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Home Cryptocurrency News

Can You Pay Your Employees with Crypto?

Vladimir C. by Vladimir C.
February 12, 2019
in Cryptocurrency News

There’s no denying that cryptocurrencies are now more popular than ever. Not to say that cryptocurrencies are now mainstream (there’s still a long way to go until they catch on), but it’s good that there is an ever-increasing number of places where you can spend cryptocurrencies on legitimate goods and services.

As an employer in 2019, there are a lot of considerations that need to be taken into account if you were to pay your employees with crypto. How do you set up the currency? What payment processor is good for this particular task? What are the risks? What are the tax implications? etc.

The last question from above is quite important. Of course, taxing authorities have different approaches which vary by country and the currency in which your employees are paid. That said, one of the most important aspects to consider as an employer is how does your country treat cryptocurrency.

More to the point, make sure you find as much information as possible about how your country’s government sees cryptocurrencies. Are they legal or illegal? Does your country treat them as legal tenders, commodities, or maybe properties?

Invest at your own risk!

Whatever your country may be, you should be able to find official labor laws listed on the government’s website. To make this point relevant, we will look at some of the world’s most crypto-friendly countries and how they treat the subject at hand.

Switzerland

Our list starts with Switzerland, one of the first countries to have fully embraced cryptocurrencies. It’s also the country where some of the most prominent crypto companies have their headquarters. What’s more, the KPMG program helps make things very simple for employers who wish to pay their employees using cryptos.

“According to Swiss Labour law, it is lawful to pay all or part of wages in kind or foreign currency, provided that the amount paid matches the amount in Swiss franc contractually agreed by the parties or required by the collective labor agreement,” swiss Socialist Party member Jean Christophe Schwaab declared.

As The Library of Congress specifies, any cryptocurrency received by an employee becomes part of his/her taxable income.

Malta

Often regarded as the “crypto heaven,” Malta is not only one of the first jurisdictions to have accepted cryptocurrencies, but it’s also home to a great number of important cryptocurrency and blockchain companies. Malta’s approach to crypto and blockchain acceptance has determined many crypto exchanges to move there, including Binance, one of the most successful crypto exchanges of all time.

Therefore, it’s no surprise that salaries paid in crypto are a reality in Malta. “By giving each of our staff a reason to observe and interact with the Bitcoin market, we believe we can quickly become conversant in the technology and be among the first to see its potential applications in our industry,” advertising agency Blonde and Giant Head of digital Mike Stivala told Lovin Malta

Japan

Japan is another country that has fully embraced cryptocurrencies. In fact, there are reports of crypto companies paying their employees in crypto as early as 2017. The GMO Internet company stood out and became famous for offering Bitcoin payments to well over 4,000 employees.

For over 70 years, Japan’s Labor Standard Law declared that salaries should be paid in cash. However, thanks to the ever-growing popularity of crypto, Japan soon created a payroll card. Nowadays, according to the FSA (Financial Services Agency in Japan), it’s perfectly legal to pay your employees using crypto in Japan.

Australia

Australia caught a great deal of headlines in 2018 thanks to its open-minded approach towards cryptocurrencies. Australia is a country that intends to implement cryptocurrencies on a large scale. It’s one of the few countries where crypto and blockchain technologies are used to improve tourism.

The Australian Taxation Office states the following: “where an employee has a valid salary sacrifice arrangement with their employer to receive cryptocurrency as remuneration instead of Australian dollars, the payment of the cryptocurrency is a fringe benefit, and the employer is subject to the provisions of the Fringe Benefits Tax Assessment Act 1986.”

Hence, as long as there is a written agreement between the employee and the employer, employers can legally pay salaries and wages in cryptocurrency.

Canada

Canada is another country that has a very friendly view of cryptocurrencies.

“The CRA considers that when an employee receives cryptocurrency as payment for salary or wages, or otherwise in connection with employment, the amount, computed in Canadian dollars, must be included in the employee’s income under subsection 5(1) of the ITA,” according to Gowling WLG.

This means that employees who want to receive their salaries in cryptocurrencies are to be taxed before the conversion. In Canada, cryptocurrencies are declared as a commodity by the CRA (Canada Revenue Agency).

The U.S.

According to the Commodity Futures Trading Commission, employers can’t pay employees with cryptocurrencies.

“Under the FLSA, Bitcoin payments do not satisfy an employer’s minimum wage or overtime obligations. Beyond that, under federal law, the form of compensation is up to the employer and employee. Therefore, employers could meet their minimum wage and overtime requirements with US currency and pay an additional amount beyond that with Bitcoins. State laws vary, some states specify cash or check only, some explicitly defer to the FLSA, and some are silent regarding the form of payment.”- Thomson Reuters Practical Law

Both the SEC and the IRS are afraid of the legal and financial ramifications of allowing payments for employees with cryptocurrencies, but this situation might very well change throughout the year.

Final words

 

This article is meant to provide you with a general idea regarding how various countries treat cryptocurrencies as a means to pay the salaries of employees. As an employer, don’t be afraid to seek assistance on the matter at hand. You should look for accountants, lawyers, and consultants that are well versed in regards to cryptocurrencies.

Tags: blockchaincryptocurrencydigital assetPay Employees with Cryptopay with crypto
Vladimir C.

Vladimir C.

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