Ultimate Global Crypto Tax Guide 2023

by
Pratibha Tiwari
Reviewed by
min read
Last updated:

“How to file my crypto taxes?”

This question haunts every crypto investor in the world, and here are 3 reasons why:

  1. Taxes are complicated
  2. Getting your taxes wrong may attract legal trouble
  3. Tax professionals charge a lot of money to help you file taxes

We aim to offer you a comprehensive crypto tax guide with this article, addressing all your issues. To make things easier for you, we have compiled a list of every crypto tax guide we have created thus far. This way, you won't have to search our website for the tax guide specific to your country.

The extract provides a comprehensive list of tax guides, each accompanied by a link to the original tax guide. These resources cover numerous topics like capital gains taxes, income taxes, DeFi taxes, mining taxes, and tax-filing tutorials. No matter where you live or the type of crypto transactions you engage in, this guide has everything you need to file your crypto taxes. 

Note that this article has a non-exhaustive list. If you can’t find your country’s tax guide here, it will be added soon. Now that we’ve got that out of the way, let’s dig in.

Nation-Wise Crypto Tax Guides 

Listed below are tax guides for 16 different countries:

  1. Norway Crypto Tax Guide

In Norway, cryptocurrency is treated as a capital asset for tax purposes, not as a currency. Profit from selling cryptocurrency is considered a capital gain by tax authorities, but there’s no specific capital gains tax in Norway. Instead, any profits are subject to income tax. Note that keeping accurate records and reporting transactions on your tax return is essential to avoid legal and financial issues with the tax authorities.

Norway Crypto Tax Guide 2023

  1. Sweden Crypto Tax Guide

According to the Swedish tax authority, Skatteverket, Bitcoin and other cryptocurrencies are not considered currency. Instead, they are classified as property and any sale or disposal of these crypto assets results in capital gains tax in Sweden. Skatteverket categorizes cryptocurrencies such as Bitcoin and altcoins as "other assets," subject to taxation under Chapter 52 of the Swedish Income Tax Act.

Sweden Crypto Tax Guide 2023

  1. Denmark Crypto Tax Guide

In Denmark, Skattestyrelsen, considers cryptocurrency as a personal asset, not a fiat currency, for tax purposes. Personal assets are subject to taxation in Denmark in two situations - if they are related to your business or if they are deemed speculative. It's important to note that simply holding onto your crypto assets (known as HODLing) does not exempt you from taxes. 

The Danish tax authorities view these holdings as speculative and, therefore, subject to taxes. Attempting to evade crypto taxes by holding onto your assets could result in an unwelcome surprise from the tax authorities in Denmark. 

Denmark Crypto Tax Guide 2023

  1. Germany Crypto Tax Guide

The Federal Ministry of Finance, or Bundesfinanzministeriums (BMF) in Germany, has established guidelines regarding cryptocurrencies. The guidelines state that all cryptocurrencies are digital representations of value, not issued or guaranteed by any central bank or public authority. 

Therefore, tax authorities don’t recognize crypto as a legal tender or currency. Instead, they are considered private assets for tax purposes. It's important to note that any profits from selling or disposing of your crypto assets are subject to capital gains tax in Germany.

Germany Crypto Tax Guide 2023

  1. Finland Crypto Tax Guide

The Finnish Tax Administration, Verohallinto or Vero, categorizes cryptocurrencies as personal assets rather than fiat currencies. Cryptocurrencies are defined as units of digital value that can be electronically transferred, saved, and exchanged, without being issued by any central bank or public authority.

In Finland, the purchase and transfer of cryptocurrencies between wallets and exchanges are not taxed. However, any profits made from selling or exchanging them are subject to Capital Gains Tax and are considered capital income.

Finland Crypto Tax Guide 2023

  1. Italy Crypto Tax Guide

Before December 2022, the Italian revenue agency, Agenzia Entrate, did not have a clear taxation framework for cryptocurrencies. Crypto taxation was governed by a small set of regulations that did not consider crypto as a speculative asset and crypto gains were tax-free. 

However, if the value of your crypto portfolio exceeds €51,645 for seven consecutive days in a tax year, your gains would be taxable at a flat rate of 26%. In December 2022, the Italian Senate established new tax regulations for cryptocurrencies as part of the budget legislation. Under the new rules, any gains worth €2,000 or more will be subject to a flat tax rate of 26%

Italy Crypto Tax Guide 2023

  1. Austria Crypto Tax Guide

Prior to March 1, 2022, Austria didn't impose a separate capital gains tax on crypto investments. Instead, they were taxed under the existing income tax laws. Investors were taxed at their respective income tax rates for short-term gains, and any assets held for over a year were tax-free. 

Assets purchased before February 28, 2022, were not taxable under the old rules. However, with the new tax reform, short-term gains are now subject to a flat stock tax rate of 27.5%, and long-term gains are no longer tax-free, except for assets purchased before the cutoff date, which are considered legacy holdings.

