Have you been investing in crypto? Or are you planning to invest soon? Regardless of your category, you will have to report transactions to the HMRC and pay your crypto taxes. But before you can do that, you need to be aware of the UK tax infrastructure and understand the nuances of crypto taxation in the UK.

However, it might seem intimidating. After all, where should one start?

Don’t worry we have the answer. You should start here with this ultimate UK crypto tax guide. We have curated the most comprehensive crypto tax guide for UK residents, covering all aspects of crypto taxation including capital gains tax UK, income tax UK, and NFT taxes, in a very digestible manner.

So let’s get started…

How is Crypto taxed in the UK?

In the United Kingdom, there is no specific tax dedicated to cryptocurrencies. Instead, the tax treatment depends on the nature of the transactions involved. If the activity is classified as generating income, it is subject to Income Tax. If it is deemed to generate a gain, it falls under Capital Gains Tax.

For income-generating activities, such as receiving a salary in crypto or earning mining and staking rewards from DeFi or native blockchains, income tax is applicable. Income tax rates in the UK range from 0% to 45%, depending on the individual's tax bracket.

For gains made from crypto transactions, if the total capital gains in a tax year are below £50,270, a Capital Gains Tax of 10% is applied. However, if the gains exceed this threshold, a 20% Capital Gains Tax is levied on the entire gain. The new Autumn Budget also announced that Capital Gains Tax rates had been raised to 18% and 24% respectively from October 30, 2024

For the 2024-2025 financial year, the tax-free allowance for capital gains has been cut from £6,000 to £3,000

‍

Consider the following transactions:

2024/01/13 - Oliver buys 2 BTC in the Binance Wallet

2024/01/27- Oliver sells 1 BTC from Binance Wallet (Assuming a gain of €8,000)

2024/03/23- Oliver buys 7 ETH in the Binance Wallet

2024/05/12- Oliver sells 6 ETH from Binance Wallet (Assuming a gain of €15,000)

2024/06/15- Oliver receives 6.25 BTC as mining rewards in Binance Wallet (Assuming 1 BTC to be €25,000)

2024/08/17- Oliver receives 12 ETH as compensation in Binance Wallet (Assuming 1 ETH to be €2,500)

As evident from the above ledger of transactions, Oliver made two disposals.

‍

1st Disposal

1 BTC sold

Gain incurred from the disposal = €8,000

‍

2nd Disposal

6 ETH sold

Gain incurred from the disposal = €15,000

Collective gain from both disposals = €15,000 + €8,000 = €23,000

This is Oliver’s taxable base, and CGT will be levied on it.

Moreover, Oliver received 6.25 BTC as mining rewards and 12 ETH as compensation. These transactions constitute an income. So let’s calculate the total income made by Oliver.

Value of mining rewards = €25,000*6.25 = €1,56,250

Value of ETH tokens received as compensation = €2,500*12 = €30,000

Total income = €1,56,250 + €30,000 = €1,86,250

This is Oliver’s taxable income base.

‍

Crypto Gains Tax

Since crypto is considered to be a capital asset, selling, swapping, spending, or gifting crypto results in capital gain and attracts a capital gains tax.

Note that HMRC doesn't have a long-term or short-term capital gains tax rate. The segregation is made based on income level.

The HMRC provides a capital gains tax allowance of £12,570.00 to each individual, meaning that you are only liable for tax obligations if your gain exceeds this allowance limit. If you have disposed of a crypto asset and made a profit of less than £12,570, you can offset the entire gain against the allowance limit.

Furthermore, any losses incurred from the disposal of a crypto asset can be offset against the gain, reducing your taxable income. For example, if your gain is £42,570, after deducting the allowance amount, your taxable income will be reduced to £30,000. To further decrease your taxable income, you can close underperforming positions at a loss. Let's assume you close positions worth £20,000, resulting in a taxable income of £10,000.

‍

Crypto Capital Gains Tax Rates UK

The capital gains tax rates are pretty straightforward in the UK, the tax slabs are segregated based on income levels. Below are the tax slabs according to which your capital gains will be taxed.

If your total gain is less than £50,270, you will be taxed at 10%. Otherwise, a 20% tax is levied on your income.

‍

‍

For any disposals made after 30 October 2024, the new tax rates are as follows:

‍

How to Calculate Crypto Gains and Losses

Calculating your crypto gain or loss is a simple process. Start by determining the cost basis of the asset, which includes the acquisition cost of the asset plus any transaction or gas fees paid during the acquisition.

The capital gain or loss is then calculated as the difference between the cost basis and the amount received upon disposal. If the difference is positive (disposal amount exceeds the cost basis), it is considered a capital gain and is subject to capital gains tax. Conversely, if the difference is negative, you owe zero taxes.

However, you should track all your losses because you can offset your losses against your gains and reduce your tax bill.

‍

Consider the following transactions:

2024/01/13 - Jaimie bought 1 BTC for £21,000 in Binance Wallet

2024/03/15 - Jaimie bought 4 ETH for £2,000 each in Binance Wallet

2024/04/19 - Jaimie bought 2 BTC for £23,000 each in Binance Wallet

2024/05/20 - Jaimie sold 1 BTC for £25,000 from Binance Wallet

2024/07/21 - Jaimie sold 1 ETH for £2,800 from Binance Wallet

‍

As evident from the above ledger of transactions, Jaimie made 2 disposals:

‍

1st Disposal

1 BTC sold for £25,000

Now since BTC tokens were acquired on two separate instances at different prices, we need to use a specialised accounting method for cost basis calculations. There are three tax accounting methods as specified by the tax authorities in the UK, the Same Day rule, the Bread and Breakfast rule, and the Section 104 method. You have to apply one of these methods for cost-basis calculations depending on the nature of your transactions.

Jaimie's transactions fall under the application of the Section 104 method since the disposals were not made within the same day or within a 30-day period. The Section 104 method is akin to the Average Cost Basis (ACB) method, where the average acquisition cost of the asset is used as the cost basis.

Cost Basis for BTC = £23,000 + £23,000 + £21,000/3 = £22,333 (approx.)

Disposal Amount = £25,000

Capital gain = Disposal Amount - Cost Basis = £25,000 - £22,333 = £2,667

‍

2nd Disposal

1 ETH sold for £2,800

Jaimie acquired ETH tokens once. Therefore, this is a fairly straightforward calculation.

Cost Basis = £2,000

Disposal Amount = £2,800

Capital Gain = £2,800 - £2,000 = £800

Collective Gain from both disposals = £2,667 + £800 = £3,467

‍

Crypto Losses

Investing in cryptocurrency, like any other investment, may result in loss. If you sell a capital asset and incur a capital loss, you are not required to pay capital taxes on your loss.

Maintaining accurate records of your losses and reporting them to the HMRC is essential, as losses can be utilised to reduce your taxable capital gains. There is no limit to the number of losses you can use to offset gains, which has the potential to bring your taxable gains down to the annual tax-free allowance of £3,000, thus exempting you from paying taxes on your gains.

Importantly, you can carry forward your losses indefinitely until they have been fully utilised. Therefore, it is crucial to diligently track and report all your losses to the HMRC in order to maximise their benefits.

‍

Lost or Stolen Crypto

Although capital losses can be offset against gains, it's important to note that lost or stolen crypto cannot be directly written off against your gains. In certain circumstances, you may be able to make a negligible value claim for the lost crypto, which can later be converted into a capital loss.

Lost crypto is not recognized as a capital loss because the assets still technically remain under your ownership, even if you have lost access due to a missing private key. On the other hand, stolen crypto is not considered a disposal of assets by the HMRC, and therefore cannot be offset against capital gains.

‍

Crypto Tax Breaks UK

There are three primary tax breaks offered to citizens in the UK:

1. Income tax Allowance: For the 2024-25 tax year, the first £12,570 is tax-free. Note that you don’t get a personal income tax allowance if your income is more than £125,140 in a year.‍
2. Capital Gains Allowance: Every UK resident enjoys a Capital Gains Tax-Free Allowance of £12,300. After April 2023, this allowance will be reduced to £6,000, and in April 2024 it will further decrease to £3,000 for FY 2024-25.‍
3. Trading and Property Allowance: The Trading and Property Allowance allows for £1,000 of income from either trading or property to be tax-free. If you receive income from both, you can enjoy up to £2,000 of tax exemption.

‍

Crypto Cost Basis Method UK

Calculating the cost basis for a single token or currency is a simple task, however, people mostly trade and invest in multiple assets throughout a tax year, which makes cost-basis calculations a bit complicated.

In the UK, there are three possible cost basis methods you can use and you need to work through them in order of which applies to your assets:

1. Same-Day Rule: When buying and selling coins, if you complete the transaction on the same day, you must use the cost basis of that day to determine your gains or losses. If you sell a higher amount than you purchased, proceed to the next guideline.‍
2. Bread and Breakfast Rule: If you sell and then buy back the same coins/tokens within 30 days, you will use the cost basis of the newly purchased coins/tokens to calculate any gains or losses. If you sell a greater amount than what you bought in this time frame, you'll follow the final rule.‍
3. Section 104 Method: If neither of the two applies to your crypto transactions, you must use the cost basis method when determining your cryptocurrency taxes. This method operates similarly to the ACB (Average Cost Basis) by calculating an average cost basis for a group of assets by dividing the total amount paid for all assets by the total number of coins/tokens held.

‍

Consider the following transactions:

2024/01/23 - Emily bought 1 BTC in Binance Wallet for £21,000 and sold it 6 hours later for £21,500

Now since the disposal was made within 24 hours, the Same-Day rule applies.

So the cost basis from the same day will be used for cost basis calculations:

Capital Gain = £21,500 - £21,000 = £500

2024/02/23 - Emily bought 2 ETH for £2,000 each

2024/03/15 - Emily sold 2 ETH for £2,500 each

2024/03/21 - Emily bought 2 ETH for £2,400

Since the tokens were repurchased within 30 days of the disposal, the Bread and breakfast rule applies which states that the cost basis is equal to the acquisition price of the newly purchased tokens.

Cost Basis = £2,400

Disposal Amount = £2,500

Capital Gain(for 1 ETH) = £2,500 - £2,400 = £100

Gain from 2 ETH disposals = 2*£100 = £200

The Section 104 Rule has been discussed in detail in the section titled “How to Calculate Crypto Gains and Losses”.

‍

Crypto Income Tax UK

Cryptocurrency transactions classified as income may be subject to Income Tax and National Insurance contributions, taxed at your regular tax rate. There are various instances where crypto transactions can be viewed as income by the HMRC and taxed according to income tax laws.

Your gains will be considered an income if they arise from the following sources:

1. Received as compensation for a product or a service
2. Received as a staking reward from a DeFi protocol
3. Received as a recurring income in the form of interest/reward from the borrower
4. Received as a mining reward
5. Received via airdrops

These transactions are taxed according to the regular income tax slabs. HMRC has finally issued clear guidelines for the taxation of DeFi transactions. Since staking and lending involve recurring payments in the form of interest or reward from the DeFi protocol, they can be considered as income and therefore attract income tax. Although DeFi transactions may also be taxed under capital gains tax laws depending on the nature of transactions.

The following cases shall be considered for an income to be considered taxable in case of DeFi transactions.

1. If the return is predetermined
2. If the return originates from a borrower or a DeFi platform
3. If the return is periodic as against a one-time payment

The HMRC is yet to release any guidance on income from play-2-earn, learn-2-earn, and watch-2-earn Web3 platforms that offer a reward for engaging with their platform. Some examples would be:

• Tokens earned through Brave Browser for watching ads
• Tokens earned on CoinMarketCap learning or Coinbase learning center
• Rewards earned on Odysee by watching videos

‍

Crypto Income Tax Rates UK

To determine the tax owed on crypto income, familiarise yourself with the crypto Income Tax rates, which align with the Income Tax Bands for other forms of income.

Notice that taxes in the UK are progressive, which means that not all your income is taxed at a flat rate, but only the excess amount.

Let’s understand this through an example:

Suppose you make £20,000, the first £12,570 will be taxed at 0% as it falls under the first slab and the remaining £7,430 will be taxed at a tax rate of 20% as it falls under the second slab.

‍

How to Calculate Crypto Income

To accurately calculate your crypto income, the most crucial requirement is to have a comprehensive list of cost basis for each token in your crypto portfolio, as well as a record of all the disposals you have made during the tax year, including the corresponding disposal prices. These details will form the foundation for accurately determining your taxable income from crypto transactions.

Determining your cryptocurrency gains is simple if you have infrequent small profits, but tracking and calculating them from recurring sources such as staking rewards or airdrop income from multiple assets can become complicated.

Fortunately, Kryptos can quickly manage all these transactions for you and calculate your total cryptocurrency income in minutes.

‍

Tax-Free Crypto Transactions

In the UK, some tax-free crypto transactions include:

• Personal gifts to spouse.
• Transactions that are made in a personal capacity and not as part of a trade or business.
• Transfers of crypto assets between an individual's wallets or exchanges.
• Donations of crypto assets to charities registered with the Charity Commission for England and Wales.
• Crypto assets are received as airdrops, provided they are not part of a trade or business.

