In a recent Reuters article, El Salvador passed a law to make Bitcoin legal tender. This official classification could have some interesting tax implications.
Nowhere else in the world has yet made Bitcoin legal tender. El Salvador is leading the field. It’s important to stress that its use will be optional.
El Salvador will still pay pensions and salaries in USD. But citizens will soon gain access to more than 1000 cryptocurrency ATMs.
El Salvador relies heavily on overseas workers sending money back to the country. In 2019, $6 billion in remittances alone made up the country’s GDP. Under 1% of all cross-border global remittances are currently made in Crypto. This percentage is set to soar once Bitcoin becomes official legal tender. The cryptocurrency will eliminate high commissions associated with sending money home.
As legal tender, El Salvador must therefore accept tax payments in Bitcoin.
This Bitcoin move may see it classified as foreign currency. Does that mean other countries will not charge any capital gains tax on Bitcoin too? Stay tuned with us at CryptoTaxGeek.com – this is definitely a story to watch!
