Zug – one of the regions belonging to the Swiss Confederation – has announced that residents will be able to pay their taxes in either bitcoin or Ethereum starting next year.
Zug – Want to Pay Your Tax Bill with Digital Currency?
Zug is part of Switzerland’s affectionately dubbed “Crypto Valley,” which has garnered its nickname thanks to the many bitcoin, crypto and blockchain startups the region currently houses. The area takes its name from Silicon Valley, the section of Northern California that currently serves as home to many of the world’s leading tech companies including Google, Apple and Facebook, only instead of housing tech companies, Crypto Valley is entirely devoted to blockchain and the power of digital assets.
The news is big in the sense that bitcoin and cryptocurrencies are often reserved for speculative trading only. Initially, they were designed to potentially replace fiat currencies and allow users to purchase both goods and services, though this dream is still far from being a reality even though bitcoin has been around for well over ten years at this point.
The problem is that many of these cryptocurrencies remain extremely volatile to price changes. They can be doing extremely well one moment and then incur dramatic drops the next. This recently occurred with bitcoin, the world’s main cryptocurrency by market cap. For the second time in several weeks, the asset recently crossed the $12,000 threshold, making many traders believe that the latest resistance mark was going to be a thing of the past.
Sadly, this wasn’t the case, as the jump didn’t last. Now, the asset has fallen more than $1,000 into the high $10,000 range despite not dropping below $11K for several weeks.
Many businesses and enterprises are not willing to take a chance that they could lose money by accepting crypto as a method of payment. Say, for example, you purchase $50 worth of merchandise from a store with bitcoin, but tomorrow the asset’s price drops, thereby making that $50 more like $30. While you’ll still walk away with everything you bought, the store is stuck dealing with a $20 loss. Retailers and business owners are likely not willing to accept such a fate, which is why so few commercial businesses accept crypto as a cash equivalent.
So, the idea that one can now pay whatever tax bills have accumulated in crypto is a huge step forward. Zug has announced that users can pay their bills with crypto beginning in February of 2021. Sums of up to $110,000 can be taken care of via crypto payments.
Always Getting Their Money’s Worth
Heinz Tannler – finance director of the Zug administration – commented in a recent interview:
We do not take any risk with this new payment method, as we always receive the amount in Swiss Francs, even if payment is made in bitcoin or ether.