Topic: Norway Will Tax Bitcoin + VAT (Read 3400 times)

I beg to differ, it's "only" 25% and 15% for foods (">http://no.wikipedia.org/wiki/Merverdiavgift)

I think that in Singapore also you have to pay the VAT (called GST there). But there it is around 4%, not 30% as in the case with Norway.

Both tax and vat ?!

Bitcoin is not damn alcohol to do that.

Good there is other countries out there.

Yep.

A similar incident has already happened in Florida, US. The usage of Localbitcoins doesn't always allow you to escape from the governmental persecution.

That sucks. Hope it's bad google translation

Yeah I kinda agree as long as we can exchange btc from cash, they cant  do anything about it.  Im sure also you can sell to a person who ill buy many for cash at wholesale price saving you time and effort then paying taxes

Norway will instead treat Bitcoins as an asset and charge a capital gains tax, after Germany in August said it will impose a levy on the virtual currency.

...Until you get entrapped by an Norwegian undercover cop dressed as a cute 18 year old blonde with ponytails for your illegal bitcoins traffic.

I don't understand the need to tax bitcoin but okay..

there's still a way around this and it's called localbitcoins.com

I hope Norwegian bitcoiners here could answer your question directly.

So this only affects purchasing BTC with fiat or when using it? Or both?

Essentially it wont be that much. If VAT was applicable, it would only be when consumers go into bitcoin. That means they can get the bitcoins from overseas cheap, and still be using them like normal currency domestically. This is what people will do if bitcoins take hold, and i think the authorities will realize by seeing that people just buy the bitcoin overseas, that the VAT is not giving them any revenue, and they might as well remove it again. There will also be the bitcoin advocates who will use the courts and the media to have the VAT removed. There was an example in Denmark, where they increased taxes on unhealthy foods. The result was people drove to germany to do the shopping. The danish stores and merchants were complaining, and eventually the taxes got removed

Hah! There are still some vikings left. Or let's just call them masculine men! The fact that a large part of the male population has turned into whimpy bitches is another discussion altogether. I don't think the gene material has changed much since the vikings lived though. But these are other times, you don't kill people who you dislike any longer. :p

I like it, although the reply was sarcastic. The vikings are gone many centuries ago. Not even remnants of that history remains now in Scandinavia. Radical feminism has destroyed masculinity there. Every week or so, I am reading horror stories like this, this and this.

Norwegian males with any self respect will soon go to Kirkenes and then cross over to Nikel or Zapolyarny via the Storskog crossing.

http://www.youtube.com/watch?v=yn3cHsHnUPM

If you think of it - you have the oil platforms in the North Sea. The special millitary forces have conducted several training sessions out there, where the scenario is that a foreign force or terrorist group have attacked one or more platforms. Norways economy depends a lot on the oil, and if one or more of these platforms were destroyed, that would cause big monetary losses.

And it is true what bryant says, Norway has traditionally been a very peaceful country, of course if we discount the vikings and all their killings and slaughters, the time of colonization, triangle trade, and all the wars. So it's easy to play the blame game when something like this happens. And media did that to a large extent, something they always do if something goes wrong. If something never goes wrong, it's never mentioned.

If stuff like what happend at Utoya was a regular occurence, I'm sure there was better preparations for cases like it.

I agree with the bureaucracy part.

But then, Norway is a very peaceful place. Terrorist incidents like the one occurred in Utoya occurs like once in a millennium. They never thought that something like that would happen in Norway.

Yes. And now Imagine if there was a serious attack from a foreign power, or a very organized group. Perhaps there would be attacks on several different places at once. In effect, Norway would not be able to respond quickly enough. There are talks about getting more helicopters though, I'm not too updated on this. But frankly, a country as rich as norway should always be able to respond within 30 minutes anywhere in the country, and then preferably with the millitary when something like this happens.

And then when all the faults were pointed out after the slaughtering took place, nothing happened for months afterwards. The road outside the prime ministers office was also pointed out as a security risk years before the attacks took place, yet it had not been closed for traffic.

Most national projects are over budget and delayed. That's the state of Norway.

People trust too much in the government, but when the shit hits the fan, are they there to save you?

And have all the people forgotten the crisis in the 1980's where stocks in banks were written down to zero? So much for the safety of the banks, and the protection from the government...

