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(Dec 11, 2013) Bitcoins, the online currency, have received much media attention in a short time and become an up-and-coming international means of payment. (Joe Light, Virtual-Currency Craze Spawns Bitcoin Wannabes, THE WALL STREET JOURNAL (Nov. 20, 2013).) Now the Norwegian Tax Administration (NTA) has weighed in on the legal classification of bitcoins by issuing a "Principle Statement" stating that although one may accept payment in bitcoins, they are not a currency but a capital property and therefore sales using bitcoins that entail a profit will make the seller liable for Norwegian taxes. (Bruk av bitcoins – skatte- og avgiftsmessige konsekvenser, NTA website (Nov. 11, 2013).) Conversely, losses incurred through trading in Bitcoins are deductible. (Id.)
While Norwegian law provides for an exemption from taxes on small winnings gained from currency exchanges in currencies commonly used for travel, the exemption does not extend to bitcoins, according to the NTA. (Marius Lorentzen, Skatteeataten har bestemt seg: handler du bitcoins må du ut med bade skatt og moms, E24 DIGITAL (last updated Nov. 22, 2013).)
The NTA's finding that bitcoins and similar forms of payment used by online payment service units are not currencies has consequences for business owners as well. Any trade in bitcoins is subject to the 25% Norwegian VAT. (Bruk av bitcoins – skatte- og avgiftsmessige konsekvenser, supra.)
Because the use of bitcoins is new and controversial, the issue of the legal definition of such digital forms of payment is likely to eventually reach the Norwegian courts. For now, however, bitcoin users in Norway are advised by one Norwegian commentator to take note and keep track of their bitcoin purchases. (Lorentzen, supra.)
Prepared by Elin Hofverberg, Foreign Law Research Consultant, under the supervision of Edith Palmer, Chief, Foreign, Comparative, and International Law Division II.
|Author:||Edith Palmer More by this author|
|Topic:||Currency More on this topic|
|Financial services More on this topic|
|Internet More on this topic|
|Taxation More on this topic|
|Value-added tax More on this topic|
|Jurisdiction:||Norway More about this jurisdiction|
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Last updated: 12/11/2013