The Venezuela Rules for Cryptocurrency
Since 2018, cryptocurrency has taken front and center stage on a global scale. And, some countries have embraced cryptocurrency more than others (El Salvador and the Central African Republic use Bitcoin as legal tender). In most countries such as the United States, cryptocurrency is still considered an asset and not currency per se since it is not backed by the federal government. A common question becomes whether cryptocurrency is legal in a particular country where a person resides — and it if can be used to acquire assets as a form of payment.
Is cryptocurrency legal in Venezuela?
Let’s take a look at some of the basic rules involving cryptocurrency in Venezuela.
US Tax on Worldwide Income
The United States is one of only a few countries in the world that taxes individuals on their worldwide income. Therefore, if you are a Green-Card Holder/Legal Permanent Resident then you will be taxed just as if you were a US citizen. As a result, whether or not you reside in the United States or outside of the United States, you are required to file a US tax return. Moreover, whether or not the income you earn is sourced in the United States or outside of the states, does not matter for income purposes; in other words, you are required to report all of this income on a US Tax Return. Thus, if you are a US Person residing in Venezuela, and you earn crypto income, it is still taxable by the US government.
Crypto is Not Legal Tender
As in most countries, cryptocurrency is not considered legal tender in Venezuela — although crypto is becoming much more commonplace. In fact, the government of Venezuela issued its own cryptocurrency in 2022 — although it has taken on the limited application in the real world. For tax purposes, the country of Venezuela has expanded the tax implication of using or exchanging cryptocurrency, which can significantly increase the taxation of crypto transactions in Venezuela.
As provided by the Venezuelan government in part:
In that framework, it is necessary to guarantee treatment at least equal, or more favourable, to payments and transactions made in national currency or in cryptocurrencies or crypto assets issued by the Bolivarian Republic of Venezuela versus payments made in foreign currency.
For this reason, the Reform Law project seeks that the transactions in foreign currency pay a tax on debits and transactions at least equal to or higher than what debits in Bolivares pay today.
The project applies the tax for these transactions with a rate ranging from 2% to 20%, starting at 2.5% for any transaction in foreign currency or currency foreign, until the National Executive establishes a different aliquot.”
Thus, taxpayers who are making cryptocurrency transactions in Venezuela (especially US persons) should remain cognizant of the tax implications.
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