‍

Taxed Crypto Transactions

Crypto transactions that are taxable in the UK include:

• Disposal of crypto assets for a profit, where the profit is considered as taxable capital gains.
• Crypto assets that are received as income, such as mining rewards or staking rewards, where the income is considered taxable income.
• Trading of crypto assets as part of a trade or business, where the profits are considered taxable business income.
• Sale of goods or services for crypto assets, where the profits are considered taxable business income.

‍

Tax on Mining Crypto UK

Depending upon the size, activity, and objective of the miner, crypto mining is taxed in two different ways. If an individual or group of individuals perform mining operations in their free time just to make a couple of extra bucks on the side, then the event is perceived as habitual mining by the HMRC, and the tokens received are subjected to income tax. These tokens are also subjected to capital gains tax upon disposal.

For mining companies, the taxation model is different. All tokens obtained through mining are included in the company's trading profits and are subjected to an income tax.

‍

Tax on Staking Crypto

According to the HMRC guidelines on Staking rewards, staking rewards can either be viewed as taxable trade subject to capital gains tax, or they may be viewed as miscellaneous income attracting regular income tax based on the consensus you are staking on and how the rewards are distributed.

Whether staking rewards are viewed as taxable trade depends on the following variables:

• Degree of activity
• Organisation
• Risk
• Commerciality

If it’s not viewed as a trade, the value of the tokens at the point of receipt in pound sterling will be taxed as income. Note that if you choose to hold these tokens and dispose of them later, you will have to pay capital gains tax on any gains you make.

‍

Crypto Margin Trading, Futures and CFDs

In the UK, profits from trading cryptocurrencies, including margin trading, futures, and CFDs, are subject to capital gains tax. If the profits are above the annual tax-free allowance (currently £3,000), the excess must be reported and taxed at the individual's marginal tax rate. Additionally, value-added tax (VAT) may also apply to cryptocurrency transactions in the UK.

‍

Crypto Gifts and Donation Taxes

Gifting crypto to anyone other than your spouse or family in the UK constitutes a taxable event and attracts capital gain tax. However, crypto donations to a registered charity are tax-free.

When gifting cryptocurrency to someone other than your spouse or civil partner, it is necessary to determine the market value (in pound sterling) of the crypto at the time of the gift. This value will be treated as sales proceeds for Capital Gains Tax purposes.

It is crucial to note that if income tax has already been levied on the value of the gifted tokens, section 37 of the Taxation of the Capital Gains Tax Act 1992 will come into effect. Essentially, this means that the "sales proceeds" will be adjusted by the amount already subject to income tax and subsequently subjected to CGT.

When it comes to gifting crypto to your spouse or civil partner, it’s completely tax-free and there’s no limit on how many assets you can give them in a tax year.

Donating cryptocurrency to a registered charity in the UK is exempt from tax.

When an individual donates crypto to a charity, they qualify for Income tax relief on the donated amount. Additionally, they can enjoy an exemption from Capital Gains Tax, with two exceptions:

‍

1. If the individual sells the crypto assets to the charity at a price higher than the acquisition cost, they will be liable to pay CGT on the difference between the selling price (instead of the market price) and the acquisition cost.
2. If they make a tainted donation—this refers to a scenario where an individual enters into an arrangement with a charity to receive some form of kickback or financial advantage.

‍

NFT Taxes UK

NFT taxes are still a grey area in the UK crypto tax infrastructure because the HMRC doesn’t consider NFT to be the same asset class as cryptocurrencies and therefore segregates them from the guidelines governing their taxation.

Although no new legislation has been passed to accommodate the taxation of NFTs in the UK, here’s how some of the common NFT transactions are taxed in the UK:

• Buying an NFT with crypto assets- attracts capital gains tax
• Buying an NFT with fiat currency- attracts zero tax
• Disposing of an NFT for fiat or crypto- attracts capital gains tax
• Swapping one NFT for another- attracts capital gains tax
• Minting an NFT from a blockchain- attracts zero tax
• Gifting NFTs- attracts capital gains tax unless(unless it’s your spouse or civil partner)

‍

ICO Taxes

ICOs are special events that allow investors to acquire tokens from an unreleased project in exchange for mainstream tokens like BTC and ETH. The HMRC is yet to release guidelines on how tokens received from ICOs are viewed from a tax perspective. However, since most European countries treat ICOs as simple crypto-to-crypto trades, we can assume that income from ICOs will be viewed as simple crypto-to-crypto trade and will be subject to CGT.

However, we do suggest seeking the advice of an expert tax accountant to make sure you don’t end up in legal trouble due to discrepancies in your tax report.

‍

DAO Taxes

DAOs are member-owned communities with a shared vision. All the decisions in a DAO are made by the members in the absence of central leadership. DAOs are new-age institutions that aim to democratise decision-making and allow people to have a say in decisions that directly affect them. DAOs are often called the soul of Web3 and enable members to earn rewards in multiple ways. DAO contributors are rewarded for their contributions to the organization, similar to how centralized organisations pay salaries to their employees. They also pay out bounties for one-time projects and redistribute any profits generated through operations.

The HMRC is yet to release specific guidance on how income from DAOs is taxed. We are constantly on the lookout for new guidelines on the subject and all relevant details will be added here as soon they hit our radar.

‍

DeFi Crypto Taxes UK

The HMRC recently announced that DeFi transactions will be taxed depending on the nature of the transactions. If the DeFi transaction results in a capital gain, it is subject to capital gains tax. And if a person or institution appears to be generating income from DeFi protocols, they must pay income tax on that income.

DeFi transactions such as adding/removing liquidity, staking assets, and lump sum rewards received from staking and lending in most instances are considered disposal of assets and attract capital gains tax.

Returns from DeFi protocols may be considered an income when:

• The return is predetermined
• The return originates from a borrower or a DeFi protocol
• If the return is recurring in nature

‍

How are airdrops and forks taxed in the UK?

Forks

There are two ways a blockchain can split. One is through a soft fork and another is through a hard fork. According to the HMRC guidelines, a soft fork is a non-taxable event, because it ends with no new tokens.

Hard Forks, on the other hand, results in the distribution of a fixed number of new tokens to each user in exchange for their existing tokens on the blockchain. Although these new tokens aren't considered income and don't attract income tax, they are assigned a cost basis, or acquisition cost, based on the value of the original tokens. If the user later sells these new tokens, they may incur a capital gains tax liability.

‍

Airdrops

According to HMRC, airdrops attract income tax(in most cases). If the tokens you receive via the airdrop are the result of an action taken by you, then the tokens received will be counted as income and will attract income tax. Note that your actions may be as simple as promoting the airdrop in your immediate network through social media or having interacted with the blockchain in the past.

‍

When to Report Crypto Transactions in the UK

In the UK, individuals are required to report their cryptocurrency gains and report them as part of their taxable income. This should be done annually as part of the individual's Self-Assessment tax return. The deadline for filing a Self-Assessment tax return for the 2024-2025 tax year is 31st January 2026.

‍

How to File Crypto Taxes in the UK

You file your crypto taxes when submitting your self-assessment tax return to the HMRC. You can report your crypto gains and losses on form SA-100 and crypto gains summary SA-108.

You can report your crypto income in box 17 of your self-assessment tax return(Form SA-100).

‍

What Crypto Records Will the HMRC Want?

As a crypto investor in the UK, it's essential to maintain accurate records to ensure compliance with the HM Revenue and Customs (HMRC) regulations. Here are some records you should consider maintaining:

• Detailed report of all sales and purchases, including dates, transaction amounts, and values in British pounds at the time of the transaction.
• A record of your cryptocurrency wallet addresses, both for personal wallets and exchange wallets.
• Copies of your account statements from cryptocurrency exchanges, including details of deposits, withdrawals, trades, and any fees incurred.
• If you are involved in cryptocurrency mining, maintain records of the expenses related to mining equipment, electricity costs, and any income from mining activities.
• A record of any transfers between wallets or exchanges. This includes details such as dates, wallet addresses, and transaction amounts.
• In addition to transaction-specific information, it's also a good practice to keep personal records, such as email correspondence, contracts, or invoices related to cryptocurrency investments.

‍

How to File Crypto Taxes Using Kryptos?

Now that you’re aware of how your crypto transactions are taxed and what forms you need to fill out to complete your tax report, here’s a step-wise breakdown of how Kryptos can make this task easier for you:

1. Visit kryptos.io and sign up using your email or Google/Apple Account
2. Choose your country, currency, time zone, and accounting method
3. Import all your transactions from wallets and crypto exchanges
4. Choose your preferred report and click on generate report option on the left side of your screen and let Kryptos do all the accounting.
5. Once your Tax report is ready, you can download it in PDF format.

If you still need clarification regarding the integrations or generating your tax reports, you refer to our video guide here.

‍

How to avoid crypto taxes in the UK

Tax evasion is a punishable offence in the UK and we advise you to diligently report all your crypto transactions to the HMRC and pay your taxes on time to avoid getting into legal trouble.

However, there are ways you can legally and strategically reduce your crypto taxes. So let’s look at some of these ways:

• Use a crypto tax calculator to make sure all your losses are accounted for
• Take advantage of tax-free thresholds(capital gains tax-free allowance, tax-free allowance)
• Invest some of your crypto assets into a pension fund.
• Donate your crypto
• Gift crypto to your spouse or civil partner
• Invest in an opportunity-zone fund.
• Use tax-loss harvesting

‍

United Kingdom: Tax Implications of Celsius Distributions

The Celsius Network bankruptcy marked a significant fallout in the cryptocurrency industry, exposing vulnerabilities in centralized exchanges. Declared in mid-2022 amid liquidity challenges, it left thousands of investors unable to access their funds. The collapse revealed operational mismanagement and risky lending practices. Bankruptcy proceedings aim to redistribute approximately $2 billion in assets, though many users face substantial losses. The legal and tax implications of the distributions received during the bankruptcy vary depending on the country. 

Below is a detailed analysis of how the United Kingdom (UK) handle these issues.

In the UK, tax treatment for Celsius-related losses and distributions depends on whether a disposal occurred and the circumstances surrounding it.

1. Capital Loss Claims
   • A disposal (e.g., liquidation of holdings) allows claiming a capital loss if the cash received is less than the original cost basis.
   • Negligible value claims can be made for worthless assets, treating them as disposed of for £0 to crystallize the loss.
2. Non-Taxable Scenarios
   • Receiving a reduced quantity of the same cryptocurrency without liquidation does not trigger a taxable event. Instead, the new cost basis is used for future Capital Gains Tax (CGT) purposes.
3. Reporting Losses
   • Investors must calculate the difference between the original purchase price and the amount recovered to report losses under the "Capital Gains Summary" in their Self-Assessment tax returns. Losses can offset capital gains or up to £3,000 of income annually, with excess carried forward.

‍

Example

• Purchased 1 BTC for £40,000.
• Celsius distributed £10,000 in cash post-bankruptcy.
• Capital loss: £40,000 - £10,000 = £30,000.

Investors can claim this loss against current or future gains​.

‍

FAQs

1. Do you pay tax when spending crypto in the UK?

Spending your cryptocurrency incurs Capital Gains Tax as you are getting rid of a valuable asset. You must determine your capital gain or loss by comparing the fair market value of your crypto on the day of spending to its cost basis. If the value of your asset has risen since you obtained it, you owe Capital Gains Tax on the resulting profit. On the other hand, if the value has fallen, you have a capital loss that can balance out any gains.

2. What is the deadline for reporting crypto taxes to HMRC?

The deadline for reporting crypto taxes to HMRC in the UK is 31st January following the end of the tax year.

3. Is crypto taxable in the UK?

Yes, crypto transactions are taxable in the UK according to the HMRC guidelines. Depending on the nature of the transactions you’re involved in, your gains may be subjected to capital gains or income tax.

4. How is Crypto Taxed in the UK?

There are no dedicated tax laws for crypto transactions in the UK. Instead, the HMRC has issued guidelines to accommodate crypto taxation within the existing tax laws. Crypto transactions are taxed based on the nature of specific transactions. If a person appears to be earning an income in the form of crypto, he/she is taxed according to income tax laws. If a person seems to be making a capital gain with the disposal of a crypto asset, he/she is taxed according to capital gains tax laws.

It’s important to note that the HMRC doesn’t consider crypto as a currency or a security, but as a capital asset, which automatically aligns its taxation with the capital asset taxation laws. However, crypto transactions can be complicated, especially those involving DeFi, that’s one of the reasons why crypto taxation is multi-layered.

5. Is Crypto legal in the UK?

Yes, cryptocurrency is legal in the United Kingdom. People are allowed to buy, sell, and hold cryptocurrencies like Bitcoin, Ethereum, and others. The UK government has stated that it intends to regulate cryptocurrencies to prevent their use in illegal activities, such as money laundering and financing of terrorism. The Financial Conduct Authority (FCA) has issued guidance on the regulation of crypto assets, including initial coin offerings (ICOs) and exchanges.

