UK tax treatment of cryptoassets

Schiavone, Gabriele (2021) UK tax treatment of cryptoassets. Novità fiscali, 2021 (9). pp. 490-496. ISSN 2235-4573

Abstract

This article outlines the main tax aspects of investing, trading and disposing of in crypto assets. The article distinguishes the tax point of views of individuals and businesses. For individuals, it is of paramount importance to understand whether a “trading” activity can count to a notion of a “trade” relevant for tax purposes: it is a question of fact if an activity of transferring, disposing and selling cryptoassets (and also mining) is to be considered a “trade” for tax purposes, no being predetermined by any legal tests but to be set out under circumstances and according to a number of “badges” inspired by law cases. A material consequence is that, should an activity be qualified as “trade”, profits are subject to Income Tax (and not to Capital Gain Tax). The article also outlines a number of special rules for calculating the tax base for Capital Gain Tax purposes, including the pooling method. Special attention is given to the concept of crypto assets location, which may have a deep impact on the resident non domiciled taxation: according to HMRC opinion, the pivotal criterion is the residence of the beneficial owner, irrespective if such crypto are deposited in a wallet or an exchange, with therefore a material erosion of rights connected to such regime and to the remittance basis mechanism. For businesses, cryptoassets may be considered for accounting purposes intangibles or investments, with a quite different tax treatment. Once having summarized the impact of indirect taxes (SDRT, VAT and inheritance aspects), we have attempted to determine some basic tax ideas about a number of crypto and fintech applications like DEFI, DAO and NFT.

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Official URL: https://www.supsi.ch/fisco
Item Type: Article
Subjects: Diritto tributario
Diritto tributario > Internazionale e dell'UE
Date Deposited: 16 Sep 2021 06:41
Last Modified: 16 Sep 2021 06:41
URI: http://novitafiscali.supsi.ch/id/eprint/1185

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