There is a significant rise for Greeks, particularly young adults around the age of 30, engaging with cryptocurrencies and digital assets. At the same time, significant issues are caused due to the lack of a clear tax framework in Greece. These issues concern not only the investors engaging in cryptocurrency activities but also the Greek tax authorities who currently do not recognise these cryptocurrencies and digital assets.
According to an article of a popular Greek paper, ekathimerini, a special committee is expected to deliver its report to the Ministry of Economy and Finance by September of this year. This report will include proposals to address the taxation issues surrounding cryptocurrencies.
The article continues and states that according to sources, from January 2025, cryptocurrencies will be subject to taxation, with profits taxed as capital gains at a rate of 15%. The report will cover three main areas, which include the definition and documentation of all cryptocurrencies, the taxation methodology and control procedures.
Currently, there is no framework for taxing the capital gains from the sale of cryptocurrencies, making it impossible for investors to officially use their profits. This means that they cannot use these gains for significant purchases that involve the banking system. For example, if an individual uses their cryptocurrency earnings to buy real estate, the tax authorities do not recognise the source of these funds, leading to additional tax liabilities due to imputed income. Essentially, profits from cryptocurrencies can only be used for transactions that occur outside the banking system.
The absence of a comprehensive tax framework for cryptocurrencies in Greece has several implications: many investors do not declare their cryptocurrency profits, leading to potential tax evasion, investors face legal uncertainty as their earnings from cryptocurrencies are not formally recognised, creating challenges when integrating these profits into the traditional financial system; and the lack of clear regulations can deter potential investors and hinder the growth of the cryptocurrency market in Greece.
The upcoming report from the special committee aims to address these issues by establishing a clear and structured tax framework for cryptocurrencies, thereby providing legal clarity and encouraging more transparent financial practices.
The establishment of a clear and structured tax framework for cryptocurrencies is considered to be very important, given that such a framework not only aids in legal recognition and transparent financial practices but also mitigates the risk of money laundering and financial crimes. By providing clear guidelines and controls, cryptocurrency transactions can be more effectively monitored and regulated, reducing the opportunities for illicit activities.