‍

All content on Kryptos serves general informational purposes only. It's not intended to replace any professional advice from licensed accountants, attorneys, or certified financial and tax professionals. The information is completed to the best of our knowledge and we at Kryptos do not claim either correctness or accuracy of the same. Before taking any tax position / stance, you should always consider seeking independent legal, financial, taxation or other advice from the professionals. Kryptos is not liable for any loss caused from the use of, or by placing reliance on, the information on this website. Kryptos disclaims any responsibility for the accuracy or adequacy of any positions taken by you in your tax returns. Thank you for being part of our community, and we're excited to continue guiding you on your crypto journey!

Are you still trying to figure out whether crypto is legal in Australia? Or How crypto transactions are taxed by the ATO? 

If you answered any one of these questions with a “yes”, you’re right where you should be. Figuring out crypto taxes on your can be intimidating for investors filing their crypto taxes for the first time. So we decided to make things easier for you with this comprehensive crypto tax guide, which covers everything you need to know about crypto taxes in Australia and the rules governing them.

‍

How are cryptocurrencies taxed in Australia?

The Australian Taxation Office (ATO) does not classify Bitcoin and other cryptocurrencies as currency but rather as property. As a result, when crypto assets are sold or disposed of, they are subject to capital gains tax. It's important to note that the ATO includes bitcoin, altcoins, NFTs, and other crypto assets under the umbrella term of cryptocurrencies. Hence, any profits made from the sale of these assets will incur tax obligations.

However, there might be instances where crypto is viewed as an income by the ATO and is subjected to income tax.

There are different tax rules for traders and investors in Australia. Traders are typically subject to income tax, while investors are usually liable for capital gains tax. This distinction applies to both traditional investments and cryptocurrencies.

The ATO has provided clear guidelines to determine whether someone is classified as an investor or a trader. Here is a simplified summary of the guidelines.

According to the ATO, individuals or entities that engage in frequent crypto trades or operate large-scale mining operations to generate a recurring income are considered traders. Income generated from such activities is subject to income tax.

The ATO suggests that individuals who invest in crypto assets with a long-term perspective or engage in casual trading and occasional mining using spare computing power are considered investors. Gains from these activities are subject to capital gains tax. However, it's important to note that investors may also attract income tax depending on the nature of transactions and the source of income.

You pay anywhere between 0-45% in capital gains tax based on the gains you make in a tax year. We have discussed the tax slabs in more detail later in the guide. The tax rates for crypto income are the same as capital gains tax.

Let’s look at an example to better understand how crypto transactions are taxed in Australia.

‍

Consider the following transactions:

14/01/24 - Jack Buys 2 BTC in Binance Wallet
16/02/24 - Jack buys 2 ETH in Binance Wallet
18/05/24 - Jack receives 6.25 BTC through airdrops in Binance Wallet (FMV - $30,000 per token)
13/06/24 - Jack sells 1 BTC from Binance Wallet (Realised Gain = $10,000)
18/19/24 - Jack sells 1 ETH from Binance Wallet (Realised Gain = $1,500) 

As evident from the above transactions, two disposals were made.

1st Disposal

‍1 BTC sold

A gain of $10,000 was incurred from this disposal

2nd Disposal

‍1 ETH sold

A gain of $1,500 was incurred from this disposal

Collective Gain from both disposals = $10,000 + $1,500 = $11,500

Now this gain will be taxed as capital gains.

The mining rewards received by Jack will be treated as income and as such taxed under the income tax laws.

Taxes will be levied on the FMV of the assets upon receipt.

So let’s calculate the FMV of the received assets

FMV of mining rewards = 6.25 * $30,000 = $1,87,500

This is your taxable income base.

‍Can the ATO track crypto transactions?

‍Yes, the ATO can track cryptocurrency transactions. The ATO has access to multiple avenues, such as data from cryptocurrency exchanges and blockchain analytics tools, that they can use to correlate individual transactions and identify discrepancies.

The ATO may use this information to ensure individuals are reporting their cryptocurrency gains and losses correctly on their tax returns.

Crypto Gains Tax Australia

As mentioned above, the ATO considers crypto to be a capital asset and therefore their disposal attracts a capital gains tax. The following transactions are considered disposal by the ATO:

1. Selling crypto for fiat currency(AUD or any other)
2. Swapping one crypto token for another
3. Buying goods or services with a crypto asset
4. Gifting crypto

In Australia, it is important to understand that capital gains tax is divided into two sub-categories. If you hold your assets for more than one year before selling them, you are eligible for a 50% discount on capital gains.

However, if you sell your assets within one year of acquiring them, your gains will be subject to a higher rate of short-term capital gains tax.

It is crucial to consider the holding period when calculating your crypto tax liabilities on capital gains in Australia.

Capital Gains Tax Rate

The gains you’ve made by buying, selling, spending, or gifting your assets will be taxed based on the total income in a tax year. Mentioned below are the tax slabs divided by income groups:

Tax Rates for FY year 2023-24

‍

Tax Rates for FY year 2024-25

‍

How to calculate your crypto capital gains and losses?

‍Determining your capital gains or losses is a simple task, just subtract the cost basis (the price you paid to acquire the asset) from the disposal amount. If the result is positive (selling for more than what you paid), you have a capital gain and the disposal is taxable.

If it's negative (selling for less), it's a capital loss, allowing you to offset gains and lower your taxable income.

Calculating your cost basis can be a daunting task, especially when dealing with a large number of transactions accumulated over a year. However, there are tools available to simplify the process.

One such tool is Kryptos, which can automatically fetch transactions from your investment profiles and digital wallets. With Kryptos, you can conveniently calculate your cost basis by adding the price you paid for the asset during acquisition, including transaction fees or gas fees, and convert it to AUD.

This automated solution can save you time and effort, providing you with accurate cost-basis calculations within seconds.

Consider the following transactions:

14/01/24 - Amelia bought 1 BTC for $25,000 in Binance Wallet
18/03/24 - Amelia bought 2 ETH for $3,000 each in Binance Wallet
23/04/24 - Amelia bought 2 BTC for $30,000 each in Binance Wallet
04/06/24 - Amelia sold 1 BTC for $35,000 from Binance Wallet
29/07/24 - Amelia sold 1 ETH for $4,000 from Binance Wallet
21/05/25 - Amelia sold 1 BTC for $40,000 from Binance Wallet

As evident from the above ledger, three disposals were made. Let us look at each disposal individually.

‍1st Disposal

‍1 BTC sold for $35,000

Now, Amelia acquired BTC tokens on two separate occasions, one for $25,000 and another for $30,000. We need to identify which one of these tokens was disposed of and we need to rely on a specialized accounting method as suggested by tax authorities.

In Australia, the ATO allows investors to use any accounting method as long as the investment lots can be identified.

We will use FIFO accounting for simplicity. A simple way to understand the FIFO or First-In-First-Out accounting method is to consider that the first token you buy is the first one you sell.

So according to the FIFO accounting method, the BTC that was disposed of is the same one that was acquired on 14/01/24  for $25,000.

Cost basis = $25,000
Disposal amount = $35,000
Capital Gain/Loss = Disposal Amount - Cost Basis = $35,000 - $25,000 = $10,000

2nd Disposal

‍1 ETH sold for $4,000

Cost Basis = $3,000
Disposal Amount = $4,000
Capital gain = $4,000 - $3,000 = $1,000

3rd Disposal

‍1 BTC sold for $40,000

Cost Basis = $30,000
Disposal Amount = $40,000
Capital Gain/Loss = Disposal Amount - Cost Basis = $40,000 - $30,000 = $10,000

However, this disposal is different from the other two. This disposal was made after holding the BTC for over a year. Amelia is eligible for a 50% discount on her tax liabilities.

So actual gain from this transaction is $5,000

Now, collective gain from all three disposals = $10,000 + $1.000 + $5,000 = $16,000

This is the final amount you’ll pay capital gains tax on.

Crypto Capital Losses

‍Whether you classify as a trader or investor, losses are an inevitable part of the crypto journey. However, losses can have a silver lining when it comes to taxes. By actively tracking and documenting all your losses, you can utilize them to your advantage.

In Australia, managing crypto capital losses can be a strategic way to minimize your tax liability. When you incur a capital loss from cryptocurrency transactions, you can use it to offset your capital gains, but there are specific rules to follow, especially regarding non-allowable capital losses and the order in which these losses are applied.

‍Non-Allowable Capital Losses

‍Not all capital losses can be used to reduce your capital gains. For example, if you sell personal use assets like boats or furniture at a loss, these losses are non-deductible. Similarly, losses from assets exempt from Capital Gains Tax (CGT), such as cars, motorcycles, or low-value collectables, cannot be used to offset your capital gains. Additionally, losses from certain leases and arrangements involving personal services income paid through an entity you’ve set up are also non-allowable.

When you report your losses to the ATO, you become eligible for a tax deduction. This deduction can be applied to reduce your overall tax liability. Moreover, if you have excess losses, you have the option to carry them forward to offset future tax liabilities in subsequent tax years.

There is no time limit to carry forward the capital loss so it can be carried forward indefinitely.

To ensure accurate calculations of your capital gains and losses, it is essential to maintain precise records of all your cryptocurrency transactions.

This includes details such as transaction dates, cryptocurrency costs, and any other pertinent information that may be relevant for tax purposes.

‍Lost or Stolen Crypto

‍If you have incurred a loss from theft or other crypto frauds, you may be able to claim a capital loss in Australia.

To claim a capital loss due to loss or theft with the ATO, you'll need to provide substantial evidence. Here's what you'll need:

• Proof of when you acquired and lost your private key.
• The wallet address associated with the lost key.
• Documentation showing the cost of acquiring the lost or stolen crypto.
• Records of the amount of crypto in the wallet when the key was lost.
• Evidence that you controlled the wallet.
• Proof that you possess the hardware where the wallet was stored.
• Transaction records show transfers to the wallet from an exchange you used.

‍

Australia: Handling Celsius Distributions Under Tax Law

The Celsius Network bankruptcy marked a significant fallout in the cryptocurrency industry, exposing vulnerabilities in centralized exchanges. Declared in mid-2022 amid liquidity challenges, it left thousands of investors unable to access their funds. The collapse revealed operational mismanagement and risky lending practices.

Bankruptcy proceedings aim to redistribute approximately $2 billion in assets, though many users face substantial losses. The legal and tax implications of the distributions received during the bankruptcy vary depending on the country. 

Below is a detailed analysis of how the United Kingdom (UK), the United States (US), and Australia handle these issues.

In Australia, cryptocurrencies are treated as capital assets, with losses or gains evaluated under Capital Gains Tax (CGT) rules.

• Claiming Capital Losses
  • A CGT event occurs when cryptocurrency is sold, exchanged, or partially liquidated. Losses can be claimed if the amount recovered is less than the cost base.
  • If holdings become worthless, Australia uses a CGT event D1 or similar mechanisms to allow claims for irrecoverable assets​.
• Non-Taxable Events
  • Receiving a reduced quantity of cryptocurrency without liquidation is not taxable. The adjusted cost base is applied to future CGT calculations.
• Reporting Losses
  • Losses must be reported in the CGT section of the annual tax return. They can offset capital gains but cannot be used to reduce regular income. Excess losses are carried forward​.

‍

Example

• Purchased 1 BTC for AUD 60,000.
• Celsius distributed AUD 15,000 in cash.
• Capital loss: AUD 60,000 - AUD 15,000 = AUD 45,000

‍

‍Crypto Tax Breaks Australia

‍While it is not possible to completely avoid paying taxes on your crypto transactions unless you have incurred a net loss during a tax year, there are strategies available to help minimize your tax liabilities. Apart from capital loss write-offs, here are some techniques you can employ to lower your tax bill:

Disposal of Long-Term Assets

‍Any crypto assets held for over a year are eligible for a 50% CGT exemption(33.33% for insurance companies and eligible super funds).

So if you’ve held some of your assets for over a year, you can sell them and pay 50% fewer taxes.

For instance, if you bought 2 ETH in tokens in your Binance wallet back in 2022 for 1,271 AUD each and sold them in 2024 for 3,921 AUD each.

The total gains of 5,300 AUD will only be considered to be 2,650 AUD and will be taxed accordingly.

Assets for Personal Use

‍According to the ATO, capital gains resulting from personal use assets are not taxed. Cryptocurrency is considered a personal use asset if it is primarily used to buy items for personal consumption.

However, if the primary purpose is an investment, generating profits, or conducting business, then cryptocurrency is not considered a personal use asset.

Unclear guidelines surrounding the classification of crypto assets as personal use assets can be a challenge.

However, by following best practices, you can increase the chances of successfully demonstrating the personal use nature of your transactions to the ATO.

• Segregate personal use crypto assets and investment assets into two wallets
• Don’t hold personal use assets for long durations
• Record all your transactions from the personal use wallet
• Use tokens directly to make purchases, never swap them for fiat currency
• Buy goods or services for personal consumption directly from the seller without the use of a payment gateway or other intermediary service for bill payment.

‍

Crypto Cost Basis Methods Australia

According to the ATO, for the average investor, any one of the LIFO, FIFO, HIFO, and ACB accounting methods can be used as long as each tax lot can be accurately identified.

