Crypto investor? Wondering how Crypto is taxed in your country? Come with us on a journey as we explore crypto taxes for individuals in various countries including the US, UK, Australia, Canada, Germany, Ireland, Switzerland, France, Austria, Spain and The Netherlands. This guide looks at the taxes that apply to individual investors and not to commercial traders or businesses. The rules for the 2020-2021 tax year apply, but we will continue to update them.
United States
In the United States, cryptocurrency is seen as property and is therefore taxed as either Capital Gains Tax or Income Tax. If you don’t sell or convert your cryptocurrency to another form of currency, you won’t have to pay taxes on it. This includes buying crypto, holding it, or transferring it to another wallet. If your crypto exceeds $15,000 in value, you may need to file Form 709. This amount will increase to $16,000 in value for 2022. For example, if you were to sell a piece of art for a profit, you would be subject to Capital Gains Tax. However, if you were to donate that same piece of art to a qualified charitable organization, you would not be subject to Capital Gains Tax. Donations that are more than $500 may require the donor to submit Form 8283, which needs to be signed by the chosen recipient.
Australia
In Australia, cryptocurrency is classified as property and is taxed as either Capital Gains Tax or Income Tax. When you purchase crypto, hold it, or transfer it to different wallets, you will not be charged taxes. Donations to tax-exempt organizations may also be exempt from taxation.
United Kingdom
The UK views cryptocurrency more as an asset than as currency or money. The HMRC does not consider cryptocurrency as currency, but rather as property that is subject to Capital Gains Tax or Income Tax. You will not be taxed when you purchase cryptocurrency, hold cryptocurrency, or transfer it between wallets. If you give your spouse cryptocurrency as a gift, it is not taxed and allows you to effectively double your tax-free allowance for that tax year. Donations to registered charity are also tax-free.
Canada
In Canada, cryptocurrency is taxed as either Capital Gains Tax or Income Tax. The Canada Revenue Agency views cryptocurrency as a commodity. The purchase, holding, and transferring of cryptocurrency is not subject to taxation.
It is important to establish if you are trading as an individual or as a business, as the lines can become blurry.
Germany
In Germany, cryptocurrency is considered a private asset and is therefore subject to individual Income Tax, rather than Capital Gains Tax. You will not be taxed when you purchase, hold, or transfer cryptocurrency between wallets.
Ireland
In Ireland, cryptocurrency is taxed as either Capital Gains Tax or Income Tax, depending on how it is used. If you don’t buy, hold, or move your crypto, you won’t have to pay taxes on it. Cryptocurrency gifted in Ireland is subject to a 33% Capital Acquisitions Tax.
Switzerland
Cryptocurrency in Switzerland is seen as a private asset by the Federal Tax Administration (FTA), meaning it is subject to a Wealth Tax rather than a Capital Gains Tax. This only applies to private investors and not sole traders or businesses, who have different tax rules.
When you buy, hold, or move cryptocurrency between wallets, you will not have to pay taxes.
France
Cryptocurrency is viewed as a moveable asset in France by the General Directorate of Public Finances (DGFiP). Any capital gains made from selling movable assets, such as securities or bonds, will be taxed as if they were income from cryptocurrency sales. Income from mining is also taxable under the Income Tax.
If you do not sell, trade, or convert your cryptocurrency into fiat currency, you will not have to pay taxes on it. This also applies if you trade one cryptocurrency for another, or move it from one digital wallet to another.
Spain
The Spanish Tax Office sees cryptocurrencies as a commodity, and there are a few different taxes that may apply to your crypto. Since Spain doesn’t have any specific tax laws for cryptocurrency, the tax that applies to your transaction depends on what type of transaction it is.
When you trade or sell cryptocurrency, it is seen as a capital gain. The profits made from these transactions are taxed under Renta del Ahorro – Income Savings Tax. The amount of tax you will pay on these gains varies from 19% to 26%, depending on how much money you make.
If you earn cryptocurrency through mining, staking, or other means, it will be considered ordinary income and taxed under the Income Tax – Renta General category. This means that the more you earn, the higher percentage of tax you will pay.
Spain also has a wealth tax in addition to this. Your asset portfolio’s risk should not just be based on cryptocurrency values. The amount of wealth tax you will pay is determined by your location and the value of your assets. You’ll pay anywhere between 0.2% to 4%.
If you receive cryptocurrency as a gift or an inheritance, it will be subject to the Gift and Inheritance Tax.
The Netherlands
The Dutch Tax and Customs Administration considers cryptocurrency to be an asset. The Dutch do things differently than the rest of the world. There is no Capital Gains Tax that is only applied when you sell, swap, spend, or gift assets. Instead of being taxed on the actual gain made from owning cryptocurrency, Dutch taxpayers are taxed on an assumed, fictitious gain based on the value of their asset from the start to the end of the financial year. The tax you’ll pay on an assumed gain will depend on the value of your assets, with a higher percentage for larger values.
If you earn a significant amount of money from trading cryptocurrency throughout the year, you will need to declare this income and pay income tax on it. If you report your crypto income in this box, you will not be taxed on the fictitious gain of your asset.
