- Georgia is not the first country to introduce such tax exemptions for its crypto holders.
- In the past, other nations such as Slovenia, Estonia and Switzerland too have allowed their citizens to freely trade crypto assets without having to pay any taxes on their gains.
Since the inception of the crypto industry nearly a decade back, various regulators across the globe have been faced with the task of taxing digital currencies in a way that is not only fair but also quite streamlined. However, over the past few years, there have been a number of countries that have completely exempt their crypto industries from VAT and other associated charges.
In this regard, the government of Georgia recently released a circular that explicitly states that ‘traders of digital coins — both companies and individuals’ will no longer have to pay the Tbilisi regime any VAT. The legislation was recently approved by Nodar Khaduri — the nation’s finance minister — and has been in effect since the latter half of June.
A Closer Look at the Matter
Following the passing of this recent law, Georgian crypto holders dealing with local and foreign fiat assets are no longer obliged to pay value-added tax to the govt. If that wasn’t enough, even citizens with smaller crypto holdings looking to facilitate their altcoin tx’s online are exempt from any IT on their digital assets.
As per the bill, the Georgian ‘lari’ will be the only currency that can be used as legal tender for buying/selling cryptocurrencies within the country.
Additionally, Georgian mining operators will be required to pay VAT — unless their operations are being carried out abroad.
The small European nation currently offers its people with abundant/cheap hydro power. Owing to these affordable electricity rates, a lot of Bitcoiners have started to move towards the area in hopes of setting up their startups.
Europe And Crypto
EU based tax authorities have continued to try and regulate their crypto markets but with little success. For example, the UK still treats crypto coins as being foreign currencies while Germany views the purchase of digital assets as being investments (they still subject altcoins to capital gains tax).
However, countries like Estonia and Switzerland are very open to the idea of crypto and have devised frameworks that are very accommodating of this novel asset class. In this regard, it is worth pointing out that Estonia and Slovenia do not currently tax the gains of individual cryptocurrency traders.
At this point in the article, we should mention that Value-added tax (VAT) is an ‘indirect tax scheme’ that has become an extremely important source of income for many governments across the globe. To put things into perspective, more than 160 countries currently make use of this model — with countries like France acquiring more than “half of their budget receipts” via VAT.