Will cryptocurrencies preserve their popularity in GR? - KPMG Greece
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Will Cryptocurrencies Preserve Their Popularity in Greece?

Will cryptocurrencies preserve their popularity in GR?

Interview of Spyros Dimitriou, Lawyer / Senior Manager, Tax, KPMG at cointelegraph.com

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Manager, Tax

KPMG in Greece

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How are crypto/ICO transactions valued and taxed in Greece and at what rate for individuals and businesses and foreign investors if there is a difference?

According to the Greek framework, money stricto sensu or money as legal tender is any mobile asset, which is legally recognized as means of payment. Thus, there is a significant distinction between fiat currencies and cryptocurrencies considering that the latter are not issued or guaranteed by any government, and fulfil the functions of money lato sensu only by agreement within the community of the respective users. In the same context, cryptocurrencies cannot be considered as e-money, given that in principle the latter consist digital representation of fiat currency. Moreover, according to Greek legislation, ‘electronic money’ means electronically (including magnetically) stored monetary value as represented by a claim on the issuer which is issued on receipt of funds for the purpose of making payment transactions and which is accepted by a natural or legal person other than the electronic money issuer. In the view of the above, therefore, virtual currencies fall outside the scope of this definition, because they do not represent monetary value.

The recent Law 4537/2018, which incorporates in Greek legislation Directive 2015/2366/EU about payment services in the internal market seems to leave some scope though for the broadening of the definition of “payment services”, so as to include notions such as “third party payment service provider” and “payment initiation service”, and may comprise some of the activities carried out on platforms for the exchange of cryptocurrencies, yet not the primary service of buying and selling virtual for traditional currencies and vice versa.
Thus, Greek payment services law cannot be applied to virtual currencies, given that virtual currency exchange services do not fall under the definition of payment services.
Finally, cryptocurrencies are not financial instruments, because they are characterized as means of payment, which are explicitly excluded from the scope of Greek and EU financial instruments law. Furthermore, respective exchange providers are not included in the list of financial institutions, which constitute investment service providers.

Currently there is no particular legal framework governing crypto/ICO transactions. For this reason Companies, on one hand, are not able to declare activities relevant to crypto/ICO transactions to the regulator and individuals, while on the other hand, are not able to identify what kind of products or transactions are those regarding crypto/ICO. Taking this under consideration, these activities in general cannot be declared to the Tax Authorities, because no specific legislation or guidelines exist in order for any person or entity to do so.

However, it should be noted that in theory the Companies’ activity regarding crypto/ICO transactions resembles business activity. On this basis and according to Greek tax legislation, any income which derives from business activity must be taxed. Moreover, users - buying bitcoins for the first time - are likely to keep them for speculative purposes and without having the intention to use them to pay for goods and services. In this case, if the individuals’ transactions result to any personal income, this income should be taxed, if not as income from capital, at least as income from capital gains.

To sum up, any income which derives from crypto/ICO transactions cannot currently be taxed, because there is no such regulatory framework and relevant procedure within the Greek legislation. However, this does not mean that any income which derives from these transactions cannot be at any time considered as taxable income by the Greek Tax Authority.

How is cryptocurrency/ICO related business income taxed in Greece and at what rate, and what is the trigger to business taxation vs. capital gains treatment?

Taking under consideration that any income which derives from crypto/ICO transactions cannot currently be taxed, because there is no such regulatory framework and relevant procedure in the Greek legislation, if, in any case, cryptocurrency/ICO transactions could be considered as business activity, then such business income would be taxed at 29% in case of companies. In case of individuals’ business activity, such income would be taxed according to a graduated tax scale provided by the law (with rates ranging from 22% - 45%).

On the other hand, in case where any gain from cryptocurrency/ICO transactions could be considered as capital gain, then 29% would apply for Companies (since any income/gains is considered as business income) and 15% for Individuals.

How is crypto mining activity taxed in Greece for individuals, businesses and foreign investors?

Taking under consideration that any income which derives from crypto/ICO transactions cannot currently be taxed, because there is no such regulatory framework in the Greek legislation, if, in any case, cryptο mining activity could be considered as business activity by the tax authority, then such business income would be taxed at 29% in case of companies. In case of individuals’ business activity, such income would be taxed according to a graduated tax scale provided by the law (with rates ranging from 22% - 45%).

How are utilities and securities tokens for investors, ICO companies and foreign investors taxed in Greece?

Taking under consideration that any income which derives from crypto/ICO transactions cannot currently be taxed, because there is no such regulatory framework in the Greek legislation, if utilities & securities tokens could be considered as business activity by the tax authority, then such business income would be taxed at 29% in case of companies. In case of individuals’ business activity, such income would be taxed according to a graduated tax scale provided by the law (with rates ranging from 22% - 45%). On the other hand, if utilities & securities tokens were identified as investment instruments by the Tax Authority, then they would be taxed as capital gains at 29% in case of companies and 15% in case of individuals.

The article is also available at CPALaw.gr

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