How Is Crypto Taxed around the World?

In a number of countries around the world, such as the US and Australia, it is not recognised as a currency, but rather as an investment asset. In countries such as Russia or China, crypto is illegal, but in other countries the treatment is quite liberal, such as in Finland where it is VAT exempt. In Russia, digital currency is not recognised as a legal tender for payments, and the Russian rubble remains the only official monetary unit.

China does not recognise cryptocurrencies as legal tender and the banking system is not accepting cryptocurrencies or providing relevant services; however, China’s central bank is reportedly considering issuing its own digital currency. In other countries, Crypto is legal, but not recognised as a currency. In Japan however, on 1 July 2017, bitcoin and other digital currency were officially recognised as legal money. At the time of writing, Japan is the only country in the world that recognises it as a currency, and has the most liberal laws related to Crypto.

How is Crypto Taxed?

How Crypto is taxed greatly depends on the legal definition of the digital currency in the country in question, as well as the tax system utilised in the particular country. Some countries use a wealth tax instead of CGT, others use both or income tax, and yet others use either income tax or Capital Gains Tax (CGT), but no wealth tax.

Tax Rates around the world:

United Kingdom: In Britain, the capital gains tax rates for disposing cryptocurrencies are?20 per cent for higher and additional rate taxpayers and?10 per cent for basic rate taxpayers (but this depends on your overall taxable income, the size of the gain, and your deducted allowances, as you’ll pay 20 per cent on any amount above the basic tax rate).?The tax-free allowance for capital gains tax is $16,610.

United States: Buying and?selling crypto in the United States is taxable?because the Internal Revenue Service (IRS) identifies crypto as property, not currency. It imposed a tax between?0?to 37 per cent.

Canada: In?Canada, if the income comes from a business, the entire amount is taxed, however, capital gains are only taxed 50 per cent of the time.

Australia: In Australia, crypto kept for more than 12 months qualifies for the 50 per cent?capital gains tax deduction. Capital gains tax (CGT) event occurs when you dispose of your cryptocurrency (i.e. trade, exchange, sell, gift, use to buy goods or services)

Italy: In Italy,?only the part of the gain realized on the sale of cryptocurrencies?for an amount greater than $58,232 (51,645 euros), equal to the old one hundred million lire, is owed to the tax authorities.

Netherlands: In the Netherlands, individuals’ income is taxed at various rates and using various methods, depending on the type of income concerned. The country has imposed?31 per cent tax on cryptocurrency.

India: The country has imposed?30% tax rate?on any profits made from the transfer of virtual assets.

As the value of crypto skyrockets, several countries around the world are imposing heavy taxes on crypto investors and their respective businesses—which could potentially cripple their profits. These taxes can either be imposed as a #capital gains tax or an #income tax.? Fortunately, there are still a few countries with no crypto tax. These countries are:

• Germany
• The Cayman Islands
• El Salvador
• Malaysia
• Malta
• Switzerland
• Puerto Rico
• Belarus
• Singapore
• Portugal
• UAE

World map showing differences in cryptocurrency regulation

Governments have taken a wide range of approaches to regulating cryptocurrencies, even going so far as to define the assets in different ways. To date, digital currency regulation has mainly focused on:

• Consumer protection
• Prevention of crime
• Taxation

Thanks for being part of the Newsletter!

For more information reach out at [email protected]