Three banks had all their stocks reduced to zero. All investors lost all their money. This happened because of a very controversial law made in the autumn 1991. This was a law allowing for expropriation which allowed the state to overtake the banks in crisis by zeroing the stocks and avoiding public administration. The law was trumped through quickly. This was done at the end of a year, preventing stock holders from writing the losses off on their tax. Had the govt waited till the next year, the stock holders could've written it off. The govt also ensure that a large number of private stock holders lost all their stocks without any compensation, because of a special law who allowed for expropriation without compensation. 170 000 stock holders in the 3 largest business banks had their stocks written down to zero.

And now with the current welfare system, the financial system will break down in about 20 years. The oil money will run out. Do you think your bank deposits then are safe?? Is it unthinkable that the government will not impose super-taxes to be able to pay for running costs?

What happened in Cyprus? And what are the talks about reducing the Norwegian state guarantee of 2 million NOK pr bank account to 100K Eur according to the EU rules?

Anyone who puts their full faith and trust in a centrally run government and financial system clearly do not understand the issues at play here.

Already we see that privacy rights are evaded, surveillance is being ramped up, and the government want to control everything that's related to the financial system. They want to abolish cash, and naturally they don't like bitcoin much either.

The bottom line is that you cannot trust the state to look after your interests. You're the only one who can protect your own assets and ensure that you survive in the event of a crisis in the future. Gold, silver, bitcoin, real estate, it's your choice where you want to put your money, but the traditional banking system may not be the safest bet depending on what happens in the future.

Many of those who sit in powerful positions are not even comfortable with using e-mail and digital tools, how do you expect them to understand something like bitcoin?

When the killer started his rampage on the island, the police could not come fast enough because there were one helicopter. The pilot was in vacation. No one else could replace him. Finally the cops made it to the place. their boat to reach the island broke down. They had to use someone's boat.

Those are the kind of bureaucrat adults in Norway that understand Bitcoin.

Your text was somewhat long to be read in full.

But the tax department of norway classify bitcoin as an asset class, but also at the same time as an electronic service. They state that anyone buying btc from a company is supposed to pay 25% VAT. This will of course kill bitcoin in Norway if enforced, and currently none of the bitcoin companies selling bitcoins adhere to this.

You said you wanted an adult view. Here's one for you:

Everything in regards to technology in Norway is usually very slowly adapted, esp. so in the public sector. And you really cannot handle bitcoin with current rules and regulations, they're not made for cryptocurrencies.

There was recently a story about a man who catched an ID-thief. The thief stole his passport and bank card and took out a loan and rented a tv in the victim's name. Once catched, the victim contacted the thief, and togheter they went directly to the police in Oslo to have the thief being questioned by police. They were abruptly hushed away as the police didn't have the time for such cases.

So, if you were to do something or anything that's against the law, and you're not dealing in millions, chances are nobody will bother one bit.

There exist many laws in Norway, many of which are never enforced. For instance both steroids, narcotics and prostitution is illegal, but you can get hold of all of that within a 0.5 km radius from where the government work and play daily.

The politicians are mostly concerned about themselves and their own positions. Much of the politics that you see take place are symbol politics. Nice words, and not much more than that.

So, unless you're absurdly attached to the idea that you need to do everything within the law, there's nothing to be afraid of. If you exchange bitcoins in private between private persons, there's in practice very little, if anything, to be afraid of. Too many people obsess over trivialities and technicalities while an entire lifetime can pass by without anything ever happening.

And of course, if you want to have the mature adult viewpoint of things, why do you not contact the relevant departments directly yourself? Be prepared for months of waiting time, and when you finally receive an answer, the case is probably handled by some low level bureaucrat that doesn't understand two bits about bitcoin. And if you want to get a legal binding answer to any question, you have to pay quite a lot of money, and even then it will take months before you get your answer.

Meanwhile, the govt's more than happy to collect all sorts of possible taxes. Everything's taxed. It's just a matter of time before the fresh air in the mountains are taxed.

I hope there are some savvy adult people in this forum to explain this properly...:

* I understand the "capital gain" part of it: If I buy 1 BTC for 500 EUR and sell it 10 days later for 800 EUR, I pay tax for the capital gain (300 EUR) I made. E.g. if capital gain tax rate is 28%, I have to pay 28% of 300 EUR = 84 EUR tax in this example.
This is the same principle as in Germany by the way (with the special German thing that capital gain tax is 0% when there is >1 year between buy and sell).

