After trading in a range for the past few days, bitcoin prices staged a breakout today hitting a high of $710 on BitStamp before pulling back. On BTC-E, the highest high reached today stands at $686.99. One bitcoin is currently trading at $643 on BTC-E, this compares to $682 on BitStamp.
In some good news for the cryptocurrency today, UK’s HMRC (Her Majesty’s Revenue and Customs, the tax agency) issued some guidelines regarding ‘’bitcoin and other similar cryptocurrencies’’. Here are some of the more important points from the brief.
– Income from bitcoin miners is VAT (value added tax) exempt
– Income Tax: business profits from cryptocurrencies is taxed as normal income
– Capital Gains: gains or losses from cryptocurrencies allowable as capital gains for an individual or corporation tax for a business
– Gambling gains are not taxable but losses cannot be offset against other gains
– Charges for arranging transactions in cryptocurrencies is VAT exempt
– Cryptocurrencies transferred to fiat is VAT exempt
– VAT due as normal for selling goods or services paid in cryptocurrencies (the VAT will be calculated in GBP based on the value when the transaction occurred)
– Corporation Tax: no special rules apply, cryptocurrencies will be treated as foreign exchange and loan relationships
The ruling more or less puts Bitcoin and other cryptos on the same footing as regular fiat foreign currencies. This is a substantial improvement over earlier HMRC rules that stipulated a VAT charge of 20% payable on every bitcoin transaction.