Is crypto income taxable? Well, this is probably one of the first questions that would come to your mind when you plan to buy cryptocurrencies. Although the crypto industry is yet to come under a structured regulation regime yet national governments around the world have already imposed a tax policy on crypto. So, yes, crypto tax is very prevalent globally- you will have to pay tax if you sell off your crypto exchanges them with another crypto. But, you won’t have to pay any crypto tax for HODLing, for both short-term and long-term. On the other hand, you will receive tax exemption if you suffer a loss in crypto.
The type and range of crypto tax vary from one country to another. It’s primarily because “crypto” doesn’t have a universal standard classification yet- different countries have their own specific classification for crypto. Having said that, the contemporary global crypto tax domain involves majorly three kinds of taxes-capital gains, income tax, as well as wealth tax.
The post below offers a brief on the crypto tax situation in top countries of the world.
In America, crypto is considered a capital asset and hence is taxable. More precisely, the country has imposed capital gains crypto tax on both short-term and long-term holdings (when you sell the holdings). Crypto traders will have to pay short-term crypto tax if they hold the asset for 12 months or less. Any duration more than that will fall under the category of long-term tax. However, you won’t have to pay crypto tax for just HODLing the asset. The basic idea is you will have to pay crypto tax if you make a profit from your crypto activities, say transaction or trading.
If you want to know the tax rate, well, for BTC, it is around 0-37% for short-term holdings. Long-term holdings make way for reduced tax rate, hovering around 15-20%.
Akin to the U.S.A., the U.K. too has imposed both capital gains and income tax on crypto gains and income. If a crypto user is making income from crypto, s/he will have to pay income tax. And, if s/he is getting capital gain from crypto transactions, s/he will have to pay capital gains crypto tax. The rate of crypto tax in the U.K. is around 10-20%.
The crypto scene is a little weird with India. The largest subcontinent houses the largest base of crypto users in the whole world. Irony is, the country is yet to accept crypto legally. India has also imposed a fairly high 30% crypto tax on crypto income.
The Great White North has imposed both capital gains and income tax on cryptocurrency transactions. For capital gains crypto tax, crypto users will have to pay 50% of total gains. In regard to income tax, the tax rate ranges from 15-33%. For example, Canadian crypto users will have to pay 15% crypto tax on their first ever $49,020 taxable income. The 33% tax rate is applicable on crypto income ranges crossing $216,512.
The existing crypto tax system in Russia imposes 20% crypto tax on crypto transactions. But, a new bill is in line that has been proposed to reduce the tax rate on crypto or digital asset tax. If the bill receives approval from Duma, crypto users will enjoy lesser taxes. As per the upcoming bill, Russian businesses dealing with crypto will have to pay 13% crypto tax while the same would be 15% for a foreign business.
El Salvador recently made history by becoming the FIRST country ever to confer legal tender on Bitcoin. Much to the delight of foreign investors, the country does not impose capital gains crypto tax on Bitcoin gains for foreign investors. In fact, El Salvador is also marching ahead to build a futuristic tax free “BTC City”.
The ATO has imposed crypto tax on sales as well as income from cryptocurrency. It is mandatory for Australian crypto users to declare about the crypto holdings and activities while filing their IT return. The rate of crypto tax in Australia ranges from 0-37%. However, you won’t have to pay crypto tax if your income from crypto is within $18,200. Income over $120,001 will accrue 37% crypto tax.
Germany considers crypto as a “private asset” that comes within the purview of Income Tax. The tax rate is around 45% (plus Solidarity tax). But, German crypto users only have to pay crypto tax if they sell crypto in the very year they buy it. Moreover, Germany considers crypto selling as “private disposal” which is completely tax-free in the Deutschland.
France is another country that has levied capital gains crypto tax on profits generated from crypto related activities. The tax rate is around 31%.
Spain also follows capital gains crypto tax for gains generated from crypto dealings. The tax rate is around 19% to 23%.
Switzerland has not imposed Capital Gains crypto tax but Income Tax on crypto as well as Wealth Tax. However, crypto users won’t have to pay taxes if-
- They HODL for minimum 6 months
- They have less than 5x trading turnover in early quarter of fiscal year
- Their capital gain volume is less than 50% of total income
Unlike many other countries that impose Capital Gains crypto tax, Netherlands imposes wealth tax on crypto activities. The tax rate is around 31%.
While the countries mentioned above follow a strict crypto tax regime, there are some countries that have not levied tax on crypto. And even if they have levied, the tax rate is way lower than the crypto tax rate in other countries. We will wind up the article with 2 such countries that are heaven for crypto users given their excellent tax relaxations.
The MAS regulates the crypto scene in Singapore. The country has not imposed capital gains crypto tax on crypto gains.
The beautiful island country has a relaxed stance towards crypto taxation. Cyprus has only levied taxes on ICO funds and that too is way lower (12.5%) from the crypto tax in most of the countries.