Bitcoin users have been dealt a blow as Norwegian authorities have announced that they will be placing a tax on the virtual currency.
Hans Christian Holte, director at the Norwegian tax administration said in an interview:
Bitcoin don’t fall under the usual definition of money or currency.
We’ve done some assessments on what’s the right and sound way to handle this in the tax system.
The Norwegian tax authorities will treat Bitcoin as an asset that will consequently be subject to capital gains tax.
There will also be a 25 per cent sales tax applied to businesses. Holte said that he intended to work with other countries to clarify the legal aspects of Bitcoin. He added that Bitcoin was a poor substitute for cash in case of emergencies.
If there’s a crisis or power outage, you need some bills in your wallet in case your credit card doesn’t work - same goes with Bitcoins.
Governments across the world have struggled to respond to the rapid rise of the cryptocurrency. The United States has taken a generally relaxed view of the currency with a Senate committee labelling Bitcoin a "legitimate financial service."
In August, the German federal ministry of finance recognised Bitcoin as "private money" and imposed a 25 per cent capital gains tax.
In July Thailand became the first country to ban Bitcoin after its central bank ruled it was not a currency.