* But I do not fully understand the VAT thing (above translation / explanation is not clear) - can anyone adult & savvy explain this?

Here is my *understanding*, explained in concrete examples - -please can anyone savvy confirm if my examples are correct, or clarify otherwise?

Example:
1.) I as a Norwegian private person buy 1 BTC for 500 EUR from another Norwegian private person (e.g. via bitcoin.de German "bitcoin escrow service", i.e. the Euros flow directly from private to private and not via bitcoin.de). Who pays VAT at this moment (and how much and based on what)? Me, who buys the BTC?? Or the other private person, who sells it?? Or nobody? I assume, nobody, I assume, the only tax that is involved here is the capital gain tax for the seller, in case he/she sells the BTC to me at a higher price than what he/she had purchased it for earlier.

2.) I buy a bread from a Norwegian baker for 10 mBTC (0.01 BTC) that I pay from my Android smartphone's Bitcoin wallet. Since the price of the bred anyway includes VAT (same when I buy with EUR, the 5.00 EUR includes the VAT), I suppose it is the same in the Bitcoin-payment scenario. Or is there any extra VAT involved in this transaction, and if so, which amount exactly? My understanding would be that the baker has to write this in his books as if I pay him 5.00 EUR for the bread, assuming that *at the time of purchase* the value of 10 mBTC equals 5 EUR. So the baker will pay the VAT irrespective of how I pay.
- If the baker converts the 10 mBTC to EUR immediately for 5 EUR, that's all, and he will fill is books as if I paid him 5 EUR.
- If the baker keeps the 10 mBTC for a few days or weeks and then exchanges them for 8 EUR, he will additionally have to pay capital gain tax of 28% (or VAT of 25% because he is a business?) for the 3 EUR that we made as extra profit.
- In the case that he sells the 10 mBTC for only 4 EUR some days later (because exchange rate has evolved unfavorably for him), I assume the baker can write-off the 1 EUR as operational loss into his books to reduce his overall profits and correspondingly, his tax burden.

3.) In the 3rd example, I am a professional BTC exchange in Norway, and I am buying and selling Bitcoins professionally to and from private persons let's say. Let's assume I have only two clients Alice and Bob, both from Norway as well. Alice wants to sell 2 BTC, Bob wants to buy 2 BTC. They use my exchange for this. I take 0.5% commission from each of them, so we can consider this as follows:
- I buy 2 BTC from Alice and pay her 995 EUR.
- I sell (these) 2 BTC to Bob and he pays me 1005 EUR for this.

Now who has to pay what kind of tax and how much?
* Alice, who sold 2 BTC to me for 995 EUR, has to pay taxes or not depending on how *she* has purchased these 2 BTC before, acc. to example 1 above.
* Bob, who has bought 2 BTC from me for 1005 EUR, does not have to pay any extra taxes at this moment, he only has to pay capital gain taxes at a future point in time when he sells his 2 BTC at a higher price than 1005 EUR. But at this moment, this 1005 EUR is a price "incl. VAT" already, so the VAT is the matter of the exchange, that is "me", as follows:
* Me, as the exchange operator, I have bought the commodity "2 BTC" for 995 EUR from Alice. Since she is a private person, there is no VAT involved in this operation. Next, I as an exchange operator sell (the same) 2 BTC to Bob for 1005 EUR, so my service added 10 EUR additional value to this "2 BTC" commodity (formally speaking). So I have to pay VAT relative to this 10 EUR. E.g., if the VAT rate is 25% in Norway, I have to pay 2.50 EUR tax for this operation. And that's all.



So far this is my understanding of what capital gain tax and VAT is all about in Norway. Even though everybody would like a "taxless bitcoin", I do not understand all these negative headlines. To me all this appears quite reasonable from the state's point of view, he puts tax to BTC like for any other commodity, which means the state acknowledges BTC's rank as a commodity and treats it equally to other commodities, which appears fair enough.

As can be seen from above examples (if they are correct), there is no particular disadvantage involved in Bitcoin compared to using Euros when purchasing goods or services. So there is no obstacle for Bitcoin to evolve in the ecosystem and to be used as a means of payment.

