Crypto Taxes Around The World
The popularity of crypto today should be of no news to you. Unprecedented growth, mainstream adoption, explosive increase in market cap, increased trading activities, you name it. Crypto has shown time and again that it has come to stay.
With this comes the big question of how crypto is taxed across various countries. Some jurisdictions outrightly ban their usage, some partially allow them and impose ordinary taxes, while some give favorable tax treatments. For instance, El Salvador recently recognized Bitcoin as a legal tender. A great leap forward isn’t it?
Now let’s see how crypto is taxed in some of the most popular countries to give you a good picture.
The Internal Revenue Service (IRS) had declared in 2014 that all cryptocurrencies be treated as property and thus attracting Capital Gains Tax (CGT). Activities with crypto that attract CGT includes trading crypto for fiat currencies, trading crypto assets for other crypto assets, buying goods and services using crypto.
CGT comes in two forms for crypto here: short-term and long-term. For crypto assets held less than a year (short-term), gains or losses are taxed based on your income tax bracket. For long-term (held more than a year), taxes are lower, ranging from 0% to 20% depending on your income bracket.
On the other hand, there are instances where activities regarding cryptocurrencies are subject to income tax because they are treated as income. Some of these activities include: earnings from DeFi lending, earnings from liquidity pools, earning crypto as a means of payment for work done, mining income and a number of others.
Heads up, keeping a record of all your crypto transactions is a vital requirement by the IRS. So if you’re gonna be dealing crypto as a US taxpayer, be sure to follow all of the tax requirements.
Here, crypto assets are not considered money by the HMRC (Her Majesty’s Revenue and Custom), rather they are categorized in 4 i.e. Exchange tokens, Security tokens, Utility tokens and Stablecoins. Details for filing taxes on cryptocurrencies are provided in the HMRC Cryptoassets manual.
Overall, UK residents who hold crypto assets will have the profits taxed. This means, if you live in the UK and hold cryptocurrencies as a form of personal investments, you will be subject to CGT based on the profits you make from the cryptocurrencies. However, you should note that there’s an annual exemption amount, where you only pay taxes if your profit is above the annual exemption amount.
Germany considers cryptocurrencies like Bitcoin as private money not monetary currency or stocks. According to the Income Tax Act, if you make profits from holding cryptocurrency within a year, you will be subject to a 25% CGT.
Cryptocurrencies like Bitcoin, Ethereum and others are considered Digital Payment Tokens in Singapore. Since there’s no CGT here, whatever profit you make in your crypto assets holding is not taxed in Singapore. This is why many refer to Singapore as the “Crypto haven”. However, businesses that buy and sell digital tokens in the ordinary course of their business will be taxed on the profit derived thereon. More details are available on the Inland Revenue Authority of Singapore (IRAS) web page.
Those should give you an overall picture of how different countries could vary on how cryptocurrencies are taxed. Some are seen as a haven why many are not. It’s up to you to do your own research before dealing crypto in whatever country you find yourself.
*The information on this blog is intended for informational purposes only. The content herein is not guaranteed to be factual or up to date. Please do your own research as tax laws can change.