However, if you are classified as a trader or someone who conducts crypto trades as a business, the ATO specifies that you should only utilize either the FIFO or the average cost basis accounting method.

It's important to align your accounting method with your investor classification to ensure compliance with the ATO guidelines.

‍Crypto Income Tax Australia

‍If you’re making an income from crypto assets, you’re liable to an income tax. There are multiple ways you can earn crypto as an income:

• Staking or mining rewards
• Strategically trading crypto assets
• Through lending activities on DeFi platforms
• Creating your NFTs and selling them
• Validating on-chain transactions and collecting prizes for them
• Earning through Play-2-Earn, Learn-2-Earn, Watch-2-Earn Web3 platforms like Brave, Coinbase Learning, Odyssey, and Axie Infinity
• Receiving airdrops
• Receiving referral rewards
• Receiving crypto as payments in exchange for a product or a service

‍

Crypto Income Tax Rates

‍Income tax rates in Australia depend on the total income made in a tax year. Given below are the income tax rates based on income:

‍

Tax Rates for FY year 2023-24

‍

Tax Rates for FY year 2024-25

‍

How to Calculate Crypto Income

‍Calculating crypto income is a pretty straightforward process, all you need to do is add all the individual gains incurred from income-generating transactions and you’ll have your taxable income base.

Tax-Free Crypto Transactions

‍In Australia, the following crypto transactions are tax-free:

• Personal use asset transactions, such as buying cryptocurrency to hold as a personal investment, are exempt from capital gains tax.
• Transferring cryptocurrency between personal wallets.
• Trading cryptocurrency for other cryptocurrencies, as long as the transaction is not part of a profit-making scheme.
• Purchasing goods and services for personal use with cryptocurrencies. 

‍

Taxed Transactions

‍In Australia, cryptocurrency transactions are subject to tax laws and are considered taxable events. Some common crypto transactions that are taxable include:

• Trading or exchanging cryptocurrencies for fiat currency (e.g. AUD) or other cryptocurrencies.
• Receiving cryptocurrency as income, such as payment for goods or services
• Purchasing goods or services with crypto assets(for non-personal use)
• Disposing of cryptocurrencies, such as selling or exchanging them for fiat currency or other cryptocurrencies.
• Mining cryptocurrency, as the reward received is considered income.
• Staking or holding cryptocurrency to receive rewards, as the rewards are considered income.

‍

Tax on Mining Crypto Australia

‍Mining crypto is not taxable if pursued as a hobbyist, however, you might owe taxes to the ATO if you are involved in mining activities as a business.

‍Mining as a Hobby

‍If you're mining cryptocurrency as a hobby, there is no need to report your income on receipt. You'll only be required to pay taxes when you eventually sell those coins.

Unlike those who mine cryptocurrency as a business, hobbyist miners don't have the benefit of deducting expenses such as equipment costs, monthly fees, and electricity bills from their taxable income.

Mining as a Business

‍If your mining activity classifies you as a business, it's mandatory to report the fair value of the received tokens as soon as you receive them.

All the figures to be reported must be in AUD, and you are entitled to claim tax deductions for expenses associated with the mining operation, such as equipment, electricity, and so on.

Tax on Staking Crypto

‍In Australia, staking rewards are considered regular income and are subject to income tax. However, the ATO is yet to offer specific guidance on this matter, leading to debates among crypto stakes.

For example, ETH 2.0 stakers faced challenges as they couldn't immediately withdraw and dispose of their assets. This created uncertainty about whether taxes should be paid based on the fair market value of the tokens upon receipt or on the day when investors could access and dispose of them.

You need to declare this income in your tax return as other income.

If you later sell, or otherwise dispose of, your staking rewards, you'll still need to pay Capital Gains Tax on any gain, just like you would if you disposed of any other crypto.

You can use the fair market value you calculated when you received your crypto as your cost basis to calculate gains and losses.

Crypto Margin Trading, Futures, and CFDs

‍Crypto margin trading, futures, and CFDs are taxed as income in Australia. The value of the asset at the time of the transaction is your tax base. The amount is converted to AUD for tax reporting.

If the trading activity is considered to be a business, then the individual is eligible to deduct related business expenses, such as trading software, internet costs, and so on.

For personal investment in Australia, individuals can only claim a capital loss from crypto margin trading, futures, and CFDs if the value of the cryptocurrency decreases.

This loss can be offset by capital gains from other investments. It is recommended to consult with a professional tax advisor to understand the specific tax implications of these activities and receive personalized advice.

Crypto Gifts and Donation Taxes

‍Gifting and donating crypto in Australia can have tax implications, but it depends on the situation. Generally, if you’re donating to a Deductible Gift Recipient (DGR), you may get a tax deduction. However, donations to non-DGRs won’t be eligible. Here’s what the ATO says about taxing crypto gifts and donations.

Giving Crypto as a Gift - Capital Gains Tax

This one might sting a bit. Whether you’re being generous or just want to offload some crypto, the ATO requires you to pay Capital Gains Tax on any profits made from giving away crypto.

Receiving Crypto as a Gift - Tax-Free

If someone gifts you crypto, consider yourself fortunate. Not only do you get the crypto, but you also don’t have to pay any tax on it. However, you should note down the fair market value of the crypto on the day you receive it. This will be your cost basis if you decide to sell or even re-gift the crypto later.

Selling Your Crypto Gift - Capital Gains Tax

Here’s the catch. While receiving a crypto gift is tax-free, selling, swapping, spending, or even re-gifting it is not. Any disposal of the crypto is taxed as a capital gain, with your cost basis being the value of the crypto on the day you receive it.

Donating Crypto - Tax-Free

In Australia, donating crypto works similarly to donating cash. If you donate to a DGR, your donation is tax-deductible. The donation amount is calculated based on the value of the cryptocurrency at the time it’s donated, and any related capital gain is exempt from tax.

NFT Taxes Australia

‍NFTs have surged in popularity over the past year, and the ATO treats them as crypto assets, similar to other cryptocurrencies. This means

NFTs are considered Capital Gains Tax (CGT) assets for investors and will follow the same tax rules as other crypto assets. How your NFT is taxed will depend on your specific situation, including whether you’re an investor or running a business.

Creating and Selling NFTs - Income Tax

‍If you’re creating and selling NFTs, how you’re taxed will depend on whether it’s seen as a hobby, an investment, or a business.

If it’s considered a business, the income from selling NFTs is treated like any other business income and will be subject to Income Tax.

It’s best to consult with a qualified accountant to understand how the ATO views your activities and what that means for your taxes.

Additionally, if you’re farming NFTs for staking rewards, this income will likely be treated similarly to DeFi staking rewards and be subject to Income Tax.

Buying, Selling, and Trading NFTs - Capital Gains Tax

‍For those not considered professional traders, Capital Gains Tax applies in the following scenarios:

1. Buying an NFT with Cryptocurrency: You’ll owe Capital Gains Tax on any profit made from the cryptocurrency you used to purchase the NFT (unless it qualifies as a personal use asset, in which case no CGT is due).
2. Selling an NFT for Cryptocurrency or Fiat Currency: You’ll need to pay Capital Gains Tax on any profit made from the sale of the NFT.
3. Swapping an NFT for Another NFT: Any gain from the NFT you’re swapping away is subject to Capital Gains Tax.

NOTE:
if an individual acquires an NFT for resale, the sale will be considered a taxable supply and may be subject to goods and services tax (GST).

‍

‍DAO Taxes

‍DAOs are member-owned communities with a shared vision. All the decisions in a DAO are made by the members in the absence of central leadership.

DAOs are new-age institutions that aim to democratise decision-making and allow people to have a say in decisions that directly affect them.

DAOs are often called the soul of Web3 and enable members to earn rewards in multiple ways. DAO contributors are rewarded for their contributions to the organization, similar to how centralized organizations pay salaries to their employees.

Moreover, DAOs pay bounties for one-time projects and redistribute any profits generated through operations.

The ATO is yet to release specific guidance on how income from DAOs is viewed from a tax perspective. We are constantly on the lookout for relevant guidelines and relevant information will be added here as soon as the guidelines hit our radar.

ICO Taxes

‍In the realm of cryptocurrencies, ICOs represent opportunities for investors to acquire tokens/coins from an unreleased crypto project.

Typically, this acquisition occurs through the exchange of conventional tokens like Bitcoin or Ethereum.

From the perspective of the ATO, this constitutes a crypto-to-crypto trade. The taxable event arises at the precise moment of the ICO transaction when you receive the newly minted tokens.

Subsequently, when you decide to sell these tokens at a later point in time, the cost base of that transaction will be determined by the cryptocurrency's value on the date of the ICO, which you initially utilized for the purchase.

DeFi Crypto Taxes Australia

‍The ATO has finally provided guidelines on how DeFi transactions are taxed for Australian investors.

According to the ATO, DeFi transactions can lead to either Capital Gains Tax or assessable income, depending on the type of transaction.

• If you're lending or adding liquidity to pools, the ATO considers these as crypto-to-crypto transactions, which means any gains are subject to Capital Gains Tax.
• When you earn new tokens through DeFi rewards or similar activities, these are treated like interest income, and the market value of the tokens is considered assessable income.
• For wrapped tokens, the ATO has clarified that wrapping your crypto triggers a Capital Gains Tax event, making any gains taxable.

This stance on wrapped tokens can be confusing since wrapped assets like BTC and wrapped BTC represent the same underlying asset.

The question arises as to whether there’s actual economic disposal when exchanged, especially since wrapping is often used to facilitate transactions on non-native blockchains to reduce fees, such as bidding for NFTs.

When to Report Crypto Taxes in Australia

‍In Australia, the tax year extends from 1 July to 30 June of the subsequent year. If you are an individual who is personally filing your tax return for the period of 1 July 2024 to 30 June 2025, the deadline for submitting your taxes is 31 October 2025.

How to Report Crypto Taxes in Australia

‍With your reconciled cryptocurrency calculations in hand, you have two options for filing your taxes in Australia.

You can choose the traditional method of filling out a paper tax form and mailing it to the ATO or you can opt for the convenient and secure online option through myTax.

This online service, associated with the ATO, offers a fast and easy way to prepare and file your tax return, helping you receive your refund sooner.

Here's a step-by-step tutorial on how to file your crypto taxes online using the myTax portal:

• Collect all the necessary information related to your cryptocurrency transactions. This includes details of each transaction such as dates, amounts, and any applicable fees. Make sure you have records of your cryptocurrency purchases, sales, trades, and any other relevant transactions.
• Access the ATO website.
• Log in to myGov Click on the "Log in" or "Sign in with myGov" button on the ATO homepage. Enter your myGov username and password to access your myGov account. If you don't have a myGov account, you will need to create one by following the provided instructions.
• Once logged in to myGov, locate and select the myTax option from the available services. This will redirect you to the myTax portal on the ATO website.
• Select the option to start your tax return for the relevant financial year (e.g., 2023-2024). Follow the prompts and provide the required information, such as your details and income sources.
• When you reach the section for declaring income, look for the category related to cryptocurrency or digital assets. Select the appropriate option to indicate that you have engaged in cryptocurrency transactions during the tax year.
• Enter the relevant details of your cryptocurrency transactions as requested in the form. This may include the type of transaction (e.g., purchase, sale, trade), dates, amounts, and any associated costs or fees. Be thorough and accurate while providing this information.
• Calculate gains or losses Based on the information provided, the myTax portal will automatically calculate the gains or losses from your cryptocurrency transactions. Ensure that the calculations are accurate and reflect your actual financial activities.
• Complete the tax return Continue filling out the remaining sections of the tax return, including any other income sources, deductions, and credits you may be eligible for. Review the entire form to ensure all information is accurate and up to date.
• Submit your tax return Once you have completed all the necessary sections, review your tax return one final time. If you are satisfied that everything is correct, submit your tax return electronically through the myTax portal. Follow any additional instructions or prompts provided.

‍

What Crypto records will the ATO want?

‍You should maintain the following records to avoid complications when filing your taxes with the ATO:

• Receipts: Save proof of all purchases, transfers, or sales of your crypto assets.
• Transaction Dates: Note down the date of each transaction.
• Transaction Details: Record the purpose of each transaction and details about the other party (such as their crypto asset address).
• Exchange Records: Keep a log of transactions on crypto exchanges.
• Value Records: Document the value of each crypto asset in AUD at the time of each transaction.
• Costs Records: Maintain records of any costs related to agents, accountants, or legal services.
• Wallet Records: Keep track of your digital wallet details and access keys.
• Software Costs: Record any expenses related to software used for managing your taxes

‍

How long to keep records

‍The ATO expects you to keep detailed records of your cryptocurrency transactions for 5 years. This period starts from the date you prepared or received the records, or from the date you completed the transactions, whichever is later.

‍How to File Crypto Taxes Using Kryptos?

Now that you’re aware of how your crypto transactions are taxed and what forms you need to fill out to complete your tax report, here’s a step-wise breakdown of how Kryptos can make this task easier for you:

• Visit Kryptos and sign up using your email or Google/Apple Account
• Choose your country, currency, time zone, and accounting method
• Import all your transactions from wallets and crypto exchanges
• Choose your preferred report and click on the generate report option on the left side of your screen and let Kryptos do all the accounting.
• Once your Tax report is ready, you can download it in PDF format.

