Would We Pay Taxes When We Don't Exchange Bitcoin for Fiat Anymore? - page 4.

Abu-Naim

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Quote from: Davidvictorson on August 12, 2023, 07:23:05 AM

According to him, his fear is that if he sells it during the next bull run, he will be taxed, and he doesn't want that. A question arises: Would taxes still be applicable if a time comes when exchanging bitcoin for fiat is no longer necessary?

During Bull Run, bitcoin and cryptocurrency will be everywhere due to the trend of bitcoin's price going up; therefore, he can use his bitcoin to buy some goods since there are stores and some shops accepting bitcoin as a means of exchange.

If he bought his bitcoin a long time ago, I don't think he should bother with the amount of taxes he should pay because by then he would have made a huge profit, and as others have said, it also depends on the country you live in.

Fiatless

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Quote from: Davidvictorson on August 12, 2023, 07:23:05 AM

So, a senior citizen in one of the western countries makes a complaint that he preferred the 1950s when everything made sense and life was simple. He loves the analog times more than the digital. Despite this, he trusts Bitcoin self-custody, and that is the reason why he holds bitcoin. He complains that his bitcoin just sits in his hard wallet, and he doesn't even know what to do with it. According to him, his fear is that if he sells it during the next bull run, he will be taxed, and he doesn't want that.

The only way he could escape paying taxes is if he sells his coin through P2P. Using exchanges to convert his coin might expose him to both direct and indirect taxes. But if the law of his country stipulated that citizens are mandated tax from their crypto investment, he should abide by it.Trying to bypass taxes is tax invasion and it is a criminal offense.

Quote from: Davidvictorson on August 12, 2023, 07:23:05 AM

A question arises: Would taxes still be applicable if a time comes when exchanging bitcoin for fiat is no longer necessary?

This is one of the reasons why most governments want to centralize bitcoin transactions. Monitoring and collecting tax might be difficult in decentralized payment systems. But when we get to that bridge, there will always be a way to cross.

thecodebear

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So you are asking will you be taxes if you spend your bitcoin directly? Likely yes. Spending and selling is usually treated the same. For example, in the US it doesn't matter if you sell or spend, any transaction made with Bitcoin triggers a tax event. There could in the future be a law that doesn't include small payments in Bitcoin as taxable, thus allowing Bitcoin to be used as a currency for spending without tax accounting nightmares. But for now I don't know that that is the case anywhere. So yes you would still pay taxes whether you exchange bitcoin for fiat, for altcoins, or directly spend Bitcoin.

Short answer: YES

Findingnemo

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Quote from: Davidvictorson on August 12, 2023, 07:23:05 AM

Would taxes still be applicable if a time comes when exchanging bitcoin for fiat is no longer necessary?

Short answer :NO.

You are paying taxes for everything at the time of purchase itself so even if we say we are moved to a completely Bitcoin-based monetary payment system and your country accepted it and you will be paying in a grocery store for the products along with the taxes which may be subjected to varies from government policies.

The only exception is Income tax like capital gains which you need to report to the government by yourself and if get caught for not paying the tax for the amount you are earning then you will end up behind bars along with hefty fine.

Bitcoin is not meant to avoid paying taxes which is illegal at any cost, it is here to eliminate the banks making money out of nowhere and there is no limit to how much money they will make in the future...

Husires

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I suppose that in a country where a tax is imposed on the profits made from the sale of bitcoin, and to reduce the impact of taxes, your friend must be careful to choose the date of purchase, because buying the price of bitcoin is within $ 15,000 and selling at $ 100,000 is a good profit after tax deduction.

He can reduce his tax by exchanging bitcoin into any stablecoin and then buying bitcoin with that stablecoin, but this kind of thinking is risky because sometimes altcoin are unstable and may cause him a loss instead of a little gain + tax rebate.

It is not a tax advice, and my words may be wrong, because I do not know your country, and I do not advise you not to pay taxes, but to comply with their payment.

maydna

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If the money comes into his bank account, he must pay taxes. But he doesn't have to pay taxes if he uses a decentralized exchange and keeps his money in a stable coin for a while. But I don't know if the government can still track down someone who has made a crypto transaction.

This also crossed my mind when I wanted to sell my bitcoins in the next bull run, which would definitely be a big profit for me. I thought what would happen if I transferred the money to my bank account. The bank may get suspicious and ask me where the money came from, and they could send a report to the government so that the government can examine it in more detail. But never mind, I do not want to think that complicated. What will happen, will happen.

nelson4lov

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Quote from: Davidvictorson on August 12, 2023, 07:23:05 AM

~Snipped

A question arises: Would taxes still be applicable if a time comes when exchanging bitcoin for fiat is no longer necessary?

