Chia is new cryptocurrency which has attracted enormous attention worldwide. This new cryptocurrency is backed by renowned American programmer Bram Cohen. He developed the BitTorrent protocol, which led to the emergence of torrent trackers. Cohen calls Chia an environmentally-friendly cryptocurrency. He compares it to Bitcoin and other “classic” tokens, the production of which requires a colossal amount of electricity. It is considered to be an ecological currency because it is not created with a graphics card but with storage space, so its mining requires incomparably less energy than other cryptocurrencies.
Expectations from this cryptocurrency are high, in some countries there has been a lack of SSDs of high performance and the production of specialized SSD cards for mining operations is taken into consideration.
As with other cryptocurrencies, the question, which arises is how to introduce crypto money into legal flows, as well as what is the tax treatment of this money.
Serbia is now home to many successful fintech start-ups and many other businesses are overhauling their models, often in cooperation with Fintech companies.
Under the new Law on Digital Assets only a company that is registered in the Republic of Serbia can be a Provider of services related to digital assets. The entity applying for the relevant license must have a minimum registered capital of EUR 20,000 to EUR 125,000, depending on the type of service it will be providing.
- Value Added Tax Law – Transfer or conversion of cryptocurrency to cash will be VAT exempt without the right to deduct input VAT.
- Corporate Income Tax Law – Sale or other transfer against consideration of digital assets by legal companies will be subject to capital gains tax at the rate of 15%. If a taxpayer invests the funds generated by the sale of digital assets in the share capital of a resident company in Serbia within 90 days of the sale, 50% of the capital gains tax will be exempt. A refund of 50% of paid capital gains tax will be made within 12 months from the date of sale of the digital assets.
- Non-resident entities will be subject to a 20% tax on capital gains realized from the sale of digital assets unless there is an applicable double taxation treaty that exempts such gains from taxation in Serbia.
- Personal Income Tax Law – Similar to the CIT Law, sale or other transfer against consideration of digital assets by individual taxpayers will be subject to capital gains tax at the rate of 15% on the positive difference between a contracted price, i.e. market value and acquisition value of the digital asset. Generally, acquisition value is documented as the price actually paid. In the case of digital assets acquired through ‘mining’ or from the employer through a share plan, acquisition value would be determined under specific rules. PIT Law prescribes a tax exemption for 50% of realized capital gains if the gain is invested into the share capital of a Serbian legal entity or investment fund.
- Law on Property Taxes – Digital assets will be subject to inheritance and gift tax at the rate of 2.5%, whereby the tax base is the market value of digital assets at the moment they are inherited/gifted. Property tax and property transfer tax do not apply to digital assets.
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