Company in Estonia OÜ offers accounting services for companies engaged in crypto-activities. It is important to bear in mind that cryptocurrency transactions are not subject to VAT. According to the judgement of the European Court of Justice of 22 October 2015 (case C-264/14), Article 135 (1) cl. 1 of the VAT Directive shall be interpreted in such a way that the exchange of virtual currency for traditional currency and vice versa, as well as the crypto-fiat exchange service shall be exempt from value added tax.
With regard to virtual currency, taxable income may arise as follows:
- As a result of virtual currency price changes, when buying and selling/exchanging virtual currency
- When mining virtual currency
- Upon receipt of payment in virtual currency for work performed
Income received in virtual currency shall be taxed in the same way as income received in traditional currency. For the purpose of taxation, the virtual currency purchase and sale price or the income received shall be converted into euros based on the current exchange rate (market price) on the date of transaction or on the date of receipt of income.
TAXATION OF CRYPTOCURRENCY TRANSACTIONS
Virtual currency is treated as property within the meaning of Clause 1 of Article 15 of the Income Tax Act. Income tax shall only be charged on gains (Article 37) from the sale or exchange of transferable and monetarily appraisable objects (Clause 1 of Article 15 of the Income Tax Act). In other words, profits received from the disposal of virtual currency, including exchange, is subject to income tax. The gain or loss on the sale of property is the difference between the purchase cost of the property sold and its sale price. The gain or loss on the exchange of property is the difference between the purchase cost of the property transferred in exchange and the market price of the property acquired through exchange (Clause 1 of Article 37).
It is necessary to record the amount of fiat money received and the amount of cryptocurrency assets acquired during each month. All the company’s cryptocurrency assets shall also be recorded in terms of euros on a monthly basis.
The cost of accounting services provided to a cryptocurrency company depends on the number of documents to be processed and the number of company employees.