Navigating the crypto tax landscape: A global comparison

Benjamin Franklin once said: “Nothing is inevitable in life except death and taxes”.

This quote highlights the universal truth that taxes are an inevitable part of life, regardless of where you live.The same holds true for cryptocurrency transactions and holdings.

As the popularity and use of cryptocurrencies continue to grow, countries around the world are grappling with how to regulate and tax these digital assets.

Some countries have adopted favourable tax policies towards cryptocurrencies, while others have implemented strict regulations.

In this article, we will examine the crypto tax policies of several nations and see how they handle this evolving asset class.

United States of AmericaIn the United States, cryptocurrencies are treated as property for tax purposes, similar to property taxes.

Transactions involving cryptos, such as selling for fiat currency, token airdrops, mining, or staking, are all taxable with rates ranging from 0-37% for capital gains and income tax.

However, holding crypto for the long term or buying with fiat currency is not taxable.

Taxpayers can choose to calculate their crypto taxes using either the FIFO (first in, first out) or LIFO (last in, first out) method.

Capital gains and losses, cost basis, and keeping records of transactions is important to keep in mind for tax reporting.

United Kingdom
In the United Kingdom, taxes are levied on both incomes in crypto and capital gains, with rates ranging from 10-20%. Selling crypto for fiat, trading one token for another, using crypto to pay for real-world assets, and earning compensation in crypto are all taxable.

The UK requires individuals to report and pay taxes on their crypto transactions, including income tax on gains, National Insurance contributions, and VAT.

Keeping records of all crypto transaction.including income tax on gains, National Insurance contributions, and VAT.

Keeping records of all crypto transactions is necessary for tax reporting.

Italy

In Italy, crypto is considered a financial instrument and is subject to capital gains tax.If the value of the portfolio exceeds 2000 euros, a 26% capital gains tax is applicable.

Selling crypto for fiat, trading one token for another, and using crypto to pay for real-world assets are all taxable.

Germany
In Germany, crypto is treated as private assets and is subject to income tax.

Capital gains tax usually applies only to businesses, not individuals, and profits up to 600 euros are tax-free.

Mining and staking income may be taxed as business income, and token airdrops, NFTs, using crypto to buy fiat, other tokens or real-world assets, earning compensation in crypto, and DeFi lending are all taxable.

Portugal
Portugal considers cryptocurrency capital or self-employment income. Crypto passive income is taxed at 28%. Mining, validation, and token issuance will be taxed at 14.5-53%.

Portugal crypto users calculate taxes using the FIFO (first in, first out) technique. If users stop being a resident of Portugal, they pay a 28% exit tax.

The PTA must be notified of all cryptocurrency transactions in Portugal. Their annual tax reports must show bitcoin earnings and losses.

Cryptocurrency transactions may also be subject to VAT. The PTA applies VAT to bitcoin transactions as goods or services.

By:ET

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