Everything you wonder about crypto money and tax

Tax expert Sedat Büyük explained in detail the taxation of earnings from cryptocurrencies, which is one of the topics that crypto money users are most curious about. He said that until the regulation is made, it is not possible to say that trading gains from cryptocurrencies are taxable.

‘Mining is commercial gain, therefore within the scope of tax’

The situation is different for miners, mining activity is different. Büyük stated that since it is a business that requires labor and capital, it falls within the scope of commercial gain and is subject to tax.. need. The unclear part of the subject is VAT.. VAT size depends on the recognition and regulation to be made. Mining is commercial activity, and the type of income is commercial income, but the answer to the question of when income arises and when should it be declared is when it is disposed of and converted into money, or when expenditure is made.”

‘Intermediary institutions and individuals are subject to 18% VAT’

Indicating that the situation of intermediary institutions and individuals regarding cryptocurrencies is very clear, Büyük said that he was an intermediary in crypto money trading. He stated that the income of the commission is commercial income and that this income is subject to 18% VAT.

‘The definition to be made for real persons is important’

By opening the current situation a little more for cryptocurrency users, Büyük, “Any income generated by corporate users is commercial income, therefore taxable.. For real persons, the definition to be made is important.. The taxation of income by definition changes completely. The VAT dimension will also become clear according to the definition.. Discussion of money, securities and commodities by definition. My suggestion is to call it a digital asset by making a new definition.. The result of legally calling cryptocurrencies money means that earnings are tax-free for natural persons according to current laws.. However, the definition of money has a serious workload effect especially for the Central Bank.

CMB needs to make a regulation in order to define securities.. If he does, his trading profits are taxable.. no exceptions here. It is said in some articles. Wrong info, no exceptions. It is not possible to tax at the source of the situation that complicates the definition of securities.. But of course, it is possible to include this in the declaration-based taxation system with a regulation.

Let’s come to the definition of commodity.. Things get a little messy here.. The situation is clear for users with company status. We already said commercial gain, taxable. The same result is possible for real people.. The important criterion is whether it is a commercial organization.

What is a commercial organization? If we define it simply, it can be said that an activity is carried out on a continuous basis by spending a certain capital and overtime.. For example, if you use a loan from the bank to buy crypto money, this indicates the existence of a commercial organization.

In terms of natural persons;

a) If there is a commercial organization, it is subject to commercial gain and tax.. If a certain VAT rate is not determined, the rate is 18%.

b) If there is no commercial organization, incidental gain occurs.. Income exceeding 27 thousand TL for 2018 is subject to tax. Deliveries are exempt from VAT.

What I have explained so far included the taxation that may occur according to the scenario of including cryptocurrencies in the current legal provisions.. My personal opinion is to find a new definition for this new technology instead of being stuck with these definitions.. My personal recommendation is digital assets.

Let digital assets be a payment tool instead of money.. Capital gains are taxable. Don’t let the tax be too low, it leads to speculation. Not too high, capital escapes. 10-15% is ideal. Difficult to tax at source, may be subject to declaration. Or it is based on expenditures.”

‘Smart contracts may be subject to stamp duty’

Taxing also in smart contracts, Büyük, if smart contracts are accepted as electronic signatures with a change in the law, will be subject to stamp duty. said it would be. However, Büyük stated that in a future business life with smart contracts, the stamp tax should no longer be on the agenda.

Is there a retrospective taxation?

The issue that crypto currency users are probably most worried about is backwards. the issue of taxation. Büyük said that retrospective law cannot be applied due to universal legal principles, but the situation in Turkey is slightly different in terms of taxation:

“Two methods can be put forward for tax regulation:

1) With an announcement (can be circular or communiqué) To make a statement such as “We accept cryptocurrencies as commodities”.

2) To make a legal regulation that changes existing laws. The results of the two are very different.

It is legally problematic to make arrangements with an announcement.. If such an arrangement is made, it means: ‘Well, this was already a commodity, friends, why didn’t you declare your income?’ When they say that, people who do not declare their taxes and do not keep books become tax evaders.. Tax matters are regulated by law according to the Constitution.. In the laws expected from the state, it is determined how the taxes will be collected, how they will be calculated and how they will be paid.. It is incompatible with the law to say that you do not make such a determination and then pay with the penalty.

If an arrangement is made with the announcement, taxes may be charged for the last 5 years with the result that this was already a commodity.. The decisions of the Constitutional Court on similar issues are generally in favor of the taxpayer.. After such a regulation, lawyers will have a lot of litigation.

Some countries have chosen this method.. However, they declared that they will not demand tax on the past.. In fact, if this approach was to be exhibited, it could be brought together with tax amnesty.. Tax amnesty came, but the regulations could not come. It is still possible to take advantage of tax amnesty for cryptocurrency earnings. As a result, there is also the fact that you have paid taxes for nothing, but people with high income can evaluate it.. Asset peace cannot be used for cryptocurrencies as they are not included in the definition of assets within the scope.. It is not possible to declare cryptocurrencies in asset peace, but it is possible to switch to another asset such as cash or gold and declare it.. At the very least, this method can provide some assurance.

Cryptocurrencies are not covered in the asset peace.. However, until 31.07.2018, it is possible to benefit from the asset peace without paying taxes by converting cryptocurrencies into assets such as foreign currency and gold.. If it is done after this date until 30.11.2018, there is a 2% tax on this transaction.

If the regulation is made by law, the law should not work retroactively.. But there are exceptions to this in our country.. Ideally, the effective date of the law should be the date of its publication, but it may also come into force from the beginning of that year.. It is possible.

There is also an international tax dimension to the issue.. Different definitions of each country may cause double taxation. Countries must provide a consensus on this issue.. Double taxation avoidance treaties also need to be revised.. Very silly situations can arise.”

Taxation of ICOs

Big made the following statement regarding the taxation of ICOs:

“Taxation of ICOs is completely depends on what will be done as a result of the funds collected. Funds collected are a kind of advance. The taxpayers are taxed according to what will be given in return.. This should be evaluated separately for each situation.”