How to pay taxes, accepting crypto payments?dredin
Crypto payments are undoubtedly a powerful push towards new highs, as this innovation may easily enhance your customer base and protects merchants from canceled transactions. The full list of pros contains a wide range of strong points. The number of crypto-friendly businesses is mushrooming in 2020-21 influenced by the pandemic realities and the explosive growth of the crypto market.
What is the main deterrent factor for merchants who still have doubts about whether accept crypto payments or not? Business owners have no idea about the legislative norms; this is why merchants are afraid of law infractions. For instance, how to pay taxes when some payments are accepted in digital currencies?
Fortunately, the industry is developed enough, and effective solutions remove all the troubles and headaches.
What are crypto taxes imposed on payments?
While talking about crypto payments, a merchant obtains income through sold goods and services; this is why he (she) needs to pay income tax, depending on a certain country. For instance, Serbia implies an income tax rate of 10%, while in Japan this rate is 55.97%. Furthermore, many countries set different tax rates affected by your overall annual income.
This said, a merchant needs to declare incomes in the national currency and pay the required rate as a tax. When business owners get digital currencies, they report incomes in fiat currencies, converting crypto assets at the moment they’ve got funds.
For instance, a merchant registered in Spain (47% income tax rate) has sold goods and services for 10 ETH. At the moment of payment, the Ethereum price was $3 210 per one coin. As such, a business owner needs to pay the income tax of $15 087 (47% of $32 100). When a merchant decides to keep Ethereum coins, and their price rises to $4000 (e.g.), cryptocurrencies are not the subject of income tax anymore, being not related to a merchant’s crypto activity.
In the meantime, some countries impose other crypto taxes:
- Capital Gains Tax. This tax includes profits obtained from the price differences as well.
- Value-Added Tax. Some countries impose VAT while purchasing and selling digital assets.
- Investment Tax. A few countries have taxes imposed on investments.
What is the best way to accord your business with the law?
On the one hand, taxes on crypto payments are straightforward and don’t lead to headaches; meanwhile, a merchant needs to dive deeper into a country’s taxation system where a company is registered.
Business owners accept Bitcoin payments (and other cryptocurrencies) through providers, and the market is rich in such companies. Merchants should deal with payment providers that offer a set of useful features to get a business in entire correspondence with legal norms.
For instance, the leading award-winning provider of crypto payments, B2BinPay, offers merchants two convenient solutions:
- Get digital currencies and hold them on a secured crypto wallet. Send, receive, and exchange crypto assets easily with minimum fees. B2BinPay empowers business owners to access a set of reports to pay taxes timely.
- Get crypto funds automatically converted into fiat currencies and sent to your bank account. This option simplifies the taxation, as merchants need to pay income tax on fiat funds obtained on a bank account. In this case, business owners don’t need to find out how to calculate crypto taxes.
B2BinPay is a reliable provider of crypto payments that connects merchants to a new revolutionary solution, opening the horizons for further development.