If you still need clarification regarding the integrations or generating your tax reports, you refer to our video guide here.

‍How to Avoid Crypto Taxes in Australia?

Although there is no legal way to avoid crypto taxes entirely. You can employ some strategies to lower your tax bill in Australia.

1. Deduct your losses and trading fees: Trading fees and losses are tax-deductible in Australia, contingent on whether you’re viewed as an individual investor or a business by the ATO.
2. Deduct your mining expenses: If you’re involved in mining as a business, you can deduct mining expenses from your tax bill in Australia. You can learn more about it in the Are-you-in-business section on the ATO website.
3. Invest in Australian BTC-ETFs: A Bitcoin ETF launched on 27 April 2022, offering a tax-efficient investment option for investors. ETFs track Bitcoin's price and simplify the investment process. Some Bitcoin ETFs may distribute dividends, offering Australian investors potential tax advantages through franking credits. These credits offset corporate taxes paid by the ETF's constituent companies, reducing investors' tax liability.
4. Hold your assets: If you hold on to your assets for more than 12 months before disposing of them, you can get a 50% exemption on the capital gain incurred on the transaction.

‍
FAQs

1. Can the ATO track crypto transactions?

Yes, the ATO can track cryptocurrency transactions to some extent. The ATO has access to a range of information and data sources, including cryptocurrency exchange data, to help it identify individuals who may not have properly declared their cryptocurrency transactions for tax purposes.

In recent years, the ATO has been taking an increasingly active approach to enforcing tax obligations related to cryptocurrency transactions. This includes using data matching to identify individuals who have not declared cryptocurrency gains or who have underreported their taxable income.

‍2. Is cryptocurrency legal in Australia?

Yes, crypto is legal in Australia and is considered a capital asset(property) instead of a currency by the ATO(Australian Taxation Office) and taxed accordingly.

3. How are airdrops and forks taxed in Australia?

In Australia, airdropped and forked cryptocurrencies are considered taxable income and must be reported on an individual's tax return. The value of the airdropped or forked cryptocurrency on the date it was received is considered its cost to calculate capital gains tax when it is later sold. If the cryptocurrency is held for 12 months or more, it may be eligible for the capital gains tax discount. Moreover, suppose the airdrop or fork is part of a profit-making scheme or carried out in the course of carrying on a business. In that case, the value of the airdropped or forked cryptocurrency may be subject to ordinary income tax.

4. What happens when I move crypto between wallets, exchanges and pools?

As long as you’re moving assets between wallets or exchanges that you own, the event is not considered a taxable event. However, the transaction fees paid to move the assets are considered disposal of assets and are subjected to a capital gains tax in Australia.

Similarly, funds moved from one liquidity pool to another follow the same rule. It’s a non-taxable event in the eyes of ATO. 
However, note that it’s essential to keep track of all these transactions to accurately calculate the cost basis for all your assets and that may be an intimidating task for many as their investments are spread across wallets, exchanges, and DeFi protocols.

An intelligent step would be to use an online crypto tax tool like Kryptos, which can easily track all your transactions from across your trading and investment profile and even create legally compliant tax reports seamlessly with a click of a button. All you need to do is add all your wallets and investment profiles on the website and let the software do the job for you.

‍5. What if I can't afford my crypto tax bill?

If you cannot afford to pay your crypto tax bill in Australia, you have several options:

• You can contact the Australian Taxation Office (ATO) and request to set up a payment plan to pay off the tax debt over a longer period.
• You can request an extension of time to pay the tax debt.
• If you are experiencing financial hardship, you can apply to have your tax debt remitted (cancelled) or varied (rearranged).
• You may consider seeking assistance from a tax professional or financial advisor to help you manage your tax debt.

6. Is there a legal way to avoid taxes in Australia?

No, there is no legal way to avoid paying taxes in Australia. It is a legal obligation to accurately report all taxable income, including profits from cryptocurrency transactions, and pay the appropriate amount of tax. Failing to report income and pay the required taxes accurately can result in significant fines and penalties, as well as potential criminal charges. It's essential to comply with all tax laws and regulations in Australia and seek professional advice if necessary.

‍

All content on Kryptos serves general informational purposes only. It's not intended to replace any professional advice from licensed accountants, attorneys, or certified financial and tax professionals. The information is completed to the best of our knowledge and we at Kryptos do not claim either correctness or accuracy of the same. Before taking any tax position/stance, you should always consider seeking independent legal, financial, taxation or other advice from professionals. Kryptos is not liable for any loss caused by the use of, or by placing reliance on, the information on this website. Kryptos disclaims any responsibility for the accuracy or adequacy of any positions taken by you in your tax returns. Thank you for being part of our community, and we're excited to continue guiding you on your crypto journey!

If you live in New Zealand and happen to be involved in crypto transactions, you might owe some taxes to the IRD. And If you’re struggling to figure out how crypto taxes in New Zealand work, you’re not alone. Thousands don’t understand how crypto transactions are taxed in New Zealand and how it affects them over a tax year.

That’s why we decided to create the most comprehensive tax guide and simplify crypto taxes for investors in New Zealand. This guide touches upon every aspect of crypto taxation and goes into detail on how crypto transactions are taxed in New Zealand, how to calculate your crypto taxes, and how to report them easily.

Note that this guide will be updated regularly and will reflect any new guidelines issued by the IRD, so make sure you keep revisiting this piece to make sure you don’t miss out on important updates.

So let’s get started…

‍

How is Crypto Taxed in New Zealand?

‍

Although cryptocurrencies have been around for over a decade now, tax authorities in New Zealand started talking about them just recently towards the end of 2017. Just like most countries, New Zealand doesn't consider Bitcoin and other blockchain-based assets as legal tender and denies them the legal status of currency within the national borders. Instead, the IRD treats Bitcoin and other crypto assets as property for tax purposes.

The tax authorities have refrained from drafting new laws for crypto taxation and have issued guidelines to accommodate crypto transactions under existing income tax laws. However, the status quo might shift towards a more concrete tax regime as new legislation is being discussed by the tax authorities.

Here’s an excerpt from the recent guidelines issued by the IRD regarding the acquisition and disposal of crypto assets.

‍

“If you acquire crypto assets to dispose of them you need to pay income tax on any profit you make. For example, if you buy or mine crypto assets to sell or exchange them. If you make a loss when you sell your crypto assets you may be able to claim this loss.”

‍

Since crypto assets are considered capital assets (property), any gains incurred from their disposal are usually considered capital gains. However, these gains are considered income in New Zealand and are taxed under the regular income tax laws.

Capital gains are taxed under a progressive income tax infrastructure, with rates varying from 10.5% to 39% based on the value of your gains.

Consider the following transactions:

23/04/24 - Oliver buys 2 BTC in Binance Wallet

12/05/24 - Oliver buys 3 ETH in Binance Wallet

14/07/24 - Oliver sells 1 BTC from Binance Wallet

16/09/24 - Oliver sells 2 ETH from Binance Wallet

As evident from the above ledger of transactions, two disposals were made.

Let’s assume that both sell transactions resulted in a capital gain. And since we haven’t discussed how capital gains calculations work, we will simply consider the gains to be $21,000 for the BTC disposal and $11,000 for the ETH disposal.

Collective gain from both disposals = $32,000

This is your taxable income base.

‍

Can the IRD track crypto?

‍

Yes, the Inland Revenue Department (IRD) can track cryptocurrency transactions. Therefore,  individuals who engage in cryptocurrency transactions must keep records of their transactions and declare any income or gains made from their cryptocurrency holdings on their tax returns. The IRD can also access information from cryptocurrency exchanges and other third-party providers to track and verify cryptocurrency transactions.

‍

Crypto Gains Tax

‍

The New Zealand government does not classify cryptocurrency as a currency but rather as property. Therefore, capital gains resulting from cryptocurrency sales are subject to the same tax regulations as gains from other types of property, such as real estate or stocks. In New Zealand, there is no separate capital gains tax; instead, all capital gains are treated as income and taxed accordingly under the income tax regulations.

Selling cryptocurrency for a profit qualifies as a taxable capital gain, and it is included as part of your income for the applicable tax year.

‍

Income Tax Rate New Zealand

‍

New Zealand's tax system operates on a progressive principle, meaning that as one's earnings rise, so does the tax rate. For the 2024-2025 fiscal year, tax brackets in New Zealand range from 10.5% to a top rate of 39%.

‍

‍

How to Calculate Crypto Gains and Losses?

‍

Calculating your crypto gains or losses in New Zealand is a simple process. You subtract your cost basis (including acquisition price, gas fees, and transaction fees) from the proceeds of selling a crypto asset.

Two methods are available for calculating your cost basis: FIFO (First-In-First-Out) and ACB (Average Cost Basis). It is crucial to choose one accounting method and use it consistently for cost-basis calculations in future tax years.

Also, using LIFO accounting is not allowed in New Zealand.

A method like FIFO is convenient for accurate calculation of the purchase price when holding multiple units of the same cryptocurrency obtained at varying times and prices. FIFO entails selling the oldest acquired coins first and is widely favoured in most nations.

When arriving at the purchase price becomes challenging, a prudent strategy is to view its value as nil. However, this approach requires paying taxes on the complete sum, leading to an unwarranted increase in tax liability.

‍

Consider the following transactions:

‍

12/04/24 - Noah buys 2 BTC for $32,000 each in Binance Wallet

14/04/24 - Noah buys 3 ETH for $2,300 each in Binance Wallet

18/05/24 - Noah buys 1 BTC for $30,000 in Binance Wallet

22/06/24 - Noah buys 2 ETH for $2,500 each in Binance Wallet

13/07/24 - Noah sells 1 BTC for $40,000 from Binance Wallet

15/07/24 - Noah sells 2 ETH for $3,000 each from Binance Wallet

24/08/24 - Noah sells 2 BTC for $42,000 each from Binance Wallet

As evident from the above ledger of transactions, Noah made three disposals.

Given that we have multiple assets of the same type acquired at different times, we will use the FIFO accounting method for cost-basis calculations.

‍

1st Disposal

‍

1 BTC sold for $40,000

Since the first token acquired is the first one to be disposed of. The BTC disposed of is from the same bunch acquired on 12/024/24 for $32,000.

Cost Basis = $32,000

Disposal Amount = $40,000

Capital Gain = $40,000 - $32,000 = $8,000

‍

2nd Disposal

‍

2 ETH sold for $3,000 each

Now these ETH tokens have the cost basis of the ones acquired on 14/04/24 for $2,300

Cost basis = $2,300

Disposal Amount = $3,000

Capital Gain = $3,000 - $2,300 = $700(From 1 ETH disposal)

Gain from 2 ETH disposal = 2*700 = $1,400

‍

3rd Disposal

‍

2 BTC sold for $42,000 each

This transaction here is a bit more complicated than the above disposals because there are two different types of BTC tokens involved in the transaction.

Let’s call them BTC-1 and BTC-2.

BTC-1 was acquired on 12/02/24 for $32,000

BTC-2 was acquired on 18/05/24 for $30,000

Cost Basis for BTC-1 = $32,000

Cost Basis for BTC-2 = $30,000

Disposal Amount = $42,000

Capital Gain (BTC-1) = $42,000 - $32,000 = $10,000

Capital Gain (BTC-2) = $42,000 - $30,000 = $12,000

Total Gain = $22,000

Now, collective gain from three disposals = $8,000 + $1,400 + $22,000 = $31,400

‍

Crypto Losses

‍

Losses are a part of the game when you trade or invest in a capital asset because capital markets are largely speculative. It’s difficult to predict the market movement with 100% accuracy. Fortunately, you can offset your crypto losses against the capital gains you’ve made in a tax year.

Therefore, it’s imperative to actively track all your losses and report them to the IRD, so that you can offset your losses or carry them forward to the subsequent tax year in case you have leftover losses.

‍

Lost or Stolen Crypto

‍

In New Zealand, if you experience the theft or loss of cryptocurrency, you may be able to treat it as a capital loss for tax purposes. To claim a capital loss in such cases, you must provide evidence that the loss was not a result of voluntary disposition, such as selling or exchanging the cryptocurrency.

To claim a capital loss, you need to provide evidence of the theft or loss, such as a police report or a statement from a reputable cryptocurrency exchange, and keep records of the cost of the cryptocurrency, the date it was acquired, and the date it was lost or stolen. By doing so, you may be able to offset your capital loss against capital gains from other sources, reducing your overall tax liability.

‍

Crypto Tax Breaks New Zealand

‍

Although it’s impossible to avoid paying crypto taxes entirely, you can claim some deductions and lower your tax bill in New Zealand. Here are some ways you can reduce your tax liabilities:

‍

1. Transaction Fees Deductions

‍

In New Zealand, any additional costs associated with purchasing a crypto asset, such as transaction fees or gas fees, are considered deductible expenses. These expenses can be offset against your gains, helping to reduce your overall tax liability. Although transaction fees and gas fees may seem insignificant on an individual basis, when accumulated over a year, they can add up to a significant amount.

