Yes I know, who feels like talking about taxes! I don't, but here I go!

As more and more regulations are being put on crypto I think that it will become increasingly important that:

1.  We are aligned with projects that are compliant (if not they risk legal action!).
2. We inform ourselves as to what our tax obligations are and we do our best to pay as little as possible.

Up until this time the authorities in the  jurisdiction of Switzerland where I live have been taking a wait and see attitude and I haven't had to worry about taxation. Things are changing though. 

Just last week an article appeared in our local paper which explained some changes to the tax laws and I've done my best to translate it from the Italian for you. I have put the main points of the article in bold.

Photo credit: Pixabay.com

This is The Translation of an Article That Appeared in Our Local Paper

Most likely things will be somewhat similar in your area. If you take the time to read it through you will see that the article speaks of Capital Gains (which are not taxable where I live in some instances) and income through mining. Since we are in a sense doing mining (with our minds as it were) it would appear that this will qualify as taxable income.

Here's the article which was written by Samuel Vorpe:

 The Taxation of Crypto Currencies!   (Giornale del Popolo March 6, 2018)

In recent times many people have been infected by the fever of crypto currencies and have decided to invest part of their assets in virtual money. The latter, in addition to constituting an investment, are also increasingly used by people as a means of payment without the need of using a financial intermediary.    

Just yesterday the division of the contributions of the Canton Ticino, following what has been done also by other cantonal authorities (Zurich, Zug and Lucerne) has published its practice to facilitate a correct tax declaration of crypto currencies. First of all it should be noted that the possession of units of crypto is, from an economic standpoint, comparable to the possession of cash or precious metals and therefore constitutes part of a persons assets.   

Not only Bitcoin, but all crypto currencies are subject tax declaration (e.g. Ethereum, Onecoin, Dash, Litecoin, Ripple, etc.) and are taxable income for the purposes of tax on the substance on the basis of the value at 31 December.   

The value of the crypto currency is determined on the basis of official lists issued by the Federal Tax Administration (FTA). The tax office therefore considers the crypto as true foreign currency.    

If we take Bitcoin, at the end of 2017, its units corresponded to a value of CHF 13.784,38. This amount must be entered in the tax declaration, in particular in the form of the list of securities and other placements of capital under the heading "Other values and credits". As evidence, the taxpayer may include with the declaration a print of the CD "wallet" (the digital portfolio in which are held the crypto currencies).   

Since the acquired crypto is essentially equal to performing a "currency exchange", what is obtained is a gain or loss by the taxpayer. As regards tax on income, since crypto qualifies as a security, it is necessary to assess whether these coins belong to the owner privately as a taxpayer or to a commercial entity.   

When they belong privately to the taxpayer, the profit achieved is, in principle, exempt from tax (art. 15 para. 3 LT, art. 16 para. 3 LIFD), resp. losses are not deductible.    

When instead they belong to a commercial entity, the profit is taxable, while losses deductible (art. 17 para. 2 LT, art. 18 para. 2 LIFD).   

 It must however be noted that in the course of the years the jurisprudence of the Federal Court has made it more difficult to achieve exemptions from income tax. According to the Federal Supreme Court the profits deriving from an activity that goes beyond the simple administration of private resources represent an income from gainful activities independently and also goods used for such activities constitute commercial goods, even in the absence of any activities organized in the form of a real undertaking.    

The AFC has therefore published in its circular  n. 36 of 27 July 2012, which is also applicable to cases of crypto currencies. In this document are defined criteria that, if CUMULATIVELY FULFILLED, exclude the taxable income of  capital gains achieved.    

Finally it can also be noted that payment of wages and salaries in crypto are also taxable as well as the crypto gained through mining.     

Steemit And Tax Planning

Since we are working with an open source blockchain it should be fairly easy to extract all of the data necessary for an income tax report (as distasteful as this may be).

I would like to see the development of a program that could "pull off of" the blockchain the data pertinent to individual Steemers in their personal jurisdictions. The app could, for instance, differentiate  between what was a capital gain and what was "mined". It would also be capable of doing so after having specific search periods or dates entered.

Not only would such an app help individual Steemers but it could protect Steemit.com from any claims that it was not interested in compliance.

Would You be Interested in Helping to Build a Tax Planning App?

Perhaps an App which helps with taxes already exists and if so please let me know in the comments. If not, would you be interested seeing one made or even in working on such a project?

The project could be funded by writing progress reports about its development and I'd be willing to help in any way possible.

What are your thoughts on this topic? 

Until next time,

@kus-knee (The Old Dog)

Let's Succeed Together!