Austria Crypto Tax Guide 2023

  1. US Crypto Tax Guide

The IRS considers cryptocurrency to be a virtual currency and categorizes it as 'property' for tax purposes. Virtual currency is a digital representation of value used as a medium of exchange, a unit of account, and a store of value, but not recognized as a representation of the U.S. dollar or foreign currency. In 2014, the IRS issued Notice 2014-21 to clarify that virtual currency is considered property for tax purposes.

If you engage in cryptocurrency transactions, you may be liable for either Income Tax or Capital Gains Tax depending on the type of transaction.

US Crypto Tax Guide 2023

  1. Canada Crypto Tax Guide

In Canada, crypto assets are classified as property for tax purposes, not as a currency. Therefore, any profits made from selling these assets are considered capital gains and are subject to capital gains tax. The Canadian tax authorities view several transactions as disposals, including selling crypto for fiat, gifting crypto, purchasing goods or services with crypto, and exchanging crypto for other assets.

However, not all capital gains are subject to tax. According to the CRA, taxpayers are only required to pay taxes on 50% of their gains.

Canada Crypto Tax Guide 2023

  1. New Zealand Crypto Tax Guide

As per New Zealand's laws, Bitcoin and other blockchain-based assets are not recognized as legal tender and are not considered a currency. The country's tax authority, the IRD, treats them as property for tax purposes. There are no specific laws governing crypto taxation currently, but the IRD has issued guidelines to help taxpayers comply with existing income tax laws. However, new legislation is being discussed that could lead to a more concrete tax regime.

The IRD guidelines state that if you acquire crypto assets intending to dispose of them, any profit you make will be subject to income tax. For instance, if you purchase or mine crypto assets to sell or exchange them, you will need to pay income tax on any gains you make. If you incur a loss when you sell your crypto assets, you may be able to claim that loss.

New Zealand Crypto Tax Guide 2023

  1. Australia Crypto Tax Guide

The ATO does not recognize Bitcoin and other cryptocurrencies as legal tender or currency. Instead, they classify them as property, which means that selling or disposing of them is subject to capital gains tax. The ATO also uses the term "cryptocurrencies" to group Bitcoin, altcoins, NFTs, and similar assets. Therefore, any profits earned from selling or exchanging these assets are subject to taxation.

However, there are some instances where the ATO may classify crypto as income and tax it accordingly. It's important to note that tax rules differ between traders and investors in Australia. Typically, traders pay income tax, while investors owe capital gains tax.

Australia Crypto Tax Guide 2023

  1. UK Crypto Tax Guide

As per HMRC, crypto assets are classified as capital assets, and their disposal results in a capital gain. The following activities are deemed as the disposal of a crypto asset:

  • Selling a crypto asset
  • Buying goods or services with a crypto asset
  • Swapping one token for another
  • Gifting crypto to someone other than your spouse or civil partner

It’s imperative to note that HMRC doesn't differentiate between long-term and short-term capital gains tax. The classification is based on the taxpayer's income level.

UK Crypto Tax Guide 2023

  1. Spanish Crypto Tax Guide

The Spanish tax authority, Agencia Tributaria, classifies Bitcoin and other crypto assets as digital representations of value that are not considered currency or money as they are not backed by a central bank or public authority. Nevertheless, they are accepted as a medium of exchange that can be electronically transferred, stored, or traded.

Agencia Tributaria's latest guidelines state that capital gains or losses from the sale of cryptocurrencies are treated as savings income for tax purposes. This means that any profits made from disposing of crypto assets will be subject to taxation, whether you receive fiat currency or another cryptocurrency in return.

Spain Crypto Tax Guide 2023

  1. Netherlands Crypto Tax Guide

The Netherlands has a unique tax rule where residents are required to report the value of their crypto assets on January 1st of every year, even if they don't dispose of them within the tax year. The cost basis of the assets is equal to their market value on that day, which resets every year. 

The tax authorities use this value to calculate the presumed gains over a financial year, and taxes must be paid on these gains regardless of whether the assets are disposed of or not. Crypto assets are in the third tax category, and the tax levied on Box 3 gains is called Vermogensrendementsheffing, which is equivalent to the capital gains tax charged in other countries.

Netherlands Crypto Tax Guide 2023

  1. India Crypto Tax Guide

The Indian government has recently amended its Income Tax Act, introducing Section 2(47A) during the 2022 Budget session. This section defines Virtual Digital Assets (VDAs) and covers all types of crypto assets, including cryptocurrencies, NFTs, and tokens.

According to the Indian Income Tax Department (ITD), disposing of or earning crypto, including through airdrops or staking rewards, requires payment of crypto taxes in India. Holding crypto for the long term does not offer any tax benefit, and taxes must be paid regardless of the holding period. Furthermore, the transfer of crypto assets on or after July 1, 2022, may also attract an additional Tax at Source (TDS) under Section 2(47A) and Section 194S.