‍‍

2. Capital Loss Deductions

‍

Losses aren't always a setback. If you’ve incurred losses while trading or investing in crypto assets during a tax year, you can offset them against your capital gains and claim a tax deduction. To do so, ensure you maintain a detailed record of all your losses and report them to the IRD.

‍

Crypto Cost Basis Method

‍

The examples we’ve used so far are primitive and don’t represent real-world transactions. They are far more complex and have multiple assets of the same kind acquired at different dates and prices. For such complex transactions you have no other choice but to rely on specialised accounting methods as specified by the individual tax authority of your country.

The IRD allows investors to use one of the following methods for cost-basis calculations:

1. The FIFO Method is where the first asset you buy is the first one you sell.
2. The ACB Method is where the cost basis for an asset is taken to be the average acquisition price.

You are free to use any one of the two accounting methods, just make sure you stick to the same accounting method in the subsequent tax years to avoid discrepancies in tax reports.

Here’s an example to better understand how these accounting methods work.

‍

Consider the following transactions:

‍

03/01/24 - Amelia bought 1 BTC for $28,000 in Binance Wallet

14/02/24 - Amelia bought 1 BTC for $30,000 in Binance Wallet

19/03/24 - Amelia bought 1 BTC for $32,000 in Binance Wallet

04/06/24 - Amelia sold 1 BTC for $40,000 from Binance Wallet

‍

1. Using FIFO Accounting

‍

The first BTC was acquired on 03/01/24 for $28,000So the cost basis is $28,000 for this disposalDisposal Amount = $40,000Capital Gain = $40,000 - $28,000 = $12,000

‍

2. Using ACB Accounting

‍

Since there are three instances where Amelia bought BTC.We need to calculate the average acquisition price.1st acquisition = $28,0002nd acquisition = $30,0003rd acquisition = $32,000Average Acquisition Price = ($28,000 + 30,000 + $32,000)/3 = $30,000Cost basis = $30,000Disposal Amount  = $40,000Capital Gain = $40,000 - $30,000 = $10,000

‍

Cryptocurrency and Tax Residency

‍

Residents, Non-residents, and Returning residents are taxed differently in New Zealand.

‍

Non-Residents for Taxes

‍

The ambit of crypto taxes in New Zealand is not properly defined for non-residents. A non-resident in New Zealand only has to pay taxes on income that has been sourced from New Zealand. However, the term “source” for tax purposes has not been defined properly for non-residents, leaving behind a trail of uncertainties, confusion, and tax loopholes.

However, as far as crypto assets are concerned, any assets held in NZD, or traded for NZD are considered to be taxable according to the IRD. To keep taxation of non-residents streamlined, most countries including New Zealand have double tax agreements, and these profits usually attract tax liabilities in a person’s home country.

Any income earned outside New Zealand is considered non-taxable for non-residents.

‍

New and Returning Residents

‍

New and returning residents in New Zealand are granted a “grace period” by the IRD that lasts for 4 years and they are considered “transitional tax residents”. And during this period they have to pay zero taxes on a majority of the offshore income. While it’s still unclear whether revenue generated from crypto assets is included in the list of non-taxable offshore income, the IRD is considering the prospect of issuing new guidelines regarding their taxation. But until they do, it’s a great area for new and returning residents.

‍

Residents for Tax Purposes

‍

Residents in New Zealand are taxed regardless of the source of their income. And this includes crypto assets. If you live in New Zealand and you have bought, sold, mined, or traded crypto assets during a tax year, you have to report these transactions to the IRD on your tax return and pay your taxes.

‍

Tax-Free Crypto Transactions

‍

In New Zealand, the following are some tax-free cryptocurrency transactions:

• If you use cryptocurrency to purchase goods or services for personal use and the value of the transaction is $60,000 or less, it is considered tax-free.

• If you earn cryptocurrency through mining, this income is tax-free.

• If you donate cryptocurrency to a registered charity, the transaction is tax-free.

• If you gift cryptocurrency to someone, it is tax-free.

‍

Taxed Crypto Transactions

‍

Listed below are some of the taxable crypto transactions in New Zealand:

• If you use cryptocurrency to conduct business activities, any profits you make from these activities are subject to income tax.

• If you sell or trade cryptocurrency for a profit, the profit is considered a capital gain and is subject to capital gains tax.

• If you receive cryptocurrency as a form of payment for your work, it is considered taxable income and must be declared on your tax return.

• If you purchase cryptocurrency as an investment, gains made from the investment are subject to capital gains tax.

‍

Tax on Mining Crypto New Zealand

‍

Crypto mining is considered a service by the IRD, and any income incurred from crypto mining is taxable according to the latest update on the crypto mining guidelines. And since it is categorised as a service by the IRD, the provisioning of this service also attracts a GST(Goods and Service Tax) in New Zealand.

However, the GST is zero in almost all cases because the service is offered to a blockchain set up outside New Zealand. The tax rate that applies to the income made through mining activities depends on the category in which your mining activities fall.

There are four categories your mining activities might fall into:

1. Mining as a hobby
2. Mining as a business
3. Mining for ordinary income
4. Mining as a profit-making scheme

You can look at how the IRD categorises mining activities here.

‍

Taxes on Crypto Staking

‍

The IRD groups crypto mining and crypto staking under the same bucket and considers both a service. The tokens received as a staking reward are considered income and therefore attract income tax in New Zealand.

It’s important to note that the tokens are taxed at the time you receive them as a reward and are also taxed at the time of disposal if you sell them for a profit.

Staking activities, similar to crypto mining, may be viewed by the IRD as a profit-making venture, a business operation, a source of ordinary income, or simply a leisure activity. If deemed a hobby by the IRD, your staking rewards and any future sales profits will be exempt from taxation. However, it's important to note that the criteria for classifying an operation as a hobby are stringent.

‍

Taxes on Buying and Selling Crypto

‍

Buying crypto with fiat currency is not a taxable event, according to the IRD. Crypto assets do not attract tax liabilities unless they’re disposed of. Any sale, trade, exchange, or transfer of a cryptocurrency, as well as the conversion of crypto to fiat currency, is considered disposal and may be subject to capital gains tax. The tax treatment of crypto assets may vary based on the specific circumstances of each case.

So let’s say you swap ETH for BTC. This event is taxable because you have disposed of your BTC holdings. To calculate the amount you owe taxes on, you need to first identify your cost basis(the cost incurred to acquire an asset) from back when you bought these ETH tokens and then subtract it from the price of BTC at the time of acquisition. The difference between these two assets is what you pay taxes on.

People often assume that the only way to attract tax obligations is by selling their assets, and that leads to underreporting on tax reports and unsolicited legal complications for people.

‍

Crypto Gifts and Donation Taxes

‍

Gifting crypto is a taxable event in New Zealand. If the value of the gifted assets has appreciated since the acquisition, you are required to pay income tax on the appreciated value. The person receiving the gifts is not liable to pay any taxes. However, any gains incurred by disposing of the assets are considered income and taxed accordingly.

There’s no specific guidance on how crypto donations are taxed in New Zealand. However, donations in general are tax deductible and you can claim a donation credit of up to 1/3d of the donated value given that you’ve made a taxable income during the tax year.

‍

Crypto Margin Trading, Futures and CFDs

‍

Understanding cryptocurrency futures and margin trading taxes in New Zealand is challenging as there is no regulatory framework. The best approach is to study how other countries handle these transactions and seek the advice of a tax professional. As a trader or investor, a prudent step would be to consult a tax advisor if you are uncertain about how to report your taxes.

Exchanges trading futures contracts keep a record of your realized profits and losses (P&L) in the settlement currency, usually USD, USDT or BTC. If you score a win of $1000, your account will reflect the victory and be taxed as income. On the flip side, if you incur a loss, it'll be deducted from your account and can be used to balance out other gains. Essentially, you'll only be taxed on the net gains from your cryptocurrency futures trading endeavours in a given financial year.

‍

ICO Taxes

‍

ICOs are special events that allow investors to acquire tokens from unreleased projects in exchange for mainstream tokens like BTC and ETH. They’re similar to IPOs in traditional markets.

While the IRD has not issued specific guidelines for individuals participating in Initial Coin Offerings (ICOs), it is reasonable to assume that ICOs are treated similarly to crypto-to-crypto trade for tax purposes. In this context, participating in an ICO involves sending cryptocurrency in exchange for tokens from a new project. The general principle is to consider the transaction as if you sold your crypto for the value of the ICO token in the local currency. The cryptocurrency you send is subject to personal income tax, and the received token inherits its cost basis.

‍

DAO Taxes

‍

DAOs are member-owned communities with a shared vision. All the decisions in a DAO are made by the members in the absence of central leadership. DAOs are new-age institutions that aim to democratise decision-making and allow people to have a say in decisions that directly affect them. DAOs are often referred to as the soul of Web3 and enable members to earn rewards in multiple ways. DAO contributors are rewarded for their contributions to the organization, similar to how centralized organizations pay salaries to their employees. They also pay out bounties for one-time projects and redistribute any profits generated through operations.

The IRD has yet to release guidelines on the taxation of income received from DAOs. However, it’s reasonable to assume that income from DAOs will be treated as regular income for tax purposes.

‍

NFT Taxes New Zealand

‍

According to the IRD, NFTs are similar to crypto assets because they are built on the same technology and exist on distributed ledgers. However, they’re not the same as they are unique and non-fungible.

NFTs are considered a service for GST purposes. According to the IRD:

‍

“NFTs are classified as a service for GST. Selling NFTs is subject to GST so you need to register for GST if you sell more than $60,000 worth of NFTs in 12 months. If the NFTs are sold to people outside of New Zealand the sales are zero-rated for GST purposes.”

‍

Also, some smart contracts governing the sale and transfer of NFTs are encoded so that every time the NFTs are sold in an open market, the creator receives royalties. These royalties are considered income for tax purposes and are subjected to capital gains tax.

As per the IRD guidelines, you’ll have income tax liabilities on the sale of NFTs if:

• your business creates NFTs
• you buy and sell NFTs to make a profit
• you acquired NFTs for disposal.

NFTs offer a unique advantage over crypto assets, as they can be not only used but also enjoyed. If you purchase NFTs for personal use, you won't have to pay any taxes when you dispose of them. However, if you acquire NFTs as an investment, it's important to have clear documentation showing your intentions at purchase.

‍

DeFi Crypto Taxes New Zealand

‍

In New Zealand, the tax treatment of DeFi transactions is determined by the nature of the transaction and the individual's circumstances. DeFi transactions, like any other investment, may be subject to income tax, capital gains tax, or goods and services tax (GST) depending on the specific circumstances of the transaction.

Income tax may apply to the profits earned from DeFi transactions, and capital gains tax may apply to the gains made from disposing of DeFi assets. GST may apply to DeFi transactions involving the supply of goods or services.

‍

When to report Crypto Taxes in New Zealand?

‍

In New Zealand, the tax year stretches from April 1st to the following March 31st. So, if you're compiling your tax return for the 2024/2025 fiscal year, ensure submitting it by July 7th, 2025. It's worth keeping in mind that if you submit any filings past the deadline, it could result in fines and additional charges.

‍

How to file crypto taxes in New Zealand?

‍

In New Zealand, you can file your cryptocurrency taxes through the Inland Revenue Department (IRD). The IRD requires that you declare all income, including income from cryptocurrency transactions, on your tax return.

There are two ways you can file crypto taxes in New Zealand:

1. Using the online portal myIR
2. Using physical forms

People usually prefer the online portal over physical forms as it is easy to track and edit.

‍

What crypto records will the IRD want?

‍

The IRD has released specific guidelines regarding record-keeping for taxpayers. You might need the following records when filing your tax returns:

• Name of the asset involved in transactions
• Date of the transaction
• Type of transaction (acquisition, disposal, swap, etc.,)
• Quantity of tokens
• The value of the cryptocurrency in NZD at the time of the transaction
• Total units of each cryptocurrency held at the beginning and end of the year
• Exchange records and other relevant statements
• Wallet addresses of your digital wallets

‍

In the event of an audit by the IRD, it's crucial to have detailed records of all your cryptocurrency transactions on hand. As per current tax regulations, these records must be kept for at least seven years, even if you no longer possess any cryptocurrency. Failing to produce these records during an audit can result in consequences.

‍

How to Avoid Crypto Taxes in New Zealand

‍

Although there’s no legal way to avoid crypto taxes entirely, you can employ some strategies to lower your tax bill in New Zealand without getting into trouble.

• Transaction fees and gas fees paid when buying crypto assets are deductible costs that can be used to offset gains and reduce tax obligations. Despite appearing minimal individually, these fees can accumulate to a substantial amount over time.

• Crypto losses can be offset against capital gains, leading to tax deductions. Keep detailed records of losses and report them to the IRD for eligibility.

• Donations in general are tax deductible in New Zealand and you can claim 1/3rd of your donation amount as a tax credit, given that you’ve made a taxable gain in the tax year.

