Cryptocurrency Taxation Is Around the Corner – What the Finance Ministry Plans

Ministry of Finance of Greece is trying to give new impetus to the plan for taxation and control of cryptocurrencies.

The ministry's special working group, which was tasked with drafting the new system since February, is being abolished on the grounds that its mandate needs to be changed. The aim is reportedly to expand the scope to cover all aspects of digital money and intangible assets that are currently not taxed.

Despite the huge spread of investments in virtual currencies, which are now becoming a fad similar to Airbnb, there remains a huge “hole” in their taxation in our country. There is still no clear provision in tax legislation regarding profits from such investment instruments, and currency users operate in a “gray area”.

For tax purposes, Bitcoin is treated as a means of payment rather than an investment product, so its purchase and sale are not subject to VAT, but there is also no taxation in terms of income when Bitcoin is held as an asset that can generate capital gains when sold.

But even if this is provided for by tax legislation, many people doubt whether it is possible and how to check the correctness of filling out the relevant declaration for income tax, capital gains tax, etc. As a result, those who declare are usually unemployed or inactive in order to justify their existence!

They choose this solution if they have no other income, but they received, for example, 10,000 euros from Bitcoin and received it through money transfers. Then they declare them because they know that every deposit is now tracked by the tax authorities.

How will they be declared? Tax audits often reveal transactions involving transfers of thousands of euros that result from the conversion of cryptocurrencies into euros or other foreign currencies. However, the first study shows that few people declare income from transactions with such currencies in their E1 income tax return.

In fact, it is observed that such incomes are mainly declared by unemployed people or people without income, but who have significant real estate, who want to cover up presumptions in order to avoid paying taxes.

Since the tax system has loopholes, the most “consistent” people prefer to declare first the purchase price and then the sale price of cryptocurrencies in codes 743 and 781 of Form E1 when filing an annual income tax return. Then they enter the “voluntary” earnings in code 865 and “clean” it by paying a tax of 15% (1500 euros in the example), as if they had received a profit, for example, from interest on deposits, but they pay it themselves, since the bank did not withhold tax from the sale, as is done with interest.

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