Countries Where Cryptocurrency Is Taxed

One of the most buzzing financial terms that have been ruling the headlines and minds of almost everyone right now, is cryptocurrency. No matter which country you live in, you must have come across this term at least once, isn't it?

And almost every other day, there is some news regarding various countries¡¯ governments taking steps either in favour or against crypto, with India being the recent one through its crypto tax announcement.

But India is neither the first nor the only country to tax cryptocurrency transactions.

shutterstock

Also Read: Meet The Dutch 'Bitcoin Family' Who Emigrated To 'Bitcoin Heaven' Portugal For Tax-Free Crypto

Curious to deep dive and know the other crypto-taxing countries?

Read on as we bring to you the list of crypto-taxing nations.

1. The United Kingdom

In the UK, cryptocurrency is treated as a capital asset. So, the capital gains tax rates are levied on the disposal of cryptocurrency, implying selling tokens for money, exchanging tokens for a different type of token, using tokens to pay for goods or services, giving away tokens to another person (unless it¡¯s a gift to a spouse or civil partner). All such crypto disposals are subject to crypto tax in the UK.

The capital gains tax rate on crypto in the UK is stated to be 20% for higher and additional rate taxpayers, and 10% for basic rate taxpayers. Depending on your overall taxable income, the size of the gain, and your deducted allowances, you will pay the tax. The tax-free allowance for capital gains tax is ?12,300.

Also Read: China To Create Its Own 'NFT Industry', But Not Related to Cryptocurrency

2. The United States

USA¡¯s Internal Revenue Service (IRS) states that buying and selling crypto is identified as property, not currency, for tax purposes.

Hence, your virtual currency is taxed in the same way as any other assets you own, like stocks, gold etc. Selling crypto for cash, paying crypto for goods and services, buying one crypto with another, receiving mined crypto, being paid in crypto by an employer and receiving crypto rewards are the crypto transactions taxable.

However, buying crypto with cash and holding it, transferring crypto between wallets and donating crypto to a qualified tax-exempt charity will not be taxable. The IRS imposes a tax reportedly between 10 to 20% on crypto transactions in the USA.

Also Read: World's First NFT Restaurant To Open In New York In 2023

shutterstock

3. Italy

The tax authorities of Italy had reportedly reached the conclusion that cryptocurrencies are to be deemed akin to foreign currency. Accordingly, proceeds/income arising from "speculative" exchanges between cryptocurrencies or from cryptocurrencies to fiat currencies will be subject to a flat 26% substitutive tax.

Also Read: Missed Out On Shiba Inu Or Dogecoin In 2021? These Coins Could Be The Next Big Crypto In 2022

4. Canada

abc.net.au

Canada treats cryptocurrency as a digital asset, whose purchase or holding does not attract tax, but the sale does.

When you earn capital gain through the disposal of cryptocurrency, i.e by selling or making a gift in the form of cryptocurrency, trading or exchanging cryptocurrency, including selling of one cryptocurrency to get another cryptocurrency, converting cryptocurrency to government-issued currency, such as Canadian dollars, and using cryptocurrency to buy goods or services, you have to generally include it in the income for the year. But only 50% of the capital gain is subject to tax, and not the entire gains.

Also Read:10 Big Brands That Have Dipped Their Toes Into The NFT World

5. Germany

Germany¡¯s taxation system for crypto is a little quirky. Germany views cryptocurrencies as private money, and not a capital asset. If you hold your crypto for more than 1 year, and later sell it, swap it or spend your crypto, you¡¯ll pay no tax on it.

But holding your crypto for less than 1 year is taxed unless the profit is below €600.

Also, if you¡¯ve staked your crypto to earn further income, then this crypto would be subject to taxes regardless of how long you¡¯ve held it. It¡¯s only after a long period of 10 years of holding your crypto that staked crypto would be tax-free at the point of sale.

And transactions like getting paid in crypto, mining crypto, staking crypto, selling staked crypto within 10 years, selling, swapping or spending crypto you¡¯ve held for less than 1 year whose gain is more than €600, all of these will attract crypto tax.

AP Photo

Also Read: Countries Where Cryptocurrency Is Currently Banned

6. India

On 1st February 2022, during the Budget speech, India¡¯s Finance minister Nirmala Sitharaman announced a major setback for the crypto industry. The Budget 2022 announcement stated that any income from the transfer of digital assets (crypto) will be charged 30% tax, along with TDS on payment made in relation to the transfer of virtual digital assets at the rate of 1% of such consideration above a monetary threshold.

And that¡¯s not all. Even the loss from such transfer of assets cannot be set off against any other income, and the gift of such assets will be taxed in the hands of the recipient. Also, no deduction in respect of any expenditure or allowance shall be allowed while computing such income except the cost of acquisition.

The Budget, however, did not mention the much anticipated new Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, towards which the entire crypto industry has been keenly looking forward to providing clarity to the otherwise cloudy future of crypto in India. The Central Bank RBI has, on multiple instances, openly voiced its stance against crypto in India, which further makes the future uncertain.

Union budget introduces 30% tax on crypto income.
Crypto investors pic.twitter.com/S1DPNVOjkM

¡ª SwatKat? (@swatic12) February 1, 2022

Besides these nations, countries such as Netherland, Australia too reportedly levy taxes on crypto.

But the stance towards crypto, whether to ban or regulate it and how to do so, still remains a concern for many nations around the world, including India.

And with the crypto craze riding higher and higher with each passing day, central banks of all nations certainly look in a tough spot, regarding what steps to take around cryptocurrency. Perhaps, only time will!

Also Read: Crypto Will Collapse One Day, Says Rakesh Jhunjhunwala

For more such interesting content and the latest financial news, keep reading Worth. Click here