‍

FAQs

‍

1. What happens if you don’t report cryptocurrency on your tax return?

‍

If you don't report cryptocurrency on your crypto taxes in New Zealand, it can result in penalties and fines from the Inland Revenue Department (IRD). The IRD can assess tax liabilities and issue fines for non-compliance, and if the non-compliance is found to be intentional, there could even be criminal charges brought against the individual. It's important to accurately report all income, including from cryptocurrency, to avoid these consequences.

‍

2. How to file crypto taxes with the IRD?

‍

There are two ways you can file crypto taxes in New Zealand:

3. Using the online portal myIR
4. Using physical forms

People usually prefer the online portal over physical forms as it is easy to track and edit.

‍

3. Is Crypto Taxable in New Zealand?

‍

Yes, crypto transactions are taxable in New Zealand. Cryptocurrency gains are treated as taxable income and subject to income tax. Moreover, transactions including buying and selling, are subject to goods and services tax (GST).

‍

4. Is cryptocurrency legal in New Zealand?

‍

Yes, cryptocurrency is legal in New Zealand. The New Zealand government has taken a relatively relaxed approach to the regulation of cryptocurrencies, and there are currently no specific laws in place that govern the use of cryptocurrencies.

However, the Reserve Bank of New Zealand and the Financial Markets Authority have issued warnings to investors about the risks associated with investing in cryptocurrencies. Additionally, the Inland Revenue Department (IRD) has issued guidelines on the tax treatment of cryptocurrencies, which requires individuals to report any income derived from cryptocurrencies as taxable income.

‍

All content on Kryptos serves general informational purposes only. It's not intended to replace any professional advice from licensed accountants, attorneys, or certified financial and tax professionals. The information is completed to the best of our knowledge and we at Kryptos do not claim either correctness or accuracy of the same. Before taking any tax position/stance, you should always consider seeking independent legal, financial, taxation or other advice from professionals. Kryptos is not liable for any loss caused by the use of, or by placing reliance on, the information on this website. Kryptos disclaims any responsibility for the accuracy or adequacy of any positions taken by you in your tax returns. Thank you for being part of our community, and we're excited to continue guiding you on your crypto journey!

Are you a Spain resident and wish to understand the rules governing crypto taxation and how they affect you? Then you’ve come to the right spot. This tax guide will address questions like how crypto transactions are taxed in Spain and how much taxes should you pay on your crypto transactions. And How to report your taxes to the Agencia Tributaria.

For individuals involved in trading or investing in crypto assets, it is crucial to familiarise themselves with the guidelines and regulations governing the taxation of these transactions. Staying informed about the tax rules will help you avoid potential legal and tax implications when filing your tax report. As the landscape of crypto taxation continues to evolve worldwide, it is essential to understand that Spain is also implementing its regulations in this regard. By staying up-to-date with the latest developments, you can ensure compliance with the tax requirements in Spain related to crypto assets.

This guide is comprehensive and will be updated regularly as the tax authorities keep updating the guidelines. So make sure you go through the entire guide thoroughly to avoid missing out on the pivotal aspects of crypto taxation.

So let’s get started…

‍

How are crypto transactions taxed in Spain?

‍

Agencia Tributaria, the Spanish tax authority defines Bitcoin and other crypto assets as:

‍

“a digital representation of value that is neither issued nor guaranteed by a central bank or public authority, is not necessarily associated with a legally established currency and does not have the legal status of currency or money, but is accepted as a medium of exchange and can be transferred, stored or traded electronically.”

‍

According to the latest guidelines from Agencia Tributaria, capital gains or losses from the sale of cryptocurrencies are treated as savings income for tax purposes. The taxation rules remain the same, whether you received fiat currency or another cryptocurrency after disposal.

‍

The categorisation of crypto assets as property makes them liable for four kinds of taxes in Spain:

‍

1. Savings Income Tax
2. Wealth tax
3. Inheritance and Donation Tax

‍

Let’s dissect them one at a time.

‍

Savings Income Tax(CGT)

‍

Since crypto is considered a property and not a currency by tax authorities in Spain, the disposal of crypto assets attracts a capital gains tax, also known as the Savings Income tax.

The following transactions are considered to be a disposal of crypto assets by the Agencia Tributaria:

‍

1. Selling crypto for Fiat
2. Trading crypto for another cryptocurrency
3. Gifting crypto to other people

‍

Depending on the size of gains you’ve made, you will be taxed according to the following rates:

‍

‍

Since Spain has a progressive tax infrastructure, you don’t pay a flat rate on your capital gains. You only pay a higher tax rate on the extra income.

‍

General Taxable Income

‍

Any income that’s not a savings income is by default assumed to be general taxable income for Spanish citizens and attracts a progressive income tax. Any income made from the following transactions is considered General taxable income by Spanish tax authorities:

‍

1. Any income not considered savings income.
2. Mining Crypto

‍

Just like savings income, progressive tax rates apply to general income, which contains both a state tax rate and a local tax rate approved by each autonomous community in Spain. As a result, the applicable tax rate may vary between autonomous communities.

‍

The general income tax rates are as follows:

‍

‍

Wealth Tax

‍

Like Norway, Netherlands, and Italy, Spain also levies a wealth tax on its citizens at the end of the tax year. It applies to individuals who are Spain's residents and those who own assets in the country, regardless of their place of residence. The tax rate ranges from 0.2% to 2.5% based on the individual net worth. It is primarily governed by the state, however, autonomous communities can establish independent guidelines for wealth taxation.

To calculate the wealth tax you owe to tax authorities, you need to calculate your taxable base first. Your taxable base is the total worth of your assets after all permissible deductions.

‍

Here’s a list of permissible deductions while calculating wealth tax:

‍

• Every Autonomous Community can set its minimum amount exempt from taxation. You can get more details from the website of the autonomous community.

• If an autonomous community fails to set its tax exemption threshold, a default exemption of €700,000 will be in effect.

• Your primary residence, be it a house or apartment, is eligible for a tax exemption of up to €300,000.

• Family company stakes and business assets may be exempt, provided certain criteria are fulfilled.

‍

Given below are tax rates for autonomous communities in Spain:

‍

• Catalonia: between 0.21% and 3.48% tax.
• Asturias: between 0.22% and 3% tax.
• Region of Murcia: between 0.24% and 3% tax.
• Andalusia: between 0.20% and 2.5% tax.
• Cantabria: between 0.24% and 3.03% tax
• Community of Valencia: between 0.25% and 3.5% tax
• Balearics: between 0.28% and 3.45% tax
• Extremadura: between 0.3% and 3.75% tax

‍

Inheritance and Donation Tax

‍

Spain has a gift and inheritance tax, also known as Impuesto Sobre Donaciones y Sucesiones, a tax imposed on transfers of wealth as gifts and inheritances. The tax rate depends on the value of the asset being transferred, the relationship between the giver and the recipient, and the autonomous community in which the recipient resides. But in general, the taxable rate will vary between 7% to 36.5%.

Exemptions and reductions are available for transfers between close relatives, such as spouses and children. The Spanish government sets the general framework for the gift and inheritance tax, but each autonomous community can establish its tax rates and exemptions.

‍

Can the Agencia Tributaria track crypto?

‍

Yes, it can. The Agencia Tributaria has access to information from cryptocurrency exchanges, wallets, and other platforms to identify taxable transactions. This information can be used to verify if taxpayers have reported all of their taxable crypto transactions and to identify any discrepancies or underreporting. As a result, it is important for taxpayers to accurately report all of their cryptocurrency transactions to avoid any penalties or fines.

‍

Savings Income Tax

‍

Acquiring crypto is not a taxable event in Spain. However, since crypto is considered a type of property by the Spanish tax authorities, the disposal of crypto assets is considered a capital gain and attracts tax liabilities.

In general, capital gains made by individuals are taxed at a rate in the range of 19% or 28% depending on the gain, while gains made by companies are taxed at a rate of 25%. However, certain exemptions and reductions may apply.

‍

Consider the following transactions:

‍

13/01/24 - Antonio bought 3 BTC in the Binance Wallet

11/02/24 - Antonio bought 4 ETH in the Binance Wallet

18/04/24 - Antonio received 6.25 BTC as mining rewards in Binance Wallet (Total Value Є1,25,000)

23/05/24 - Antonio sold 1 BTC from Binance Wallet (Capital Gain = Є10,000)

21/06/24 - Antonio sold 1 ETH from Binance Wallet (Capital Gain = Є2,000)

01/08/24 - Antonio received 2 BTC as a gift in Binance Wallet (Perceived Value of the Gift Є50,000)

As evident from the above ledger of transactions, two disposals were made.

Since cryptocurrencies are treated as property in Spain, their disposal attracts a savings income tax.

So collective gain from both disposals = Є12,000

Since the total gain lies between Є6,000 and Є50,000, a 21% CGT will be levied on the gain. So Antonio owes Є2,520 in CGT to the tax authorities.

Now, Antonio received 6.25 BTC as mining rewards. Mining rewards are perceived as general taxable income in Spain, so the total value of the rewards (Є1,25,000) will attract a GIT (General Income Tax) based on the tax bracket it falls in.

As for the 2 BTC received by Antonio with a total perceived value of Є50,000, an inheritance and Donations Tax will be levied on the value.

‍

How to Calculate Crypto Gains and Losses

‍

You can calculate your crypto gains or losses easily. The first step would be to find the cost basis for your assets which is the price you paid to acquire the crypto asset, including any gas fees or transaction fees paid in addition to the asset’s market value. Once you have that figured out, you can move on to the next step.

Your capital gain or loss is simply the difference between your cost basis and the value of your asset at the time of disposal. If the difference is positive, it’s considered a capital gain and if it’s negative, it is a capital loss.

‍

Consider the following transactions:

‍

13/01/24 - Pablo buys 1 BTC for Є20,000 in Binance Wallet

19/01/24 - Pablo buys 2 ETH for Є2,100 each in Binance Wallet

21/02/24 - Pablo buys 1 BTC for Є22,000 in Binance Wallet

19/04/24 - Pablo sells 1 BTC for Є25,000 from Binance Wallet

24/06/24 - Pablo sells 2 ETH for Є2,500 each from Binance Wallet

As evident from the above transactions, Pablo made 2 disposals, let’s calculate the gains/losses incurred by Pablo from these disposals one at a time.

‍

1st Disposal

‍

1 BTC sold for Є25,000

Now since BTC tokens were acquired at two separate instances for different prices, we need to use a specialised accounting method to calculate the cost basis for this transaction. The Spanish authorities recommend using the FIFO or the First-In-First-Out accounting method for cost-basis calculations, stating that the first asset you buy is the first one you sell.

Accounting methods have been discussed in detail later in the guide.

So the cost basis for this transaction comes out to be Є20,000 because this is what Pablo paid to acquire the first BTC.

Cost Basis = Є20,000

Disposal Amount = Є25,000

Capital Gain = Є25,000 - Є20,000 = Є5,000

‍

2nd Disposal

‍

2 ETH sold for Є2,500 each

This is a pretty straightforward disposal since ETH tokens were acquired in only one instance.

Cost Basis = Є2,100

Disposal Amount = Є2,500

Capital Gain = Є2,500 - Є2,100 = Є400 (For 1 ETH)

Total Gain from both ETH = 2 * Є400 = Є800

Collective gain from both disposals = Є5,800

‍

Crypto Losses

‍

When you trade or invest in speculative capital markets, losses are inevitable. However, losses aren’t always bad. You can use your capital losses from crypto assets to reduce your tax bill by offsetting them against your gains. You can write off all your losses as long as you’ve made these losses in the same tax year as the gains.

If you carry your losses to a subsequent tax year, you can only use 25% of the net loss to reduce your tax bill. To write off capital losses in Spain, you will need to provide evidence of the sale of the asset, such as a brokerage statement or other documentation and meet any other requirements established by the Spanish tax authorities.

‍

Lost or Stolen Crypto

‍

In Spain, there's a chance you can deduct a lost or stolen cryptocurrency as a tax loss, but it depends on various elements, including the country's tax laws and the situation surrounding the loss. To claim a tax loss on lost or stolen cryptocurrency, you must have evidence of the loss, such as a report from the police or exchange where the cryptocurrency was held.

Furthermore, the tax laws in Spain may have specific regulations for reporting and claiming losses involving cryptocurrencies, so it would be wise to seek advice from a tax expert. You should remember that declaring a tax loss for lost or stolen crypto can be a complicated process and may not always be possible.

‍

Crypto Cost Basis Method Spain

‍

In Spain, the FIFO (first in, first out) method is employed when calculating your taxable income. This means that the first asset you buy is considered the first asset you sell, and the crypto taxes are calculated based on this original cost.

If you need more clarity on using the FIFO accounting method to calculate your crypto taxes you can refer to this article here.

‍

Consider the following transactions:

‍

13/01/24 - Carlos bought 1 BTC for Є21,000 in Binance Wallet

15/02/24 - Carlos bought 1 BTC for Є23,000 in Binance Wallet

17/06/24 - Carlos sold 1 BTC for Є25,000 in Binance Wallet

As evident from the above ledger, Carlos acquired BTC tokens at two separate instances for different prices, now since we’re using the FIFO accounting method, the cost basis for this disposal would be Є21,000.

