Is Cryptocurrency Legal in Bulgaria
Do you have questions about cryptocurrency, digital currencies or blockchain technology? Freeman Law can help you with digital currencies, tax planning, and tax compliance. Contact us now to schedule a consultation or call (214) 984-3410 to discuss your concerns about cryptocurrency and blockchain technology. The NRA accepts that cryptocurrency mining is not a separate type of income. The general rules apply to taxation. Payments received in cryptocurrency (e.g. for a service or product) In its opinion, the European Banking Authority provides a definition of cryptocurrencies based on their key characteristics. The latter define cryptocurrencies as a digital representation of value. Cryptocurrencies are not issued by a central bank or other public institution, nor necessarily pegged to an existing currency, but are also used by natural and legal persons as a medium of exchange that can be transferred, stored or exchanged electronically. A digital representation of a value should first mean that cryptocurrencies are in digital form.
The term “digital representation of value” also addresses one of the intrinsic functions of money: to serve as a unit of account, but at the same time to allow cryptocurrencies to be treated as money or a “private” commodity. The exchange is a popular choice among many people because it offers a user-friendly and easy-to-use design for buying, selling, and trading cryptocurrencies. The exchange also has a variety of payment options that can be used by novice cryptocurrency users to buy Bitcoin (BTC), Ethereum (ETH), and many other crypto coins. The above concludes that cryptocurrencies must be distinguished from fiat currency and other legal means of payment. At the same time, it is acceptable for them to be treated as financial assets, as the holder of the cryptocurrency could receive another currency through the relevant exchanges, recognized as a means of payment, goods or services. The register was created to achieve greater clarity in this specific sector and to limit opportunities for money laundering and other illegal practices. Currently, cryptocurrencies are legal throughout the EU, but specific regulations and standards vary from country to country, similar to the United States, where laws governing the crypto industry vary from state to state and federal agencies also interpret and regulate them differently. One of the easiest ways to buy Bitcoin in Bulgaria is to use the cryptocurrency exchanges described above. If you need to consult a good lawyer, contact us. We are happy to help you with these and all other legal questions. Cryptocurrency mining is not expressly or otherwise prohibited by law in Bulgaria. However, because mining is not explicitly regulated or authorized, it carries certain legal and regulatory risks.
Recent (2020) decisions of the Supreme Administrative Court have also considered cryptocurrency mining a legitimate service. Persons engaged in cryptocurrency mining are treated as traders for the purposes of the Transactions Act. As a sole proprietor, you are taxed at 15% on profits. In the case of corporations, taxable income is constituted in accordance with the Corporate Income Tax Act. If the payment of a certain type of taxed income is made in cryptocurrency, the taxation is in turn carried out in accordance with the tax regulations applicable to the respective income. To date, no Bulgarian law has explicitly addressed cryptocurrency mining. At the time of writing (July 2020), no pending parliamentary bill regarding cryptocurrency mining is pending. Initial coin offerings (better known as “ICO”) or the operation of a cryptocurrency exchange will be covered in future posts that will be published on our website. Investors who are new to the world of cryptocurrency trading are looking for an easy-to-understand crypto exchange.
Paybis is a popular cryptocurrency exchange. They serve 180 countries and 48 US states and are registered with FinCEN, making it a more reliable and regulated exchange. Paybis offers incredibly high limits and lightning-fast payouts, not to mention a 5-minute identity verification and near-perfect exam results on Trustpilot. According to a 2018 NRA Opinion, cryptocurrency mining may be a service that may be supplied for VAT purposes, provided that mining (i.e. the performance of cryptographic calculations for consideration) is directly linked to the payment of the mining and is provided by a taxable person. In terms of taxation, cryptocurrencies are treated the same in Bulgaria as income from the sale of financial assets. The tax rate applied is 10% of the annual tax base. The Bulgarian national tax authority does not distinguish between cryptocurrency-to-fiat currency or cryptocurrency-to-cryptocurrency transactions. Therefore, both cases are considered taxable events and must be included in the annual tax return. The declaration must be made no later than April 30 of the year following the year in which the profit was made.
The existing civil, administrative and criminal law in this area in Bulgaria is thin and there is therefore a likelihood of rapid legal changes and disagreements between decision-makers. The Financial Supervisory Commission (FSC) in Bulgaria has not issued any explicit legal guidelines. Most jurisdictions and authorities have yet to enact cryptocurrency laws, which means that for most countries, the legality of cryptocurrency mining remains uncertain. Sources Legal framework for cryptocurrencies in Bulgaria Tax treatment of bitcoins Banks resilient accounts of cryptocurrency exchanges Taxation of cryptocurrencies Regarding the use of cryptocurrencies, especially trade, as a professional activity, the corporate tax base is applied. The tax rate is therefore 15%. As stated by the Bulgarian National Bank as well as the Financial Supervisory Commission in Bulgaria, cryptocurrencies are not treated as financial instruments or electronic money. Finally, in the fact that no license is required for companies that trade cryptocurrencies. However, if a company wants to trade financial products with underlying cryptocurrency assets, a license must be obtained. The conclusion that cryptocurrencies are not legal tender is shared both in the doctrine and by the relevant Bulgarian institutions.
According to the Bulgarian National Bank and the Financial Supervisory Commission, cryptocurrencies are also not financial instruments within the meaning of the Markets in Financial Instruments Act. These institutions consider that the activities of acquiring, trading and paying for cryptographic data are not covered by either national or European legislation. However, cryptocurrencies should be considered a financial asset under Bulgarian law. The Bulgarian tax authorities treat them as such and treat them as a service. The income from transactions with them contributes to the formation of the tax base and is linked to the obligations arising from the VAT Act. In recent years, it has been observed that the trading of cryptocurrencies such as Bitcoin, Litecoin and Ethereum has steadily increased.