India Crypto Tax Guide 2023

  1. Portugal Crypto Tax Guide

To align with the European Union directive on Markets in Crypto-assets, Portugal has introduced changes to its budget that define crypto-assets as any digital representation of value or rights that can be transferred electronically or stored using distributed ledger technology. This new definition excludes single crypto and non-fungible tokens. 

Consequently, crypto assets are now taxable in Portugal, and all gains from the sale of these assets will be subject to capital gains tax. Any income generated from crypto assets will be regarded as business income and will be taxed accordingly. These changes are effective from this financial year.

Portugal Crypto Tax Guide 2023

The pace of evolution in the crypto space has been unprecedented, with the adoption of blockchain-based financial frameworks like De-Fi providing investors with multiple investment avenues beyond crypto tokens. However, this has resulted in complex taxation rules around transactions in the crypto space, including mining, trading, staking, and lending. 

In this article, we aim to provide a general overview of how tax authorities around the world approach the taxation of these types of transactions. So, read on to gain an in-depth understanding of these terms.

Taxes on Crypto Trading

Crypto trading can be primarily divided into two parts based on the nature of the transactions:

  1. Trading crypto for fiat currency
  2. Trading crypto for other crypto tokens

Most countries treat cryptocurrencies as capital assets rather than currency, which means that disposing of them usually results in capital gains tax. This applies when trading cryptocurrencies for fiat currency. However, there are variations in taxation when it comes to trading one crypto for another. For example, some countries, such as Canada, Australia, and the US, treat it as a disposal or change of ownership of assets, while others do not tax such transactions. 

It is important to note that countries have different tax rules for traders and investors, such as Australia, which has separate tax regulations for each group. For specific information on cryptocurrency trading taxation in different countries, please refer to our country-wise tax guides

Taxes on NFT Transactions

There are varying approaches to NFT taxation across countries, and it remains a grey area for many tax authorities. In the US, NFTs are often considered collectables and subject to a higher capital gains tax rate of 28% compared to the standard 20%. In contrast, New Zealand does not tax NFT transactions if they are solely for recreational purposes, provided that the taxpayer can prove their intent when filing taxes. 

In Canada, creating and selling NFTs is treated as business income and subject to income tax instead of capital gains tax. For more information on the taxation of NFTs in different countries, refer to our comprehensive tax guides.

Let’s consider an example to better understand this scenario:

John, who is a US resident, buys an NFT for $2,000 and sells it for $10,000 after holding it for over a year, making a profit of $8,000. Joanna, a UK resident, buys an NFT for £1,500 and sells it for £10,000, making a profit of £8,500, and Jack, a Canadian resident, buys an NFT for CAD 3,000 and sells it for CAD 10,000, making a profit of CAD 7,000.

Since John held his NFT for more than one year, his NFT will be deemed collectable by the IRS and will be taxed at a higher rate of 28%. So John now owes $2,240 to the IRS in NFT taxes.

Joanna on the other hand has to clarify whether the transaction was one of many transactions in which case the gains will be taxed as income, or if it was a normal transaction which attracts a CGT. Since Joanna was involved in only a single transaction, she will pay a CGT. She made a total gain of £8,500, which happens to be less than £50,270, so a tax rate of 10% will be levied on the capital gains, and Joanna owes a total of £850 to the HMRC.

Jack’s income will be taxed as a capital gain in Canada, and since the capital gains lie in the lowest tax bracket, a 15% tax will be levied on 50% of his capital gains because you only pay tax on half of your net profit every financial year in Canada. So Jack’s tax liability comes down to 575 CAD.

Taxes on Crypto Staking and Lending

Crypto staking and lending are DeFi transactions and since most countries are yet to release concrete guidelines around the taxation of De-Fi, it is quite a tricky task to figure out how are lending and staking transactions viewed from a tax perspective. 

Some countries like the US and Sweden consider lending to be an income-bearing transaction and tax any interest earned through these transactions as additional income. Staking on the other hand is a bit more complicated, while some countries prefer taxing the staking rewards as additional income, others consider staking as a form of disposal and subject it to capital gains tax. Canada treats NFT transactions in the same way as any other crypto transaction. You can refer to our detailed tax guides to learn more about nation-specific guidelines on NFT taxation.

Taxes on Mining Crypto 

Countries such as the US, Sweden, and New Zealand consider mining rewards as income, with the cost basis equal to the fair market value of tokens at the time of receipt. The tokens are taxed as income when received, and if you decide to sell them later, a capital gains tax is levied.

In Australia, mining is treated as a hobby unless it is part of a profit-making scheme. Tokens received from hobby mining are considered a capital acquisition and are not subject to income tax upon receipt. However, a capital gains tax must be paid when selling these tokens. You can refer to our detailed tax guides for more information on crypto mining taxation.

Let’s consider an example to better understand how mining transactions are taxed.

Let’s say, Michael received 5 bitcoins as a mining reward valued at $30,000 each. Now, Michael decided to let these tokens sit in his wallet for the next 14 months. Since mining rewards are subjected to both income tax and capital gains tax in the US, Michael is required to report the mining rewards as ordinary income on his tax return for 2022, which will be taxed according to his income tax bracket. 

