The praxeological view. The bill’s explanatory memorandum states that crypto-assets were defined broadly in order to ensure tax neutrality. Praxeology shows, however, that no such neutrality exists. A neutral tax would be one that left the market as it would have been without it. But every tax takes from some people resources that they would have devoted to their own ends, and so changes what they would have bought, what they would have saved, and how they would have traded. Ludwig von Mises, in Human Action, explains that in the changing market economy, the only one that actually exists, neutrality is impossible:

“In the frame of such a system no tax can be neutral. The very idea of a neutral tax is as unrealizable as that of neutral money.”

In this bill, the non-neutrality is visible to the naked eye. Someone who pays for a coffee in euros has no capital gain to calculate. Someone who pays for it with a crypto-asset is, under the bill, transferring an asset: he must know what it cost him, compare that with its value in euros at the moment of payment, and add the difference to the year’s gains. The explanatory memorandum says so explicitly: for tax purposes, crypto-assets are treated as intangible assets, not as legal tender. The legal tender, the euro, stays out of the calculation; any other medium of exchange that might compete with it starts out with a cost that the euro does not bear. Yet money was not created by any legislator. Carl Menger, in On the Origin of Money, puts it plainly: “Money has not been generated by law. In its origin it is a social, and not a state institution.” One need not believe that any cryptocurrency will ever become money; that is for the people who trade to decide. The tax, however, takes sides in the competition: it burdens every use of the rival and leaves the same use of fiat money untaxed.

There is a second asymmetry. The gain is measured in euros, and Article 42B makes no correction for changes in the purchasing power of the euro. In September, consumer prices in the euro area were 3.8% higher than a year earlier (Eurostat). Someone who held a crypto-asset for a year and sold it for 3.8% more in euros gained nothing in real terms; he merely kept what he had. The law, however, will count it as a gain. Murray N. Rothbard, in Power and Market, explains why nominal capital gains are not necessarily income:

“If the purchasing power has fallen in half, then a change in capital value of an asset from 50 to 100 does not represent a real capital gain; it simply reflects the maintenance of real capital as nominal values double.”

A little further on, he concludes: “capital rather than pure income is being taxed during an inflation.”

The most revealing provision, though, is the one on an acquisition price that cannot be proved. If the holder no longer has the record of a purchase made years ago, the acquisition price is deemed to be zero, and the entire sale price is counted as gain. For crypto-assets obtained through mining outside a business, the explanatory memorandum makes clear that the acquisition price is taken as zero, even though mining costs electricity and equipment. The tax then falls not on a gain but on the whole amount, including the capital that was once saved and invested. The burden of proof passes to the citizen: the tax authorities do not have to show that there is a gain; the taxpayer has to show what the asset he is selling cost him and, under the new presumption, where he found the money to buy it. Which documents will be accepted as proof will be set later by a decision of the Governor of the Independent Authority for Public Revenue (AADE).

The report of Greece’s General Accounting Office that accompanies the bill expects an annual increase in revenue from these provisions. That is the one certain result: resources pass from those who saved and traded to the state. The “neutrality” of the explanatory memorandum is not a property of the tax; it is an argument for it. Rothbard, in the same work, closes the discussion:

“But if neutral taxation is, at bottom, impossible, there are two logical courses left for advocates of the neutral tax: either abandon the goal of neutrality, or abandon taxation itself.”

The bill takes neither course: it keeps the tax and borrows the name of neutrality.