Latvia Wants To Legalize & Tax Cryptocurrencies
The Latvian Finance Ministry says, that 20% tax can be laid on capital gains from deals with cryptocurrencies. On Wednesday the authorities announced the proposal during a meeting with deputies from the Parliamentary Budget and Taxation Committee.
Some lawmakers reminded their colleagues and constituents that cryptocurrencies are not considered a legal tender in the Baltic state and come with speculative bubbles and financial pyramids. Members of the Financial and Capital Markets Committee, however, noted that cryptos like bitcoin can “function as a means of exchange”.
The Finance Ministry also revealed that the government is considering about cryptocurrency regulation. The working group set by the country’s Prime-Minister has been tasked to prepare the proposals. The Baltic Reporter says it will study the potential risks of the market, also will evaluate potential benefits from cryptocurrencies.
Cryptocurrencies were often criticized by policy makers as a means of payment and store of value. It seems, that when budget revenues are in mind, the requirements towards “virtual money” are not that strict. The Latvian authorities now have an opportunity to tax cryptocurrency transactions. Maybe if they think about VAT, a “means of payment” status will also be attributed. No tax is currently due on crypto purchases of goods and services in Latvia.
Cryptocurrencies are not covered by any Latvian law but authorities in Riga say revenues from crypto trading are subject to personal and corporate income tax. The country has a flat income tax rate of 23%. Incomes from dividends and interest are taxed at 10%. 15% tax is due on capital gains from shares, real estate, and intellectual property. The standard rate of Value Added Tax is 21%. Financial transactions are exempt from VAT. Tax returns in Latvia are filed between March 1 and June 1 of the year following the taxation year.