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Comment by docdeek | Hacker News Reader

There’s a local currency in use here in my city [0] and it seems to have a lot more support than the approx. 10 local businesses accepting the Time Credits mentioned in the article. I see the stickers in the windows of shops that accept the local currency (it’s pegged 1:1 to the euro) but I’ve never actually bought any myself. Seems to have a following if the list of stores accepting it is anything to go by [1]

0: http://www.lagonette.org 1: http://www.lagonette.org/la-liste-des-partenaires/

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How is VAT paid? The government is clearly not accepting the local currency.

So VAT must be paid in euro for purchases in the local currency? I am wondering how this eventually works out, especially the day when selling your local currency into euros is not anymore possible or pegged 1:1, while VAT must still be paid in euro.

I'm not familiar with this, but according to his links it seems there's a fixed exchange rate of 1 € = 1 G. I think it's not exactly a "different currency" it's more like chips in a casino.

I didn’t know - and I hadn’t considered it, to be honest - but a dig on the website suggests that the government treats it as something akin to bartering or donation of services. As a result, it is exempt from VAT (TVA in French).

http://www.lagonette.org/une-monnaie-locale-et-complementair...

"Les échanges de services non-monétaires, promus par les réseaux de monnaies complémentaires (banque de temps, réseau d’échanges réciproques de savoirs, SEL – Système d’échanges Locaux, etc.) relèvent d’une activité ponctuelle, d’un coup de main. Ils n’entrent pas dans le cadre d’une profession et sont exonérées de TVA et d’impôts.

Thanks. So I go for a haircut, if I pay in EUR the hairdresser forwards the VAT to the government. If I pay in the local currency for the same haircut, the hairdresser keeps the VAT. Same if I buy fruits from a local producer (how is that "coup de main"!?)

This very much looks like VAT or other tax evasion scheme. Maybe users of the currency should realize the associated risks.

If the government shuts it down for fraud, it will be difficult to convert the local currency back to euros and the claim that is pegged 1:1 to the Euro might be be correct after all.

I don’t think it is quite that bad.

As I understand from their site, while you can trade euros for the local currency at a rate of 1:1, you cannot trade your local currency for euros.

They have a FAQ [0] (in French, sorry) that states that the national financial autorities do not allow for you to exchange your local currency for euros. What’s more, if you pay for something in the local currency you cannot receive change in euros - the vendor needs to give you change in the local currency, too.

It sort of seems like once you ‘buy’ your local currency, you can spend it but you can never trade it for euros again. The peg of the currency to the euro 1:1 seems to be convenient more than a tax dodge, but I have never used it personally.

[0]: http://www.lagonette.org/utiliser/

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