During the previous years, a variety of areas over the globe let it be known that they wanted to transform into a distributed ledger hotspot. It is true that some maintained a crypto-tech reputation, but it was the Swiss Zug that is heading the way. This lead to that area frequently being called a crypto valley.
Zug is staying true to the nickname: it stated that from next year the area would start taking BTC and ETH as legit tax payments. In order to utilize this offer, all those who pay taxes need to do is ask the Zug Department of Finance of Payment for an individualized QR code.
According to their director, Heinz Tännler, they find it significant to carry on promoting and simplifying the usage of cryptocurrencies. He carried on, saying that they are making a big step that way by accepting tax payments in cryptocurrencies.
Cryptocurrencies Being Used for Tax
In addition to the resolution to recognize Bitcoin and Ethereum as tax payments, there are different clauses:
- This starts in 2021
- Bitcoin and Ethereum are the only approved digital coins
- Payments must be rendered in total
- Qualified for tax balances of up to CHF 100k
As the Zug plans for this transition, a short pilot programme will take place in the upcoming weeks.
Even though of its reputation of a crypto valley, Zug may not have all the tech requirements to create a way for gathering taxes in cryptocurrency forms. This means they had to find a partner, and the choice landed on Bitcoin Suisse.
The affiliation asks for a multi-phase procedure:
- Bitcoin Suisse will be collecting crypto tax payments
- Bitcoin Suisse automatically changes the amount to a fiat currency – the Swiss national currency, to be exact
- Fiat is then moved to the Zug’s Area Taxing Headquarters
Normally, since these are distributed-ledger-based transfers, proof of payment and settlement of accounts are likely to be fast and transparent.
Many are wondering how the government will avoid the instability connected with distributed coins when taking them as payment. Via the structuring of the payment system this way, the Zug Department of Finance will be in the position to escape this instability since fundings are quickly changed to a fiat currency.
The Zug’s director said that they are not taking risks with the new way of payment since they always get the money in Francs, even when the tax is collected in BTC or ETH.
It’s great that Zug is gathering cryptos for this purpose, but they are not the first to do such a thing. They are the 3rd Swiss region to make this step, and the ones before them were the Zermatt municipality. Bitcoin Suisse was yet again the partner of choice for this venture.
There are similar occurrences in Canada. This nation is still leading the way in blockchain acceptance – Ethereum came from Canada, as well as the first BTC fund launch. These things happened in Richmond Holl and Innisfil.
Lots of Kinds of Adoption
All of this tells us that the adoption of digital coins is ongoing. Even though it’s awesome that taxes can be paid this way, this isn’t the only way cryptos are being used.
- Auctioning off (viewed as value assets) – When Bitcoin is seized, government institutions auction it off, so the coin is seen as something accepted by the government.
- Regulations – Regulatory bodies have acknowledged the continued influence of digital coins and started to change their regulations to become more suited for future times.
- Institutional offering – Bitcoin Funds, Future Marketplaces…
This region is like a headquarter for lots of blockchain-operating firms, so it’s called a crypto valley. The nickname came due to them having such crypto-accepting regulations. The area is small and has circa 127k residents.