitcoin as a 'unit of account' and requiring commercial bitcoin transactions to gain permission from the German financial markets regulator.
"The two ministries contradict each other, so there is no [clear] way to interpret [the guidance]," said Peter Šurda, an Austrian economist who studies bitcoin.
Another area of ambiguity centred on bitcoin and VAT. According to Šurda, the statements given by the ministers are vague about how companies dealing bitcoin should have Austria's VAT of 20% applied to transactions.
He gave the example of a brokerage that charged a commission for exchanging bitcoin. The tax could be applied just to the commissions, or the brokerage could be liable for VAT on the transacted amount, which would be a significantly heavier tax burden. Surda said the ambiguity could pose a risk for operators of bitcoin ATMs, for example.
Coinfinity operates a Lamassu ATM in the city of Graz. However, its founders remain unconcerned about the latest guidance on VAT, noting that an EU-wide standardised treatment of VAT for bitcoin is due in the coming months.
"Operationally, it doesn't change much. We're currently charging commission for the ATM, and treating that as subject to VAT," said Stefan Kliment, a co-founder of Coinfinity.
An unconventional politician, Alm made international headlines in 2011 when he won the right to use a photo of himself wearing a pasta-strainer as headgear on his driver's licence. Alm's rationale was that the strainer qualified as 'religious headgear' because he is a committed 'pastafarian'.
Featured image via Emmanuel Dyan / Flickr
CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk offers all employees above a certain salary threshold, including journalists, stock options in the Bullish group as part of their compensation.