In Bulgaria, the National Revenue Agency is preparing to conducts inspections on cryptocurrency trading platforms along with their customers. The aim of the authority is to keep in check that both the parties are fulfilling the obligations under the country’s tax and security laws, reported Bitcoin News.
According to the publication, an official announcement read that nine companies are under the radar of the authority for this investigation, as they have declared to be trading digital assets as their core business. The authorities will also indulge into the ‘how’ of the business and understand better.
The authority understands the concerns relating to such transactions, and the most important detail about the transactions of virtual currencies being anonymous is the biggest of them all. As per the authority, this comes with risks of revenue concealment and tax evasion.
The National Revenue Agency [NRA] has already undertaken a study of the Bulgarian entities working in this particular sector. The tax authority says that it has allocated “control actions” with regards to nine companies.
As soon as the inspections are completed, the tax officials will be analyzing the data collected through this to know the users of these platforms. The tedious part for the authority will be to track whether these taxpayers have reported their income from cryptocurrency trading.
Bulgarian government counts the profits from cryptocurrency as income from the sale of financial assets. Individuals, thus indulging in crypto trading will have to declare their revenues from crypto on their annual tax returns. The country implies an income tax of 10 percent to the positive balance from these transactions in fiat, reported the publication.
The profits registered by the businesses are liable for taxation under the Corporate Income Tax Act, with the same tax rate. The residents of the country are obliged to file their tax declarations and pay their taxes for the past year by April 30, whereas annual corporate tax returns should be submitted by March 31, 2019.
Unlike a few other nations, Bulgaria has not yet adopted legislation on crypto-related taxations such as mining and trading. The rules applicable are based on NRA’s clarification notice issued seven years ago. At the moment, digital currencies are taxed like any other financial instruments and Bulgarian authorities refer the general Europian Union regulations and the European practice in the stream.
According to the publication, the treatment of cryptocurrencies profits differs vastly amongst EU. The rate at which they are taxed can be anywhere between 0 and 50 percent. There are various ways in which people interpret the legal status of digital assets. Most EU countries do not have set regulations for cryptocurrencies and the industry built around it because of which many officials have urged for a unified action across the Union. The publication reported that two of the regulatory agencies have called for the adoption of common EU.
The European Banking Authority [EBA] said in a report that the European regulation may be needed to level the playing field. The Banking Authority had advocated the European Commission to carry out a comprehensive analysis and take a call on what action is required to be taken at the EU level to address the issues with respect to the opportunities and risks presented by cryptocurrencies and related technologies. The European Securities and Markets authority [ESMA] stated in a report that crypto assets need an EU-wide approach to assure investor protection.
The National Revenue Agency of Bulgaria is preparing to conduct inspections on cryptocurrency trading platforms and their customers. The authority wants to make sure that both are fulfilling their obligations under the country’s tax and social security laws.
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