2021 has been a big year for cryptocurrencies so far, with the entire market surging exponentially and cryptocurrencies like Bitcoin and Ether reaching new highs. Therefore, it is not surprising that an increasing number of governments are looking to get a share of the crypto profits and the Austrian government is the latest to jump onto this bandwagon. The government in Austria has expressed their intention of taxing gains that people make from investments in these digital currencies the same way as gains from investments in bonds and stocks are taxed. The purpose of the move is to increase access to and trust in cryptocurrencies.
The government in Vienna claims that they are aiming to treat different types of investments equally, which includes those made in cryptocurrencies like Bitcoin. In order to do so, they are considering the idea of applying a levy of 27.5% on crypto assets, the same that it currently uses for taxing capital gains that are made from traditional stock and bonds. The measure is intended to be imposed as part of a bigger tax overhaul that will be carried out in Austria in the next year. This news comes as a greater number of governments around the globe are exploring ways for taxing profits that are generated from the expanding crypto market.
Recently, the total market value of the crypto market went past the $3 trillion mark and this valuation is expected to grow with Bitcoin once more enjoying a bull-run. On Tuesday, the Federal Ministry of Finance in Austria issued a statement where it said that where cryptocurrencies are concerned, there is currently an imbalance in regulation, as opposed to bonds and stocks. It also added that the new tax framework they would introduce in the country would be the first one in the European Union to include bitcoin and other cryptocurrencies. In addition, it would also ensure that investors have fair conditions in different investment classes.
The officials said that in introducing these tax reforms, they would be able to reduce the prejudice and distrust against new technologies through equal treatment. The regulatory move has been defined by the department as a step that’s necessary for making crypto products more accessible to people. Gernot Blumel, the Finance Minister in Austria said that they were pioneers in Austria and also pioneers in Europe. As per the document, this new tax liability would be put into effect from March 1st, 2022 and would be applicable to cryptocurrencies that are bought after February 28th, 2021.
These have been categorized as ‘new assets’, whereas previously bought cryptocurrencies categories as ‘old assets’ would not be subjected to the new tax laws. In the case of the latter, the taxpayers in Austria would have to refer to the general rules of taxations applicable and would be required to report their gains from cryptocurrencies as income via speculative transactions. But, this is only applicable if the sale occurs within one year of them making the purchase and not in any other circumstances.