The legality of cryptocurrency salaries

Many countries introduced tax rules governing the tax treatment of salaries paid in cryptocurrencies. The Netherlands, New Zealand, and the UK are just some of those countries. Cryptocurrencies supporters all over the world see the new rules as an official endorsement of alternative monetary systems and an important step towards the global acceptance of cryptocurrencies.The rules on the tax treatment of cryptocurrency salaries vary from country to country. The Dutch taxman sees cryptocurrency salaries in the same way as other payments in kind. From a tax point of view, payments in cryptocurrencies do not differ from payments in gold, cows, or chocolate bars. In the Netherlands, cryptocurrency salaries are taxable based on their value in euro at the time when they are paid.New Zealand followed the example of the Netherlands and adopted rules applying to cryptocurrency salaries. The rules became effective on the 1st of September 2019. They apply only to payments in regular and fixed amounts. Furthermore, the cryptocurrency used to make the payments needs to be pegged to at least one regular currency and must be directly convertible into a standard form of payment. The rule does not apply to self-employed taxpayers. Companies that fall within the scope of the new rule are entitled to take into account their cryptocurrency payments for tax purposes.In 2014, the UK published guidance entitled “Paying employees in shares, commodities, or other non-cash pay”. The guidance clearly states that employers who offer certain non-cash payments to employees need to calculate and deduct applicable taxes on those payments. Such payments include, but are not limited to, payments with crypto assets, stocks and shares, financial instruments, and commodities.Employers willing to pay their employees in cryptocurrencies need to be aware of the highly volatile nature of cryptocurrencies. For example, Bitcoin was trading at USD 7,430 on the 24th of October 2019, whereas its exchange rate in 2017 was about USD 19,000.