The main disadvantage about "the VAT thing" in Norway is that Norwegian exchanges cannot really compete to e.g. German exchanges if the latter do not have to pay VAT. But that's a competitive disadvantage for Norwegian (exchange-)companies only, but not for the "Bitcoin User/Consumer".

Taking above Example "3":
In the case "with VAT", the exchange pays 25% VAT for the 10 EUR, what remains is a profit of 7.50 EUR. Assuming the exchange has no other costs (electricity, wages, etc.), there remains a profit of 7.50 EUR at the end of the year when I have to pay the normal taxes for my profits. Assuming that these are 25%, I pay 25% on 7,50 EUR = 1.875 EUR tax, so the net profit that remains is 5.625 EUR.

In the "no VAT" scenario, the profit is the full 10 EUR, and so after 25% profit gain end of year I have a net profit of 7.50 EUR for my Norwegian Bitcoin exchange company.

So far my understanding, hope this clarifies it, and please correct me if I got something wrong, or confirm if you think I got it right.

Since BTC does not flow through the traditional banking system, it will be hard to enforce the law if people won't cash out their coins.

I thought Obama was good for the USA 

That is not fair -.- Bitcoin should never be taxed

Do someone pay it really!? I think rich people can just move away capitals from Norway.

- This will be settled in court, as tax administration can't decide what taxes we have or don't have. In the end there are laws that decide that.

Sweden beat you to it!
Might also interest you we have taxes on selling in game currencies now (that's what happens when you take in too many "fugitives".. They also cut down on psych help and on elderly care )

Bitcoin isn't money... Simple...

The VAT rule can be challenged on the grounds that Paypal are already selling electronic money in Norway and not charging VAT.

If you read Paypals Legal Agreements you will see that a Paypal balance is not a Euro or a Krona. It is an electronic money issued by Paypal


https://cms.paypal.com/ie/cgi-bin/?cmd=_render-content&content_ID=ua/ServiceDescription_full&locale.x=en_US

This text can be found if you click on Legal Agreements, Key Payment and Service Information.

i did some travelling a few years ago and it seems to me that the norweigians/scandanavians i met were looking to get away from their form of socialistic government. then again, i think i met some guy living in thailand like a king, collecting money off his unemployment money 

Governments taking bitcoin seriously, good for value and acceptation!

And where did the hardware come from? Did the company selling it buy it with btc too? Depending of the country in that case it can be taxed when it's imported.

What if the transaction is wholly in BTC? I buy electronic hardware from a mining company who sells it for BTC. According to most country's laws, I should pay VAT on the purchase, but as it's all in BTC, there's no fiat papertrail.

I don't really get the point of bitcoins being hard to tax.

You don't tax bitcoin, you tax the fiat involved.
1. When you sell btc for fiat, if you are a company.
2. When you receive large sum of money, you have to explain it. Capital gain -> tax...

Norway are difficult regarding taxes,they have allot of public services available but require sometimes very high percentages of wages.
they must have a hard time taxing btc's though,unless people cooperate *cough*  *cough* they won't be able to know if you have x btc's in a paper wallet unless they get some super-coin tracker together with cooperation of all exchangers (and the person bought directly from exchanger not from personal deals).

No. In Norway it works this way:

1. Govt. wants your money.
2. Govt. wants your money.
3. Govt. wants your money.
4. ...

What the tax department of Norway actually says is that if you do business with bitcoin, you will have to pay VAT. For sale and purchase of bitcoins. So if you want to buy a bread with btc, you first have to pay 25% tax when you exchange btc to local currency, then you have to pay value added tax when you purchase the actual bread.

The right thing to do would be to leave BTC alone.

There are exchangers and even an exchange in Norway. What the tax authorities will do about this, I do not know, but I would not be surprised if there at one point would be a court case.

Actually, in Norway bitcoins are classified as a 'electronic service', and as such you have to pay VAT for the exchange of bitcoins. Interestingly, if you have  enough BTC that you need to pay the yearly tax of your holdings, then you're taxed too.

So this makes very much sense.

1. You have to pay 25% VAT when exchanging BTC.
2. Bitcoins are an electronic service.
3. If your holdings exceed the lower limit for taxation, you have to pay tax of your BTC, ops - I mean electronic service.