Like with traditional investments, income from cryptocurrency investments should be reported to the Belastingdienst. This includes income from activities like staking, mining, liquidity mining, and yield farming.
Austria
The Austrian Ministry of Finance views cryptocurrencies as assets that do not have a physical form. The BMF has also recently released a bill on the taxation of crypto assets. This change will mean that people who acquired their cryptocurrency before the change goes into effect will pay a different tax rate than those who acquire it after. This will not take effect until March 2022, but we will discuss both topics.
Austria doesn’t have a specific Capital Gains Tax. Your cryptocurrency will be taxed according to your income tax rate, which can be anywhere from 0% to 55%, depending on your activity and how much you earn.
You will only have to pay taxes on your crypto when you buy and sell it within the same financial year. The money you make from your gains will be taxed at the Income Tax rate you currently have.
If the asset is held for more than a year, there is no tax.
Cryptocurrency’s rise and appeal as an alternative payment method
The last several years have seen tremendous growth in interest in cryptocurrency. Everyone should understand the cryptocurrency tax implications, whether you use it, invest in it, or have received it as a gift.
A cryptocurrency is a type of digital asset that can be used to buy goods and services or invest in stocks. What makes cryptocurrency so appealing is that it is not regulated by any banks or other financial institutions.
Cryptocurrency has built-in security features. Transactions are encrypted with specialized computer code and recorded on a blockchain — a public, distributed digital ledger in which every new entry must be reviewed and approved by all network members.
There are a variety of cryptocurrencies available, with Bitcoin and Ethereum being two of the more well-known options. Cryptocurrencies are digital or virtual assets that use cryptography for security.
Do you pay taxes on crypto?
The IRS does not consider cryptocurrency to be a true currency. The IRS has said that cryptocurrencies are to be treated as property, and any capital gains or losses from them need to be reported on Schedule D and Form 8949.
Although cryptocurrency is decentralized and virtual, and the IRS treats it like property, your gains and losses in crypto transactions usually affect your taxes.
How is crypto taxed?
If you trade cryptocurrency in a non-retirement account, you will incur capital gains or losses. The length of time you held your cryptocurrency will determine if your gain or loss is considered short-term or long-term for tax purposes.
- If you owned the cryptocurrency for one year or less before spending or selling it, any profits are typically short-term capital gains, which are taxed at your ordinary income rate.
- If you held the cryptocurrency for more than one year, any profits are typically long-term capital gains, subject to long-term capital gains tax rates .
The way you report cryptocurrency on your tax return is determined by how you acquired it and what you used it for.
You can also earn income related to cryptocurrency activities. This income is taxed at your marginal tax rate, which could be between 10 to 37%.
Do you pay taxes on lost or stolen crypto?
Typically, you are not able to deduct any losses that you may have incurred from lost or stolen cryptocurrency on your tax return. There are two types of losses for capital assets, according to the IRS: casualty losses and theft losses. Casualty losses in the cryptocurrency world typically refer to damage, destruction, or loss of your cryptocurrency due to an identifiable event that is sudden, unexpected, or unusual. For example, if you accidentally send your cryptocurrency to the wrong wallet, that could be considered a casualty loss. But other factors would also need to be considered to determine if the loss is classified as a casualty loss. Theft losses could happen if your wallet gets hacked or an exchange is hacked.
In both cases, you cannot deduct these losses to offset your gains. Beginning in 2018 and lasting until 2025, tax reform laws will result in few casualty and theft losses being tax-deductible. If you itemize your deductions instead of claiming the standard deduction, you may be able to deduct this in the future.
Are there tax-free crypto transactions?
Depending on the type of transaction, the account it is made in, your income, and filing status, you may be able to make tax-free cryptocurrency transactions.
Even if the value of cryptocurrency increases over time, buying it does not create a taxable event. You will not face any tax consequences until you sell or exchange your cryptocurrency.
In a traditional or Roth IRA, crypto transactions are not taxed as they would be in a brokerage account. These trades avoid taxation.
If your income is low enough, long-term capital gains rates can be as low as 0%. If your table income is less than or equal to $41,650 if you file as a single person, or your taxable income is less than or equal to $83,350 if you file jointly as a married couple, you will not have to pay taxes when selling your cryptocurrency in 2022.
Can the IRS track crypto activity?
Although cryptocurrencies are anonymous, the IRS may still be able to track your crypto activity.
For example, if you trade on a crypto exchange that provides reporting through Form 1099-B, Proceeds from Broker and Barter Exchange Transactions, the IRS will be provided with a reporting of these trades.
This is further evidence that the IRS is using blockchain analytics tools to identify cryptocurrency activity in digital wallets and to track individuals who may be evading taxes or laundering money.
This means that you should include all crypto-related activities on your tax return.
How are crypto transactions reported?
If you use cryptocurrencies to pay for goods or services, or to trade them through a broker, this counts as a sale or exchange. This means that you will have to keep track of your crypto sales, including how much you paid for it and when you sold it. Transactions involving capital gains and losses are usually reported on Form 8949, Schedule D, and Form 1040.
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