By Dimitris Tsagaris*

The forthcoming legislative amendment to the income tax code which will explicitly define the taxation of bitcoin gains is a very welcome and positive development in an area of growing interest and participation worldwide in recent years.

This is because it comes to regulate an area which until now has not received the attention of the tax legislator and has produced huge gaps and legal uncertainty in the way of taxation of the relevant income, when the acquirer is a tax resident of Greece.

In particular, according to the principle of the legality of tax as derived from Article 78 of the Constitution, nothing can be taxed unless it is expressly provided for in a legal text.

The consequence of this was the impossibility to include, with legal certainty, the specific profit from the sale of bitcoin in a specific category of income. It was argued (correctly, as it is about to be adopted by legislation) that this is capital gains income with a one-off, self-assessed tax rate of 15% - if the acquirer is an individual - but there were other views that argued that it is business income, an approach that implies its staggered taxation at a rate of up to 44%.

The BPA that tried to "touch" the issue in the case of a taxpayer who claimed income from the sale of bitcoin to cover presumptions, while examining the issue in passing, rejected this as a way of covering it on the grounds that it is not income regulated by law, so it is not income.

All of the above polyphony and vagueness had multi-dimensional consequences such as:

- the inability of the State to tax the relevant income with certainty.

- risk in tax audits, the auditor can apply at will what he believes and go e.g. with the approach of business income resulting in taxation up to 44% plus fines and interest that would reach 100% - i.e. "confiscation of the whole amount" ..

- the inability of the taxpayer - tax resident in Greece to invest the relevant income - profit in Greece with a corresponding security, fearing the unpredictable and unregulated consequences of a tax audit.

Taxation as capital gains income is indeed the most appropriate according to the nature of this income and we look forward to the regulation of more specific technical issues, in particular :

- how the acquisition cost and corresponding selling price of the relevant currencies will be demonstrated in order to derive the relevant profit.

- whether taxation will be self-assessed on each purchase and sale as - for example - has been regulated in similar cases in gambling or whether, instead, the profit will be assessed on an annual basis based on the principle of self-sufficiency and therefore whether a profit will be assessed on all transactions within a year, as well as whether any resulting loss can be carried forward to subsequent years.

*Economist MA-Economist - Managing Director of FAO Economics AE