Austria to Apply Capital Gains Tax to Crypto currency:
1. Austria has announced that it is considering applying the same 27.5% levy to crypto assets it currently uses to tax capital gains from traditional stocks and bonds.
2. The reform provides for the integration of cryptocurrencies into the existing taxation system for income from capital assets.
3. Austria intends to impose the measure as part of a wider tax overhaul to be carried out next year.
4. The tax liability is to come into force on 1 March 2022 and apply to cryptocurrencies purchased after 28 February 2021.
5. Cryptocurrencies acquired prior to 28 February 2021, will not be subject to the new taxation regime but instead treated as “old assets” under the existing tax rules for speculative transactions, meaning that tax is not payable because the one-year speculation period will have already expired.
6. Austria’s Federal Ministry of Finance also insisted that the country’s new tax framework will be the first in the EU to encompass bitcoin and the like and ensure fair conditions for investors in different asset classes.
7. Can this legislation in Austria help provide more clarity on taxability of crypto currency in India?
Crypto currency regulatory framework in various countries:
Indian Government is likely to introduce a law governing crypto currency in the winter session of the parliament.
Cryptocurrency regulations in major economies and groupings:
1. UK: Under the current system, the Financial Conduct Authority is the body that grants licenses to authorised cryptocurrency-related businesses, which also include crypto-exchanges. These businesses, like all others seeking a license from the FCA, have to comply with a stringent set of rules. These rules are particularly stringent for those companies dealing in crypto futures and options trading.
2. US: Regulations regarding cryptocurrencies vary across States in the US, but overall the country has been in favour of allowing all cryptocurrency activities. One of the states, New York, launched a framework for licensing cryptocurrency businesses and exchanges, called BitLicense. Under the system, companies looking to transmit, hold, buy or sell cryptocurrencies need to obtain a license from the New York State Department of Financial Services.
3. EU: EU has looked into setting up a consolidated framework on cryptocurrencies. In September 2020, the European Commission released a draft legislation titled Markets in Crypto-Assets Regulation (MiCA). According to the draft, cryptocurrencies will be treated as regulated financial instruments. The draft law takes cognisance of the different types of crypto-tokens, such as crypto-assets, utility tokens, asset-referenced token, and e-money token and proposes different rules for each.
4. China: At first it was welcoming of all crypto-related activities, especially mining. It has now become one of the most restricted crypto-markets in the world. In June 2021, it banned the mining of cryptocurrencies. It had banned initial coin offerings (ICOs) in 2017, following which it also ordered crypto-exchanges to close. However, the legislators main grouse was with ICOs and so it has not made it illegal to hold or trade in cryptocurrencies. Chinese government has also shown considerable enthusiasm regarding blockchain technology and has encouraged the growth of blockchain-related start-ups.
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