The total reported income would be $1,50,000, and it would be taxed at a 24% tax rate based on the federal income tax brackets. So Michael now owes $36,000 as income tax to the IRS. Suppose Michael decides to dispose of his Bitcoin at $40,000 per Bitcoin after 14 months, realising a capital gain of $10,000 per coin, a total gain of $50,000 which will now be subjected to a long-term capital gains tax. A 15% tax rate would be levied on Michael’s gains since his gains lie in the first tax bracket. Michael now owes another $7,500 in CGT to the IRS.

If Michael were a Canadian resident, his mining rewards would attract no income tax since the transaction wasn’t carried out in a business setting but in an individual capacity. He has to only pay a CGT on half of his gains upon disposal. Michael’s gains fall into the second tax bracket and therefore attract a tax rate of 20.5%. So now Michael owes a total of $5,125 to the CRA. 

Crypto Gifts and Donation Tax

Crypto gifts and donations are a tax-efficient way for investors to give back, as they do not attract tax liabilities in most countries and are even considered tax-deductible in some, like the US and New Zealand. However, countries with gift tax exemptions usually have a limit. For instance, in the US, every individual is allowed a $16,000 gift tax exemption ($17,000 for 2023), and a lifetime gift tax exemption limit of $12.06 million ($12.92 million for 2023). 

Similarly, in New Zealand, you can claim up to one-third of your donations made to a registered charity as a deduction, provided that you have made an income in the tax year. In Sweden, all crypto gifts and donations are tax-free, with no limit on their value. However, Australian residents should be aware that crypto gifts and donations are considered as a disposal of crypto assets by the ATO and are subject to capital gains tax.

Crypto Margin Trades, Futures, and CFDs

Taxation of crypto margin trades, futures, and other CFDs varies across countries. While countries like the US have straightforward tax rules, other countries like Canada have a more complex tax structure where investors and day traders are taxed differently. In the US, gains from margin/future trades and other CFDs are subject to capital gains tax laws. In contrast, in Canada, if you are considered an investor by the tax authorities, you pay capital gains tax on gains made from such transactions. However, if you are a day trader, your gains are taxed under income tax laws.

As clear guidelines on the taxation of such transactions are yet to be provided in countries like Canada, it is advisable to consult a tax professional before filing crypto taxes. For more insights on the taxation of such transactions, you can refer to our country-specific tax guides.

Conclusion:

We hope you found this ultimate tax guide helpful and that crypto taxes aren’t as intimidating as they used to be for you. We will add more tax guides consistently, so don’t get discouraged if you can’t find your country’s tax guide here. 

We suggest you keep revisiting this blog, as it will be constantly updated to accommodate any new guidelines, laws, or taxation rules issued by the respective tax authorities of the above-listed countries. If you still have some thoughts or reservations regarding filing your crypto taxes yourself, you can simply use Kryptoskatt to file your taxes to ensure that your tax reports are correct and legally compliant.

Frequently Asked Questions(FAQs)

  1. Do I need to Pay Taxes on Crypto Transactions?

Yes, in most countries, including the United States, cryptocurrency transactions are subject to taxation. The tax treatment of cryptocurrencies varies depending on the country and jurisdiction, so it is important to check with your local tax authorities to determine your tax obligations. In general, the IRS treats cryptocurrencies as property, so any gains or losses from their sale or exchange may be subject to capital gains tax.

  1. What Happens if I don’t pay my crypto taxes?

If you don't pay your crypto taxes, you may face penalties and interest charges, just like with any other tax obligation. For instance in Sweden, cryptocurrencies are considered as assets and are subject to capital gains tax. Failing to report and pay taxes on cryptocurrency gains can lead to criminal charges, fines, and even imprisonment. In the United States, the IRS has been actively enforcing crypto tax compliance, and failure to pay taxes on cryptocurrency transactions can result in fines, liens, or even criminal charges in extreme cases.

  1. Are there any tax exemptions or deductions on crypto transactions?

There may be tax exemptions or deductions available for cryptocurrency transactions, but it depends on the country and jurisdiction in which you are located. In the United States, for example, cryptocurrency donations to qualified charitable organizations may be tax-deductible, and losses from cryptocurrency transactions can be used to offset capital gains and reduce your overall tax liability.

  1. How to file crypto taxes using Kryptoskatt?

We agree that filing your crypto taxes is an unreasonably complicated task, even for someone with a fair amount of prior knowledge. However, there’s an easy way to file your crypto taxes using a crypto tax software called Kryptoskatt.

All you need to do is log in on the platform, add all your trading accounts, wallets, and De-Fi accounts and sip coffee while Kryptoskatt does all the heavy lifting. The platform can auto-fetch all your transaction from the tax year and generate a legally compliant tax report within minutes while suggesting ways to lower your tax bill. It works like magic all you need to do is try it once.