What's next? Having to pay tax of your webhosting account, your cinema tickets and your bus tickets?

Let me say it again:


1. Govt. wants your money.
2. Govt. wants your money.
3. Govt. wants your money.
4. ...

Many point to Norway and think it's a great country, and in many regards it is, but many things are backwards there. For instance, recently there was a minister who built a shack for the wood at his cabin. It was 4m2. He has not applied for a license to build this, and it caused a huge uproar with the media. In general, it's too much rules, too much bureacracy, and everything public is mostly very conservative. It is very hard to drive innovation in Norway.

I hope there will be a lawsuit at one point, and that the expert witnesses can convince the court, that bitcoin is not to be taxed for exchange against fiat currencies.

Another problem is that most bureacrats in Norway do not understand Bitcoin, I wonder if even a single one of them does. Same with technology in general, the country is ruled by old folks who has no clue about technology, and this is really really bad.

So it might not after all be a hostile position, it might be the folks in the tax department trying to do their best to classify bitcoin, but there's been many news articles in Norway, where socalled 'experts' from law firms are saying that the tax department has it backwards.

It is also the responsibility of the tax department to make people pay taxes, so it would be weird if they put down their hands and said: We wont' touch this bitcoin thing - work with it as you please!

It is sad  really - and in Sweden there's also an ongoing court battle, the tax department over there wants to have people pay tax on exchanges with bitocins, so one exchanger took them to court. And now it's going to be handled in the EU. Will it be fair, or will it be politics, that's the question.

But the people are bigger and stronger than the govt. People will do what's convenient for them.

how will the tax plan take place if no one declares his/her selling records?
its for the most an anonymous transactions currency. right?

You shouldn't pay any taxes to the feds, so what difference does that make at all?

The google translation is not clear here, but aren't they just saying that you will be taxed on capital gains through bitcoin, and if you sell products and accept bitcoins you will need to pay vat like selling anything else?

Norway is highly welfare state, I would say even more socialist than USSR had been. So you really think its govt will change tax laws and reduce perks for idlers (which are large part of the electoral base)?!
Ignoring this idiotic law is only one option available IMHO.

Just breaking the law is easier.

I wonder how they will tax BTC. Maybe its citizen should move to other countries 

And even considered commenting on how stupid the term virtual commodity is...

I had to do this, but you have a point

Virtual commodity?

this is pure bullsh*t, if it's not  a financial service or a currency what dafauq is it? :/

 

Humans can't tell other humans what they have to do. This whole law thing is just absurd.

I hope Norwegians will ignore these absurd laws!

BTW, some countries apply VAT even on the investment gold bars, nevertheless people still buying them VAT-free on the "unofficial" market.

Same otherwise , breaking the law is just stupid sometimes.
People can simply weight the risks and go for it.
Or , they could try an change the laws , which It might be the better solution , right?

Not breaking the law is stupid at times.

If people don't want to, they are forced to break arbitrary and capricious laws designed only to harm innocents and violate our civil liberties all the fucking time anyway.

Breaking the law might not be that hard , but people don't want to
1) break the law
2) be forced to break the law

They don't have to. Breaking the law is not that hard.

Silver is taxed in Finland...

Atleast gold over 36,5% purity is free if I understood right...

That sucks, not sure how it will be enforced but it must be annoying for the Norwegians

It is sub-optimal but it is official legitimacy of a kind...

Onus now on norwegian bitcoiners to educate their govt and get lenient regs in place over time

Well, what ya expect from the guys that gave Fuhrer Obama da Nobel Peace Prize?

http://e24.no/digital/handler-du-bitcoins-maa-du-ut-med-skatt-og-moms/22639792


(google translate):

http://translate.google.com/translate?sl=auto&tl=en&js=n&prev=_t&hl=en&ie=UTF-8&u=http%3A%2F%2Fe24.no%2Fdigital%2Fhandler-du-bitcoins-maa-du-ut-med-skatt-og-moms%2F22639792&act=url

Tax Administration has decided:
If you buy Bitcoins must
with both tax and VAT
Tax Administration has decided that Bitcoins is neither a currency or a financial service. It will turn right into your tax return if you have shopped with online currency.

========================================================

Norway: "All Your Bitcoins are Belong To Us!"