Norway’s director general of taxation has said that Bitcoins “don’t fall under the usual definition of money or currency.” Instead, the richest country in Scandinavia will consider Bitcoins as assets and thus impose capital gains tax on Norwegian holders. This comes four months after Germany classified Bitcoins as “private money” that are nonetheless taxable.
In the meantime, Christian Holte, the above-quoted director general of taxation, said the Norwegian government would coordinate certain legal implications of Bitcoin with other governments.
“If there’s a crisis or power outage, you need some bills in your wallet in case your credit card doesn’t work — same goes with Bitcoins,” he told Bloomberg. “It’s sustainable if people use it more and more, and if they trust it. People start with buying small things, but if they start to make bigger and bigger transactions, it could begin to challenge other currencies. Right now, we’re not there.”
Capital gains tax in Norway is the same as the 25% sales duty that applies to businesses. Bitcoinexaminer.org says Bitcoin profits will fall under wealth tax, and Bitcoin losses can be deducted.
In Europe, the general state-level attitude toward Bitcoin is rather cool, with the European Banking Authority having recently issued a warning that the unregulated currency carries specific risks of manipulation and theft.
“The ‘digital wallets’ containing consumers virtual currency stored on computers, laptops or smart phones, are not impervious to hackers,” the EBA wrote. “Cases have been reported of consumers losing significant amounts of virtual currency, with little prospect of having it returned.”
The astute reader will note that the same could be said for fiat coins and paper money.