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Ultimate Global Crypto Tax Guide 2023

By
Pratibha Tiwari
On

“How to file my crypto taxes?”

This question haunts every crypto investor in the world, and here are 3 reasons why:

  1. Taxes are complicated
  2. Getting your taxes wrong may attract legal trouble
  3. Tax professionals charge a lot of money to help you file taxes

We aim to offer you a comprehensive crypto tax guide with this article, addressing all your issues. To make things easier for you, we have compiled a list of every crypto tax guide we have created thus far. This way, you won't have to search our website for the tax guide specific to your country.

The extract provides a comprehensive list of tax guides, each accompanied by a link to the original tax guide. These resources cover numerous topics like capital gains taxes, income taxes, DeFi taxes, mining taxes, and tax-filing tutorials. No matter where you live or the type of crypto transactions you engage in, this guide has everything you need to file your crypto taxes. 

Note that this article has a non-exhaustive list. If you can’t find your country’s tax guide here, it will be added soon. Now that we’ve got that out of the way, let’s dig in.

Nation-Wise Crypto Tax Guides 

Listed below are tax guides for 16 different countries:

  1. Norway Crypto Tax Guide

In Norway, cryptocurrency is treated as a capital asset for tax purposes, not as a currency. Profit from selling cryptocurrency is considered a capital gain by tax authorities, but there’s no specific capital gains tax in Norway. Instead, any profits are subject to income tax. Note that keeping accurate records and reporting transactions on your tax return is essential to avoid legal and financial issues with the tax authorities.

Norway Crypto Tax Guide 2023

  1. Sweden Crypto Tax Guide

According to the Swedish tax authority, Skatteverket, Bitcoin and other cryptocurrencies are not considered currency. Instead, they are classified as property and any sale or disposal of these crypto assets results in capital gains tax in Sweden. Skatteverket categorizes cryptocurrencies such as Bitcoin and altcoins as "other assets," subject to taxation under Chapter 52 of the Swedish Income Tax Act.

Sweden Crypto Tax Guide 2023

  1. Denmark Crypto Tax Guide

In Denmark, Skattestyrelsen, considers cryptocurrency as a personal asset, not a fiat currency, for tax purposes. Personal assets are subject to taxation in Denmark in two situations - if they are related to your business or if they are deemed speculative. It's important to note that simply holding onto your crypto assets (known as HODLing) does not exempt you from taxes. 

The Danish tax authorities view these holdings as speculative and, therefore, subject to taxes. Attempting to evade crypto taxes by holding onto your assets could result in an unwelcome surprise from the tax authorities in Denmark. 

Denmark Crypto Tax Guide 2023

  1. Germany Crypto Tax Guide

The Federal Ministry of Finance, or Bundesfinanzministeriums (BMF) in Germany, has established guidelines regarding cryptocurrencies. The guidelines state that all cryptocurrencies are digital representations of value, not issued or guaranteed by any central bank or public authority. 

Therefore, tax authorities don’t recognize crypto as a legal tender or currency. Instead, they are considered private assets for tax purposes. It's important to note that any profits from selling or disposing of your crypto assets are subject to capital gains tax in Germany.

Germany Crypto Tax Guide 2023

  1. Finland Crypto Tax Guide

The Finnish Tax Administration, Verohallinto or Vero, categorizes cryptocurrencies as personal assets rather than fiat currencies. Cryptocurrencies are defined as units of digital value that can be electronically transferred, saved, and exchanged, without being issued by any central bank or public authority.

In Finland, the purchase and transfer of cryptocurrencies between wallets and exchanges are not taxed. However, any profits made from selling or exchanging them are subject to Capital Gains Tax and are considered capital income.

Finland Crypto Tax Guide 2023

  1. Italy Crypto Tax Guide

Before December 2022, the Italian revenue agency, Agenzia Entrate, did not have a clear taxation framework for cryptocurrencies. Crypto taxation was governed by a small set of regulations that did not consider crypto as a speculative asset and crypto gains were tax-free. 

However, if the value of your crypto portfolio exceeds €51,645 for seven consecutive days in a tax year, your gains would be taxable at a flat rate of 26%. In December 2022, the Italian Senate established new tax regulations for cryptocurrencies as part of the budget legislation. Under the new rules, any gains worth €2,000 or more will be subject to a flat tax rate of 26%

Italy Crypto Tax Guide 2023

  1. Austria Crypto Tax Guide

Prior to March 1, 2022, Austria didn't impose a separate capital gains tax on crypto investments. Instead, they were taxed under the existing income tax laws. Investors were taxed at their respective income tax rates for short-term gains, and any assets held for over a year were tax-free. 

Assets purchased before February 28, 2022, were not taxable under the old rules. However, with the new tax reform, short-term gains are now subject to a flat stock tax rate of 27.5%, and long-term gains are no longer tax-free, except for assets purchased before the cutoff date, which are considered legacy holdings.

