Bitcoin trading, tax and rules for Croatia
Hello Steemians!
For the past two weeks I was on a quest to look for the answer to the question that bothered me: If I trade with bitcoin, what do I have to do to make it legal?
I want to avoid problems like tax evasion and some other complications related to that.
The quest
Thankfully, after almost 2 weeks of walking, searching and talking with people, I have finally found a solution and answers to my questions. Several times during that process, after I asked official people about my duties, and what is needed of me not to have any problems in the future, and everything else I could think of to provide them with more information related to my crypto trading only to hear: "I don't know. Try asking him/her..." [points finger]. Needless to say I was pissed, angry, annoyed and feeling like crap after dealing with those people. It drains me of my energy after dealing with such lazy and ignorant people. In total, of 15 people I've talked to, none of them gave me a straightforward and useful information which I could apply in solving my problem. Well, two people had some information which wasn't really relevant and related to my problems/questions. So I was back at starting point.
If you're from Croatia, and you've traded Bitcoin, or any other crypto currency, like me, you need to pay the taxes. It's regulated by law. Oddly enough no other info is given on any of the public sites available except for some official law slang gibberish which says nothing. All the information available is that you need to pay the tax. In some places you can find how much is that tax, but nothing on when and how to pay it. There are even some ideas on some forums that you don't have to pay as there is not enough info available. Also, some people claim as bitcoin is not named - you should not pay at all. Only problem with that - it is named, but the information is too scarce and unavailable. That said, you won't find anything useful related to bitcoin trading and taxes as 99% of the articles scream that bitcoin value is on the rise and how it's popular and that people trade it a lot. Such journalism! Much class! Very wow!
You can search the web high and low and you won't be able to find any information which is useful and helpful. Unless you're lucky.
The place
Today,I got lucky! After a long and pointless conversation with another 2 clerks, 1 bank teller (she was full of information which was sadly, totally obsolete and outdated as the law changed... again...) and her brilliant supervisor who knew less than her (and he is her supervisor - oh the irony) I found out nothing new. I knew more than they did, and yet I'm the one without a job. I was almost ready to give up, try out the anonymity of advanced cash card, hope for the best and not to get caught while using that.
I decided to give one more shot at looking for the info available on line. I went with two simplest words - as I've only dealt with idiots in the last two weeks - so I decided to become one. Hulk smash! Tax, bitcoin. And there it was, somehow I saw a 6 days old article which I haven't seen before. I know it wasn't here before as I haven't clicked on it. All other links I visited. All except that one. Also, now, even without a typo it appears there on my search list. I know I haven't seen it there before. I could swear!
The article was written by: Gordan Horbec and it was a gold mine (for me at least). All the info I wanted to know in one nicely written and informative article with all the questions I wanted to ask answered. It's simple, it's almost like a step by step guide and I'm so happy to have finally found it. I will share it here (and I already made a copy - if it dissapears suddenly).
I will go through the article for all the people outside of Croatia so that they see what we need/should and are required by law to do in order to solve this. I will link the original article at the end of my post.
Anyways, here it goes.
This is mostly my rough and meaningful translation from the original article.
The answer
First of all, if you made any profit by trading bitcoin, you should pay tax by 28th of February and fill in and file in the JOPPD form. The tax is 12% and surtax is 18% for the city of Zagreb.
I will use example same as is within the articles - although the prices don't really match - I got a better price, or worse. It depends where I looked for the price. It's just an example, it is like that in the original article so please don't hate me for it.
Lets say that you bought 1 bitcoin at a price of 1700 USD on May 10th 2017 (worth 11565.28 HRK at that time, calculated by using mid exchange daily price determined by HNB on that day), you sold it on December 7th at 16000 USD and had to pay 100 USD fee. You've gained 15900 USD (worth 101540.07 HRK at that time, calculated by using mid exchange daily price determined by HNB on that day), you pay tax only for profits you made which is 15900-1700 = 14200 USD (or worth 101540.07-11565.28 = 89974.79 HRK) which would be respectable annual salary for Croatia. Even after paying tax and surtax, the statement about the annual pay is the same - and it's pretty good. Average calculated annual salary for Croatia is around 67000 HRK.
Tax for that amount is: 89974.79 * 12% = 10796.97 HRK
Surtax is (for Zagreb 18%): 10796.97 * 18% = 1943.45 HRK
Total tax (tax + surtax): 12740.42 HRK
For that part I've made an excell spreadsheet which does all the math for me and all I do is type in the amounts I've sold and traded and dates I've done that. It takes me less than few minutes to do everyting now.
However, before you pay any of that first you need to go and signup for the register of tax payers - RPO. You need to tell the clerk that you're receiving profits from abroad and that it is the only reason you're applying. You need to do that in from 2nd of January till 28th of February of 2018. Only then you can pay the tax and surtax for year 2017.
The rest of the article has technical information about how to fill in the required fields. I have decided to skip that part as I will link the original article.
The questions - FAQ
There are also some frequently asked questions:
If I haven't sold any of my bitcoin, do I need to pay tax?
No.
If I sold but I haven't transferred my money to Croatia, but it is in some other account abroad what then?
You have to pay the tax as if you had transferred money to Croatia.
When I sold my bitcoin I had to pay a fee so I got less money than the price was, what is the sum I pay taxes for?
You pay for the sum you actually got paid for after you paid for fees.
If I made 1000 USD and later I lost 1100 USD in the same year, what then?
Nothing. (You lost more than you gained - so I would say no taxes need to be paid)
If I made 1000 USD and later lost 500 USD in the same year?
Then the amount to pay tax for is 500 USD.
How do I calculate my profits if I bought a bitcoin at 1800 USD, then one at 5500 USD, and finally one at 10000 USD and then sold 2 of those 3 at 15000 USD?
This is calculated by FIFO method (First In First Out). Which means when you sold your 1st bitcoin, calculation is that you had sold the one you paid 1800 USD, and for second one is calculated as the one you paid 5500 USD. At end you're left with one worth 10000 USD. (in the article there is also a small example table here)
When I need to pay the tax? At the end of year or within 8 days of making trade?
You pay it at the end of year, more precisely any time between January 2nd and February 28th of that year for previous year. For this year you pay by February 28th next year (2018).
How do they know how much money I have in my wallet or how much I made if I don't fill any forms and go abroad and take my money from ATM machine or if I buy something online and spend it like that?
GRRRRRR!!!! (that is the answer for that - lol)
If I invest as company/firm (legal person/entity), how does it work then?
It's not the same, the tax paid is within different category - acquisition tax (12% or 18%) if the profit is made and it is calculated and done by accountant without filling the JOPPD form. (that is totally different story and there are other rules)
Bonus!
If you made less than 112.00 HRK (which is roughly worth 17.85 USD) you are freed from paying the said tax. :)
The realization
I wish I knew all that info before but I didn't. Now I'm sharing it here with all of you in hopes that you'll find it helpful, useful and that you will correct me if I'm wrong so that I can learn from this experience. I would like to make someone's life easier with all that information.
Trading with bitcoin, and other crypto currencies is fun, stressful and, to myself at least, necessary for paying the bills. I've learned all I know about crypto here and am willing to share.
Here is the link to the original article:
Image used in the article is my original artwork. Idea I'm playing with after browsing slothicorn contest.
Have fun and keep steemin!
@zneeke