At the end of the day, it would be dependent on the country and the laws that define it. My hypothesis is that as Bitcoin and crypto becomes more mainstream and drastic changes such as profit off of bitcoin sales not converted to fiat becomes a thing, most governments will find a way to counter this. Taxing crypto didn't seem. Possible but they found a way. I reckon they would find a way to counter it regardless especially since regulation is slowly becoming a thing.

I think in a country where bitcoin is strongly regulated, government wouldn't want to mix out on those tax gains from bitcoin profit of users.

so98nn

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I am also on the same page. I think it will depend on the country and in my country already they have impulse of levying as much taxes as they could. If we move from Bitcoin to Bitcoin then also we will be restricted by the p2p platform limitations. Even local bitcoins were not spared when countries changed the rules and regulations. They also had to follow the KYC process. Thus if KYC is there then there comes the tracking of transactions.

So even if there comes any other way to transact in p2p way then either it needs to be without escrow. That means you either transact with highly trusted person or have a decentralised platform. I highly doubt any of that is really possible in the current situation.

Dr.Bitcoin_Strange

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Quote from: Davidvictorson on August 12, 2023, 07:23:05 AM

A question arises: Would taxes still be applicable if a time comes when exchanging bitcoin for fiat is no longer necessary?

Well, yes, taxation will still be included either instantly while paying for the service you receive or could be compounded for every service (buy or sell) in a month, and the tax collection service of the country will require you to pay all your compounded loans for the month. So, it depends on the country and how their tax is collected. but it sure will still be paid, just like you pay tax while spending fiat.

Plaguedeath

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Anything that could harmful or valuable will be taxed because the government do that to control their citizen to use something and they can earn a lot money from the rich.

There are some government taxing Bitcoin as an income tax, some government charge flat tax to Bitcoin, maybe in the future they will tax Bitcoin even though you're not convert it to fiat. As long as you're live in where the government tax Bitcoin as an income tax, it will not be high.

tbct_mt2

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Quote from: Davidvictorson on August 12, 2023, 07:23:05 AM

Despite this, he trusts Bitcoin self-custody, and that is the reason why he holds bitcoin. He complains that his bitcoin just sits in his hard wallet, and he doesn't even know what to do with it. According to him, his fear is that if he sells it during the next bull run, he will be taxed, and he doesn't want that. A question arises: Would taxes still be applicable if a time comes when exchanging bitcoin for fiat is no longer necessary?

If you invest to get profit that will be used to make your life better, more prosperous, with more comfortable equipment, accessory for your life, you must take profit. Because if you don't take profit, don't cash out, you will not have anything to make your life better physically.

If you have good annual income, you will be taxed and I think it is fair if you have to pay tax after taking big profit with your bitcoin. Taxing on high income people is not new and we all understand that we will have to pay tax.

If you buy bitcoin, hold it for your children, many years later, you will not have to worry about tax and your children who inherits bitcoin from you, will pay tax in future if they sell those coins and get profit.

jeraldskie11

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Government is always looking for taxes. If there's no taxes, it's difficult to develop the country. So if ever the Bitcoin will be legally accepted to buy any other things, I think government already found an idea to get the taxes when it happened. If ever they couldn't find a way to put a taxes on Bitcoin, exchanging to fiat is a must. However, we always paying taxes everyday, we just didn't notice it. Just like when we are going for groceries, we pay taxes. So there's no one of us didn't pay a tax, some people who have authorities just wants to collect a big taxes.

Cuenta Alternativa

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Quote from: Davidvictorson on August 12, 2023, 07:23:05 AM

A question arises: Would taxes still be applicable if a time comes when exchanging bitcoin for fiat is no longer necessary?

For starters, that's not going to happen, that we don't exchange bitcoin for fiat. That was imagined at some point years ago but I see it as a long shot. First, because bitcoin is valuable and will become more and more valuable and scarce, so people will tend to want to save it instead of spending it. And second because there are going to be a lot of alternatives to CBDCs and shitcoins and payment systems for day-to-day payments. Add to this that bitcoin as a hypothetical global payment system would have the problem of scalability, which is not clear that it can be solved.

In short, the scenario you suggest is not going to happen, at least at the global level. If there are places such as El Salvador where it is declared legal to tender, then you will not have to pay taxes for it, but where it is not declared as such, you will have to pay taxes as it happens now and Lucius has explained well.

Aanuoluwatofunmi

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Quote from: Davidvictorson on August 12, 2023, 07:23:05 AM

A question arises: Would taxes still be applicable if a time comes when exchanging bitcoin for fiat is no longer necessary?

