Taxes on cryptocurrencies like Bitcoin in Croatia đź‡đź‡·
“Virtual currencies are not a legal means of payment in the Republic of Croatia nor are foreign currency or foreign payment instrument.” states the National Bank of Croatia (CNB) in September 2017. In the statement the CNB educates the citizens about the high risk of investing in virtual currencies due to their unstable exchange rate.
Crypto taxation in Croatia
According to the European Court of Justice (ECJ), the trading of cryptocurrencies in Croatia is considered a financial transaction and the income generated by the sale of cryptocurrencies is subject to personal income tax on the basis of capital gains. The taxes paid on the basis of capital gains are considered final. Which means that they are not taken into account in the annual income tax calculation and the taxpayer does not have to submit an annual tax return on this basis nor use personal allowances.
For 2018 the annual tax free allowance (for individual’s asset gains) is HRK 3,800. The taxpayer is obliged to calculate, withhold and pay until the last day of February of the current year. These capital gains realized in the previous year reduced by realized capital losses must be taxed at a rate of 12% (residents of Zagreb have a tax rate of 18%). Therefore, every purchase and sale of cryptocurrency must be documented according to the method of consecutive prices (FIFO). Financial asset holders are required to submit a report to the JOPPD. Before you pay any taxes you need to sign up for the register of tax payers and fill in the RPO form, stating that you are receiving winnings from abroad. This is the requirement you have to fulfill to pay taxes for your crypto assets in Croatia. Apart from this there are further implications for other activities involving cryptocurrencies. Mining in Croatia is for example taxable at a rate of 24%.
ICO regulations in Croatia
A specific ICO regulatory framework does not exist. So far, there is no legal classification of tokens or cryptocurrencies. Croatian regulators have at present not applied financial market regulations to ICOs. The Croatian Financial Services Supervisory Agency (HANFA) warned of the risk of investing in virtual currencies due to their unstable value and mostly unregulated status.
How is the revenue generated by the sale of tokens handled? In terms of VAT, virtual currencies are interpreted as financial transactions and as such are exempt. Although there is no explicit regulation that mentions the sale of tokens, the sale of payment tokens would not likely be subject to VAT. For other types of tokens, it is difficult to say what the VAT treatment might be.
Croatian banks on cryptocurrencies
“According to the legal definition of electronic money, cryptocurrencies cannot be considered as electronic money as they do not represent a monetary claim on the issuer,” states the CNB in an article from September 2017. CNB argues that investments in virtual currencies are not protected by any regulation. The Financial Stability Council of Croatia repeated the statement from CNB and declared that virtual currencies do not bear resemblance to traditional currencies and financial instruments. Most banks in Croatia have not issued an official comment on dealing with cryptocurrencies.
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Disclaimer
The information provided in this blog post is for general information purposes only. The information was completed to the best of our knowledge and does not claim either correctness or accuracy. For detailed information on crypto regulations we recommend contacting a certified legal advisor in the specific country.
As this blog post referrs to international crypto laws, the content will only be available in English. If any questions occur, feel free to contact us in our Telegram Channel.
Sources
https://www.world.tax/articles/tax-treatment-of-crypto-currency-in-croatia.php
https://bitfalls.com/2018/02/09/croatias-announcement-taxing-cryptocurrency/
https://www.porezna-uprava.hr/HR_publikacije/Lists/mislenje33/Display.aspx?id=19570
https://smartereum.com/3605/croatias-crypto-community-embraces-new-self-regulating-body/
https://cms.law/en/content/download/340797/8580361/version/1/file/Initial%20Coin%20Offerings%20-%20New%20means%20of%20fundraising.pdf
https://www.porezna-uprava.hr/HR_publikacije/Lists/mislenje33/Display.aspx?id=19570
https://medium.com/@CopPay/croatia-cryptocurrencies-are-neither-legal-means-of-payment-nor-electronic-money-cde0b3cb0e5a
https://www2.deloitte.com/content/dam/Deloitte/ce/Documents/tax-legal-highlights/december-2017/ce-tax-legal-highlights-croatia-december-2017.pdf
https://www.hanfa.hr/vijesti/informacija-o-virtualnim-valutama-i-rizicima-ulaganja-u-virtualne-valute/
https://www.porezna-uprava.hr/HR_obrasci/Documents/POREZ%20NA%20DOHODAK/RPO.pdf
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Originally published at blog.blockpit.io and cryptocurrency-tax.info