Austria Crypto Tax Guide 2023

  1. US Crypto Tax Guide

The IRS considers cryptocurrency to be a virtual currency and categorizes it as 'property' for tax purposes. Virtual currency is a digital representation of value used as a medium of exchange, a unit of account, and a store of value, but not recognized as a representation of the U.S. dollar or foreign currency. In 2014, the IRS issued Notice 2014-21 to clarify that virtual currency is considered property for tax purposes.

If you engage in cryptocurrency transactions, you may be liable for either Income Tax or Capital Gains Tax depending on the type of transaction.

US Crypto Tax Guide 2023

  1. Canada Crypto Tax Guide

In Canada, crypto assets are classified as property for tax purposes, not as a currency. Therefore, any profits made from selling these assets are considered capital gains and are subject to capital gains tax. The Canadian tax authorities view several transactions as disposals, including selling crypto for fiat, gifting crypto, purchasing goods or services with crypto, and exchanging crypto for other assets.

However, not all capital gains are subject to tax. According to the CRA, taxpayers are only required to pay taxes on 50% of their gains.

Canada Crypto Tax Guide 2023

  1. New Zealand Crypto Tax Guide

As per New Zealand's laws, Bitcoin and other blockchain-based assets are not recognized as legal tender and are not considered a currency. The country's tax authority, the IRD, treats them as property for tax purposes. There are no specific laws governing crypto taxation currently, but the IRD has issued guidelines to help taxpayers comply with existing income tax laws. However, new legislation is being discussed that could lead to a more concrete tax regime.

The IRD guidelines state that if you acquire crypto assets intending to dispose of them, any profit you make will be subject to income tax. For instance, if you purchase or mine crypto assets to sell or exchange them, you will need to pay income tax on any gains you make. If you incur a loss when you sell your crypto assets, you may be able to claim that loss.

New Zealand Crypto Tax Guide 2023

  1. Australia Crypto Tax Guide

The ATO does not recognize Bitcoin and other cryptocurrencies as legal tender or currency. Instead, they classify them as property, which means that selling or disposing of them is subject to capital gains tax. The ATO also uses the term "cryptocurrencies" to group Bitcoin, altcoins, NFTs, and similar assets. Therefore, any profits earned from selling or exchanging these assets are subject to taxation.

However, there are some instances where the ATO may classify crypto as income and tax it accordingly. It's important to note that tax rules differ between traders and investors in Australia. Typically, traders pay income tax, while investors owe capital gains tax.

Australia Crypto Tax Guide 2023

  1. UK Crypto Tax Guide

As per HMRC, crypto assets are classified as capital assets, and their disposal results in a capital gain. The following activities are deemed as the disposal of a crypto asset:

  • Selling a crypto asset
  • Buying goods or services with a crypto asset
  • Swapping one token for another
  • Gifting crypto to someone other than your spouse or civil partner

It’s imperative to note that HMRC doesn't differentiate between long-term and short-term capital gains tax. The classification is based on the taxpayer's income level.

UK Crypto Tax Guide 2023

  1. Spanish Crypto Tax Guide

The Spanish tax authority, Agencia Tributaria, classifies Bitcoin and other crypto assets as digital representations of value that are not considered currency or money as they are not backed by a central bank or public authority. Nevertheless, they are accepted as a medium of exchange that can be electronically transferred, stored, or traded.

Agencia Tributaria's latest guidelines state that capital gains or losses from the sale of cryptocurrencies are treated as savings income for tax purposes. This means that any profits made from disposing of crypto assets will be subject to taxation, whether you receive fiat currency or another cryptocurrency in return.

Spain Crypto Tax Guide 2023

  1. Netherlands Crypto Tax Guide

The Netherlands has a unique tax rule where residents are required to report the value of their crypto assets on January 1st of every year, even if they don't dispose of them within the tax year. The cost basis of the assets is equal to their market value on that day, which resets every year. 

The tax authorities use this value to calculate the presumed gains over a financial year, and taxes must be paid on these gains regardless of whether the assets are disposed of or not. Crypto assets are in the third tax category, and the tax levied on Box 3 gains is called Vermogensrendementsheffing, which is equivalent to the capital gains tax charged in other countries.

Netherlands Crypto Tax Guide 2023

  1. India Crypto Tax Guide

The Indian government has recently amended its Income Tax Act, introducing Section 2(47A) during the 2022 Budget session. This section defines Virtual Digital Assets (VDAs) and covers all types of crypto assets, including cryptocurrencies, NFTs, and tokens.

According to the Indian Income Tax Department (ITD), disposing of or earning crypto, including through airdrops or staking rewards, requires payment of crypto taxes in India. Holding crypto for the long term does not offer any tax benefit, and taxes must be paid regardless of the holding period. Furthermore, the transfer of crypto assets on or after July 1, 2022, may also attract an additional Tax at Source (TDS) under Section 2(47A) and Section 194S.