We will still pay tax but then it may be directly or indirectly, because government needed task payment to add up to what they offer back to the community, the tax money we are paying is not for the government but rather for us individually and collectively, bitcoin cannot be taxed because it's a decentralized network but in case the whole world adopted bitcoin as legal tender and it's the only acceptable means of making payments, task would have been included from the rate of what we are being charged for and not on the transaction we are making.

sunsilk

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Quote from: Davidvictorson on August 12, 2023, 07:23:05 AM

A question arises: Would taxes still be applicable if a time comes when exchanging bitcoin for fiat is no longer necessary?

Depends on the law of the country.

If they've got specific ruling about Bitcoin exchanging it into fiat or just simply using Bitcoin to Bitcoin transaction going to the merchants, there can still be taxation on it.

I feel the senior but we can't do anything against with that because that's the permanent thing on this world. Whether we like it or not, in everywhere, there's tax.

Cryptomultiplier

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Quote from: Davidvictorson on August 12, 2023, 07:23:05 AM

. According to him, his fear is that if he sells it during the next bull run, he will be taxed, and he doesn't want that. A question arises: Would taxes still be applicable if a time comes when exchanging bitcoin for fiat is no longer necessary?

If the time comes when exchanging BTC for fiat is no longer necessary, it would mean we are in the times where it has been adopted as a legal tender in that country or it is being regulated by the SEC regulators of that country. That also means businesses and services can openly accept and use BTC as payment option for goods and services delivery.

Well your friend is even lucky to have taken advantage of this digital age by HODLing BTC in a secure wallet, while many of us still dread to do so. He is also lucky that he is trendy, and am sure it wouldn't take him long to come up with a better way to reinvest the BTC, instead of letting his funds become taxed, just like that.

ImThour

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Nope, then you will just pay service tax like you do with your fiat. You can literally pay for anything using Crypto Cards. Binance has one and many other exchanges too.
You can spend directly from it without even converting your Bits to fiat. Isn't that awesome? Back onto the topic, you will just pay what tax you pay with fiat.

For example if you buy a burger from Burger King, you pay the price + tax. That's it.

_act_

legendary

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In countries that taxed cryptocurrencies, you pay tax when you when you convert the crypto to fiat or when you are using the cryptocurrencies (like bitcoin) to trade.

If you just hold your coins, you will not likely be taxed.

But to know how exactly crypto tax is in your country is, you will need to read about it or consult the tax advisors.

Lucius

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Quote from: Davidvictorson on August 12, 2023, 07:23:05 AM

~snip~
He complains that his bitcoin just sits in his hard wallet, and he doesn't even know what to do with it.

I would then ask him why he invested in Bitcoin at all if even today he cannot understand exactly what Bitcoin represents. There are thousands of online stores that accept Bitcoin as a means of payment, and there are also cities/countries where you can pay with Bitcoin.

Quote from: Davidvictorson on August 12, 2023, 07:23:05 AM

According to him, his fear is that if he sells it during the next bull run, he will be taxed, and he doesn't want that. A question arises:

Unless the tax is insanely high, I don't see what the problem is that he pays income tax in any amount from 10% to 20% and then carelessly enjoys the profit he made. It seems to me that his fear stems from the fact that there is no evidence of how he came into possession of those Bitcoins, and in that case the fear of taxes is fully justified because it is no longer just taxes, but also some other things.

Quote from: Davidvictorson on August 12, 2023, 07:23:05 AM

Would taxes still be applicable if a time comes when exchanging bitcoin for fiat is no longer necessary?

It depends on how his country treats payment with Bitcoin, and for example in the US every payment with Bitcoin was a tax event (if something has not changed in the meantime), while most EU countries have their own rules. In theory, every BTC -> Fiat conversion, whether it's about trading or paying for goods/services, would mean that there is a need to pay taxes - although on the other hand, I pay value add tax every time I pay something with BTC and it wouldn't be logically that I also have to pay some additional tax just because I paid with Bitcoin.

DaveF

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That is always going to depend on the exact country where you live. Sometimes sometimes it won't be taxed other times it will. You're going to have to consult a local tax advisor for a definitive answer.

Part of the question would also be is it worth worrying about? Without knowing what they got into Bitcoin at does it really matter. If you're sitting on a few hundred coins that you paid a dollar a piece for them back in 2010 does it really matter what you sell it for at the next ATH? It's going to be such a ridiculous amount of profit it doesn't matter.

The other things to keep in mind is even perfectly valid 100% correct tax advice today may or may not be correct a year from now as rules regulations and laws change.

-Dave

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