• BDO Tax & Legal Newsletter / 2019 No.3
Newsletter:

BDO Tax & Legal Newsletter / 2019 No.3

03 July 2019

Public Ruling

On taxation of supply of crypto assets and processing speed (power) required to obtain those assets.

Public Ruling (№201, 28.06.2019) on taxation of supply of crypto assets and processing speed (power) required for those assets was published on 2 July. The decision defines the following:

  • Crypto asset is virtual currency, that in certain cases may be used as alternative of money
  • Since according to Georgian tax code transfer of the title on money is not considered as VAT taxable operation and crypto assets is considered as the alternative of money, supply thereof is not taxable operation for VAT purposes
  • Since the crypto asset does not have physical shape, it is not located in a specific location and it is impossible to determine its issuer, as well as practically impossible to determine the location of the operation, it should be assumed that the supply of crypto asset is not necessarily implemented in the territory of Georgia. Accordingly, the income gained from its supply does not fall under Georgian source income and is not subject to taxation by income tax
  • Supply of processing speed (power) for obtaining crypto asset is considered as electronically delivered service for VAT point of view and the place of rendering service is considered the place of registration or the place of management of the person receiving the service. Accordingly, in case the receiver of the power is registered outside of Georgian territory or it does not have the place of management or permanent establishment in Georgia, supply of the processing speed (power) shall not be subject to taxation by VAT
  • In case the receiver of the power is registered in Georgia or it has the place of management or permanent establishment in Georgia, supply of the processing speed (power) for obtaining of crypto asset shall be subject to VAT
  • In both cases above, provider of the power shall be entitled to deducting VAT paid for goods/services purchased for rendering the mentioned service as per deduction document.

The Public Ruling came into force on 2 July 2019.