India Crypto Tax Guide 2023

  1. Portugal Crypto Tax Guide

To align with the European Union directive on Markets in Crypto-assets, Portugal has introduced changes to its budget that define crypto-assets as any digital representation of value or rights that can be transferred electronically or stored using distributed ledger technology. This new definition excludes single crypto and non-fungible tokens. 

Consequently, crypto assets are now taxable in Portugal, and all gains from the sale of these assets will be subject to capital gains tax. Any income generated from crypto assets will be regarded as business income and will be taxed accordingly. These changes are effective from this financial year.

Portugal Crypto Tax Guide 2023

The pace of evolution in the crypto space has been unprecedented, with the adoption of blockchain-based financial frameworks like De-Fi providing investors with multiple investment avenues beyond crypto tokens. However, this has resulted in complex taxation rules around transactions in the crypto space, including mining, trading, staking, and lending. 

In this article, we aim to provide a general overview of how tax authorities around the world approach the taxation of these types of transactions. So, read on to gain an in-depth understanding of these terms.

Taxes on Crypto Trading

Crypto trading can be primarily divided into two parts based on the nature of the transactions:

  1. Trading crypto for fiat currency
  2. Trading crypto for other crypto tokens

Most countries treat cryptocurrencies as capital assets rather than currency, which means that disposing of them usually results in capital gains tax. This applies when trading cryptocurrencies for fiat currency. However, there are variations in taxation when it comes to trading one crypto for another. For example, some countries, such as Canada, Australia, and the US, treat it as a disposal or change of ownership of assets, while others do not tax such transactions. 

It is important to note that countries have different tax rules for traders and investors, such as Australia, which has separate tax regulations for each group. For specific information on cryptocurrency trading taxation in different countries, please refer to our country-wise tax guides

Taxes on NFT Transactions

There are varying approaches to NFT taxation across countries, and it remains a grey area for many tax authorities. In the US, NFTs are often considered collectables and subject to a higher capital gains tax rate of 28% compared to the standard 20%. In contrast, New Zealand does not tax NFT transactions if they are solely for recreational purposes, provided that the taxpayer can prove their intent when filing taxes. 

In Canada, creating and selling NFTs is treated as business income and subject to income tax instead of capital gains tax. For more information on the taxation of NFTs in different countries, refer to our comprehensive tax guides.

Let’s consider an example to better understand this scenario:

John, who is a US resident, buys an NFT for $2,000 and sells it for $10,000 after holding it for over a year, making a profit of $8,000. Joanna, a UK resident, buys an NFT for £1,500 and sells it for £10,000, making a profit of £8,500, and Jack, a Canadian resident, buys an NFT for CAD 3,000 and sells it for CAD 10,000, making a profit of CAD 7,000.

Since John held his NFT for more than one year, his NFT will be deemed collectable by the IRS and will be taxed at a higher rate of 28%. So John now owes $2,240 to the IRS in NFT taxes.

Joanna on the other hand has to clarify whether the transaction was one of many transactions in which case the gains will be taxed as income, or if it was a normal transaction which attracts a CGT. Since Joanna was involved in only a single transaction, she will pay a CGT. She made a total gain of £8,500, which happens to be less than £50,270, so a tax rate of 10% will be levied on the capital gains, and Joanna owes a total of £850 to the HMRC.

Jack’s income will be taxed as a capital gain in Canada, and since the capital gains lie in the lowest tax bracket, a 15% tax will be levied on 50% of his capital gains because you only pay tax on half of your net profit every financial year in Canada. So Jack’s tax liability comes down to 575 CAD.

Taxes on Crypto Staking and Lending

Crypto staking and lending are DeFi transactions and since most countries are yet to release concrete guidelines around the taxation of De-Fi, it is quite a tricky task to figure out how are lending and staking transactions viewed from a tax perspective. 

Some countries like the US and Sweden consider lending to be an income-bearing transaction and tax any interest earned through these transactions as additional income. Staking on the other hand is a bit more complicated, while some countries prefer taxing the staking rewards as additional income, others consider staking as a form of disposal and subject it to capital gains tax. Canada treats NFT transactions in the same way as any other crypto transaction. You can refer to our detailed tax guides to learn more about nation-specific guidelines on NFT taxation.

Taxes on Mining Crypto 

Countries such as the US, Sweden, and New Zealand consider mining rewards as income, with the cost basis equal to the fair market value of tokens at the time of receipt. The tokens are taxed as income when received, and if you decide to sell them later, a capital gains tax is levied.

In Australia, mining is treated as a hobby unless it is part of a profit-making scheme. Tokens received from hobby mining are considered a capital acquisition and are not subject to income tax upon receipt. However, a capital gains tax must be paid when selling these tokens. You can refer to our detailed tax guides for more information on crypto mining taxation.

Let’s consider an example to better understand how mining transactions are taxed.

Let’s say, Michael received 5 bitcoins as a mining reward valued at $30,000 each. Now, Michael decided to let these tokens sit in his wallet for the next 14 months. Since mining rewards are subjected to both income tax and capital gains tax in the US, Michael is required to report the mining rewards as ordinary income on his tax return for 2022, which will be taxed according to his income tax bracket. 

