How to Reduce Taxes for Investors & Crypto Investors_6
Unlike most jurisdictions, Malta viewed the cryptocurrency boom as an opportunity to introduce a new industry to complement the growing service sector. Malta became the first to adopt a legislative package:
- About Virtual Financial Assets (VFAA), which defines the classes of cryptocurrencies and regulates the corresponding services;
- On Innovative Technology Agreements and Services (ITAS), which provides for a system for regulating agreements and services, including DLT;
- About Digital Innovation Management.
These initiatives have not gone unnoticed in the crypto space. For a while Malta became a Mecca for the crypto community ... Many serious players have made Malta their base. Alas, the timing was not right. At the dawn of 2018, Bitcoin collapsed, and when the new legislation came into force, the industry found itself in the grip of a “crypto winter”.
In November 2018, the Malta Revenue Agency prepared guidance documents on the taxation of transactions related to DLT assets. No special tax rules have emerged; the existing ones were interpreted in the context of the new asset class.
According to the VFAA DLT assets are classified by income as “coins” or “tokens”. Tokens are divided into "financial" and "utility". Coins are not considered to have any security characteristics and are functionally the cryptographic equivalent of fiat currencies. Financial tokens are defined by analogy with stocks, debt obligations ...
Utility tokens are classified as DLT assets whose value and use are limited solely to the purchase of goods or services, either within the DLT platform for which they are issued or within a limited network of DLT platforms.
The implications of the classification are significant for tax purposes, as coins and utility tokens are not included in the list of the main assets of the Income Tax Law, the transfer of which is subject to capital gains tax. Unlike securities, which are included in the Law, income received from the transfer of cryptoassets, equated to securities, is taxed.
Interested in details? Email: info@dv-consulting.net