The total reported income would be $1,50,000, and it would be taxed at a 24% tax rate based on the federal income tax brackets. So Michael now owes $36,000 as income tax to the IRS. Suppose Michael decides to dispose of his Bitcoin at $40,000 per Bitcoin after 14 months, realising a capital gain of $10,000 per coin, a total gain of $50,000 which will now be subjected to a long-term capital gains tax. A 15% tax rate would be levied on Michael’s gains since his gains lie in the first tax bracket. Michael now owes another $7,500 in CGT to the IRS.

If Michael were a Canadian resident, his mining rewards would attract no income tax since the transaction wasn’t carried out in a business setting but in an individual capacity. He has to only pay a CGT on half of his gains upon disposal. Michael’s gains fall into the second tax bracket and therefore attract a tax rate of 20.5%. So now Michael owes a total of $5,125 to the CRA. 

Crypto Gifts and Donation Tax

Crypto gifts and donations are a tax-efficient way for investors to give back, as they do not attract tax liabilities in most countries and are even considered tax-deductible in some, like the US and New Zealand. However, countries with gift tax exemptions usually have a limit. For instance, in the US, every individual is allowed a $16,000 gift tax exemption ($17,000 for 2023), and a lifetime gift tax exemption limit of $12.06 million ($12.92 million for 2023). 

Similarly, in New Zealand, you can claim up to one-third of your donations made to a registered charity as a deduction, provided that you have made an income in the tax year. In Sweden, all crypto gifts and donations are tax-free, with no limit on their value. However, Australian residents should be aware that crypto gifts and donations are considered as a disposal of crypto assets by the ATO and are subject to capital gains tax.

Crypto Margin Trades, Futures, and CFDs

Taxation of crypto margin trades, futures, and other CFDs varies across countries. While countries like the US have straightforward tax rules, other countries like Canada have a more complex tax structure where investors and day traders are taxed differently. In the US, gains from margin/future trades and other CFDs are subject to capital gains tax laws. In contrast, in Canada, if you are considered an investor by the tax authorities, you pay capital gains tax on gains made from such transactions. However, if you are a day trader, your gains are taxed under income tax laws.

As clear guidelines on the taxation of such transactions are yet to be provided in countries like Canada, it is advisable to consult a tax professional before filing crypto taxes. For more insights on the taxation of such transactions, you can refer to our country-specific tax guides.

Conclusion:

We hope you found this ultimate tax guide helpful and that crypto taxes aren’t as intimidating as they used to be for you. We will add more tax guides consistently, so don’t get discouraged if you can’t find your country’s tax guide here. 

We suggest you keep revisiting this blog, as it will be constantly updated to accommodate any new guidelines, laws, or taxation rules issued by the respective tax authorities of the above-listed countries. If you still have some thoughts or reservations regarding filing your crypto taxes yourself, you can simply use Kryptoskatt to file your taxes to ensure that your tax reports are correct and legally compliant.

Frequently Asked Questions(FAQs)

  1. Do I need to Pay Taxes on Crypto Transactions?

Yes, in most countries, including the United States, cryptocurrency transactions are subject to taxation. The tax treatment of cryptocurrencies varies depending on the country and jurisdiction, so it is important to check with your local tax authorities to determine your tax obligations. In general, the IRS treats cryptocurrencies as property, so any gains or losses from their sale or exchange may be subject to capital gains tax.

  1. What Happens if I don’t pay my crypto taxes?

If you don't pay your crypto taxes, you may face penalties and interest charges, just like with any other tax obligation. For instance in Sweden, cryptocurrencies are considered as assets and are subject to capital gains tax. Failing to report and pay taxes on cryptocurrency gains can lead to criminal charges, fines, and even imprisonment. In the United States, the IRS has been actively enforcing crypto tax compliance, and failure to pay taxes on cryptocurrency transactions can result in fines, liens, or even criminal charges in extreme cases.

  1. Are there any tax exemptions or deductions on crypto transactions?

There may be tax exemptions or deductions available for cryptocurrency transactions, but it depends on the country and jurisdiction in which you are located. In the United States, for example, cryptocurrency donations to qualified charitable organizations may be tax-deductible, and losses from cryptocurrency transactions can be used to offset capital gains and reduce your overall tax liability.

  1. How to file crypto taxes using Kryptoskatt?

We agree that filing your crypto taxes is an unreasonably complicated task, even for someone with a fair amount of prior knowledge. However, there’s an easy way to file your crypto taxes using a crypto tax software called Kryptoskatt.

All you need to do is log in on the platform, add all your trading accounts, wallets, and De-Fi accounts and sip coffee while Kryptoskatt does all the heavy lifting. The platform can auto-fetch all your transaction from the tax year and generate a legally compliant tax report within minutes while suggesting ways to lower your tax bill. It works like magic all you need to do is try it once.

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