Cost Basis = Є21,000

Disposal Amount = Є25,000

Capital Gains = Є25,000 - Є21,000 = Є4,000

‍

How to Calculate Crypto Income

‍

Calculating your taxable income from crypto assets in Spain is a straightforward process. Start by summing up all your capital gains from the sale or disposal of your crypto assets. Next, offset any capital losses you have incurred against these gains. The resulting amount after offsetting the losses is your taxable income from crypto assets. It's important to note that only the net capital gains (gains minus losses) are subject to taxation. By accurately calculating your taxable income, you can fulfil your tax obligations and ensure compliance with the tax regulations in Spain.

‍

Tax-Free Crypto Transactions

‍

Not all crypto transactions attract tax liabilities. The following transactions are tax-free in Spain:

• If you give cryptocurrency to someone, it may be exempt from taxes until it meets the criteria established by Spanish tax law.

• Holding crypto is also tax-free in Spain unless you meet the wealth tax threshold.

• Transfers of cryptocurrency between your wallets or exchanges may not be subject to taxes in Spain.

‍

Taxed Transactions

‍

If you’ve been a part of any of the transactions listed below, you might owe some taxes to the Spanish tax authorities:

• If you trade one cryptocurrency for another or exchange it for fiat currency, you may be subject to taxes on any capital gains or profits from the transaction.

• If you sell cryptocurrency for a profit, the profit may be considered a capital gain and subject to taxes in Spain.

• If you use cryptocurrency for business operations, such as accepting it as payment for goods or services the transactions may be subject to taxes.

• If you earn cryptocurrency through mining, the rewards may be considered taxable income.

‍

Tax on Mining Crypto Spain

‍

The Agencia Tributaria is silent on the taxation of cryptocurrency earned through mining operations. However, as many other countries consider mining rewards equivalent to regular income, it is best to report it in your tax return, as you are effectively compensated for a service. This approach is likely the safest option.

We do suggest seeking help from an experienced tax professional to better understand how mining rewards are viewed from a tax perspective.

‍

Tax on Staking Crypto

‍

The Agencia Tributaria is yet to release specific guidelines on the taxation of staking rewards. However since most countries in the vicinity treat mining and staking rewards similarly from a tax perspective, any staking rewards will probably be taxed as investment income and should be recorded at fair market value at the time of receipt.

However, we do suggest seeking advice from an experienced tax accountant to avoid legal trouble in the future.

‍

Crypto Margin Trading, Futures and CFDs

‍

In Spain, the tax treatment of margin trading, futures, and Contracts for Difference (CFDs) depends on the classification of the investor. If you’re a retail investor, any profits from these financial instruments are taxed as capital gains. And If you’re a professional trader, the profits are taxed as business income.

For retail investors, capital gains are taxed at 19% for gains up to €6,000 and 23% for gains over €50,000 and €200,000. In addition, Spain has a progressive tax system, so the more you earn, the higher the rate will be.

For professional traders, business income is taxed at the normal corporate tax rate of 25%. However, it may be possible to qualify for a reduced tax rate of 20% under certain conditions.

‍

Crypto Gifts and Donation Taxes

‍

When an individual inherits cryptocurrencies, it is important to include them in the ISD (Inheritance and Gift Tax) statement.

Similar to the Wealth Tax, the taxation of inherited or gifted cryptocurrencies depends on the amount received and the specific jurisdiction. Each Autonomous Community in Spain establishes its tax rate for inherited and gifted assets. However, as a general guideline, the taxable rate typically ranges from 7% to 36.5%. The specific rate applied will vary accordingly.

‍

NFT Taxes Spain

‍

In Spain, the taxation of Non-Fungible Tokens (NFTs) is determined based on the specific use and nature of the NFT. NFTs can be considered a means of payment, a work of art, or a financial asset.  NFTs are considered a financial asset, they are subject to capital gains tax.

‍

ICO Taxes

‍

ICOs are special events that allow investors to acquire tokens from unreleased projects in exchange for mainstream tokens like BTC and ETH. ICOs are similar to IPOs in traditional markets and are viewed as crypto-to-crypto trades for tax purposes across jurisdictions.

Therefore, it is highly probable that any crypto assets received through ICOs will be viewed as a crypto-to-crypto trade and will be subjected to capital gains tax or Savings Income Tax in Spain. However, there are no specific guidelines in this regard. Hence. We do suggest seeking the advice of experienced tax professionals to better understand how such transactions are taxed.

‍

DAO Taxes

‍

DAOs are member-owned communities with a shared vision. All the decisions in a DAO are made by the members in the absence of central leadership. DAOs are new-age institutions that aim to democratise decision-making and allow people to have a say in decisions that directly affect them. DAOs are often called the soul of Web3 and enable members to earn rewards in multiple ways. DAO contributors are rewarded for their contributions to the organization, similar to how centralized organizations pay salaries to their employees. They also pay out bounties for one-time projects and redistribute any profits generated through operations.

The Agencia Tributaria is yet to release any guidance on the taxation of income from DAOs, we suggest seeking the advice of an experienced tax professional to understand better how such transactions are viewed from a tax perspective.

‍

DeFi Crypto Taxes Spain

‍

Agencia Tributaria is yet to release clear guidelines around the taxation of DeFi transactions. Inferring from the existing guidelines and tax rules, we can say the following:

1. Any income made from DeFi transactions shall be subjected to income tax
2. Any income made from crypto-to-crypto swaps, trades, and liquidity farming shall be subjected to savings income tax.

‍

Taxes on buying and selling crypto in Spain

‍

Whether or not buying crypto is taxable depends on the nature of your transaction. If you’re using fiat currency to buy crypto assets, the event is non-taxable. However, if you buy a crypto asset and pay for it using another crypto asset, the event is considered a disposal of a capital asset. It attracts a Savings Income Tax ranging from 19-28% depending on the size of your income.

Selling cryptocurrency, regardless of the type of currency you receive is deemed a taxable event. So, when you swap a cryptocurrency for euros, stablecoins, or any other crypto asset, it's necessary to calculate the capital gains from the cryptocurrency sold.

‍

How are Airdrops and Forks taxed in Spain?

‍

The Spanish Tax Agency has not issued any official guidance on the taxation of cryptocurrency airdrops and forks. However, as a precautionary measure, to recognize income as per the fair market value, at the time of receipt.

It is advisable to consider crypto received from airdrops and forks as taxable income under personal income tax.

‍

How to report crypto taxes in Spain?

‍

You can use Form 100 ( Modelo 100) to declare all your income to the tax agency in Spain, and since capital gains are considered a part of your income, you can report all your capital gains and losses through this form.

There’s been a bit of confusion regarding the declaration of foreign assets worth more than €50.000 using the Modelo 720 declaration form but the recent notifications from the Agencia Tributaria clarify that crypto assets are not included in the list of financial assets that must be reported using this form.

‍

How to file your crypto taxes in Spain?

‍

Once you’ve successfully calculated your cost basis and the collective taxable income across all your transactions, you need to fill up the form called Modelo 100 and submit it to the Agencia Tributaria.

You can do this physically or through their online portal called Renta Online which allows you to fill, edit, and submit your tax forms from the comfort of your home.

‍

What crypto records will the Agencia Tributaria want?

‍

The Spanish Tax Agency, AEAT, mandates that thorough documentation of cryptocurrency transactions be retained for 5 years. This requirement applies from the later of either the date when the records were prepared or obtained or the completion of the transactions they relate to. The following information should be included in these records:

• The date of each cryptocurrency transaction
• The value of the cryptocurrency in Euros at the time of the transaction, which can be obtained from a reputable online exchange
• The purpose of the transaction and the identity of the other party involved, even if it is just a wallet address.

‍

FAQs

‍

1. What is the deadline to file taxes in Spain?

‍

In Spain, the tax year follows the standard calendar year, starting on January 1st and ending on December 31st. To keep up with tax obligations, Spanish income tax returns for the previous year must be submitted by June 30th. This means, that for the 2024 tax year, the deadline for submitting your tax return is June 30th, 2025.

‍

2. Who can help you calculate your crypto tax in Spain?

‍

Although you can calculate your crypto taxes on your own, or have a tax accountant do it for you, there’s a high chance that you might miss reporting on your tax report and that may lead to some legal complications. It is advisable to use an online tax calculator like Kryptokatt that can auto-fetch all your transactions from your digital wallets and investment profiles and generate a legally compliant tax report for you within minutes saving you thousands in consulting fees.

‍

3. How is Crypto Staking Taxed in Spain?

‍

Spain doesn’t have clear guidelines on the taxation of cryptocurrency staking rewards. However, because staking rewards are similar to mining rewards, it's advisable to treat staking rewards as general income and report it on your tax return, just like you would with mining rewards. This is the most correct and prudent approach.

‍

4. Is crypto taxable in Spain?

‍

Yes, cryptocurrency is taxable in Spain. According to Spanish tax law, any capital gains obtained from the sale of cryptocurrency are considered taxable income and are subject to taxation. The tax rate varies based on the individual's tax bracket, and the applicable tax rate can range from 19% to 26%. It's essential to consult with a tax professional for specific questions about your tax situation.

‍

All content on Kryptos serves general informational purposes only. It's not intended to replace any professional advice from licensed accountants, attorneys, or certified financial and tax professionals. The information is completed to the best of our knowledge and we at Kryptos do not claim either correctness or accuracy of the same. Before taking any tax position/stance, you should always consider seeking independent legal, financial, taxation or other advice from professionals. Kryptos is not liable for any loss caused by the use of, or by placing reliance on, the information on this website. Kryptos disclaims any responsibility for the accuracy or adequacy of any positions taken by you in your tax returns. Thank you for being part of our community, and we're excited to continue guiding you on your crypto journey!

Are you among the many Swedish citizens involved in cryptocurrency transactions and unsure about the tax implications?

Don't worry, you're not alone!

Thousands of people are confused about how their crypto activities are taxed in Sweden and how this affects their tax obligations. That's why we've created a comprehensive guide to simplify the complexities of crypto taxation in Sweden for you.

Our guide covers every aspect of crypto taxation, including how to calculate your crypto taxes and report them easily. We'll also keep this guide up-to-date with the latest guidelines from the Skatteverket, so you don't miss out on any crucial updates. So let's dive in and demystify the world of crypto taxes in Sweden.

‍

‍

How are Cryptocurrencies Taxed in Sweden?

‍

According to Skatteverket, Bitcoin and other cryptocurrencies are classified as property rather than currency. Consequently, any sale or disposal of crypto assets in Sweden is subject to capital gains tax or income tax. It's important to note that the Skatteverket categorises bitcoin, altcoins, and other crypto assets as "other assets" under Chapter 52 of the Swedish Income Tax Act, which governs their taxation.

It is also possible to be liable for additional taxes such as income tax/employment tax and interest income tax, depending on individual circumstances. Each situation is unique and may attract different taxes, which we will delve into further.

A flat tax rate of 30% applies to all gains made from crypto assets. Note that this only applies when crypto assets are classified as stock assets.

‍

There are two types of Income Tax in Sweden:

1. Municipal Income Tax
2. National Income tax

National income applies to income above SEK 5,98,500, the municipal income tax varies based on the municipality you live in. However, this limit has been increased to SEK  6,25,800 w.e.f 1^st January 2025.

‍

Let’s understand how these taxes work through an example.

‍

Consider the following transactions

2024/02/21 - Olivia bought 1 BTC for SEK 2,40,000

2024/03/11 - Olivia bought 1 BTC for SEK 2,50,000

2024/04/14 - Olivia bought 2 ETH for SEK 16,000 each

2022/04/21 - Olivia bought 1 ETH for SEK 18,000 each

2024/06/04 - Olivia sold 2 BTC for SEK 2,90,000 each

2024/08/18 - Olivia sold 3 ETH for SEK 20,000 each

2024/10/23 - Olivia receives 6.25 BTC as a mining reward

Now as seen in the above transactions, a total of 2 disposals were made, so let’s look at the gains incurred from each transaction.

‍

1st Disposal

‍

2 BTC sold for SEK 2,90,000 each

Since the two BTC tokens were acquired at two different dates and prices, we are obligated to use a cost basis method to calculate the cost basis.

The Skatteverket recommends using the average cost basis method in Sweden. We have discussed it in more detail later. For now, just know that the average cost basis method considers the cost basis of an asset to be the average of its acquisition prices.

BTC-1 was acquired for SEK 2,40,000

And BTC-2 was acquired for SEK 2,50,000

Now the average cost base = (2,40,000 + 2,50,000)/2 = SEK 2,45,000

Disposal Amount = SEK 2,90,000

Capital Gain = Disposal Amount -  Cost Basis = 2,90,000 - 2,45,000 = SEK 45,000

Gain from both disposals = 2*45,000 = SEK 90,000

‍

2nd Disposal

‍

3 ETH sold for SEK 20,000 each

ETH-1 acquisition cost = SEK 16,000

ETH-2 acquisition cost = SEK 16,000

ETH-3 acquisition cost = SEK 18,000

Avg. Cost Base = (16,000 + 16,000 + 18,000)/3 = SEK 16,666.67

Disposal Amount = SEK 20,000

Capital Gain from 1 ETH disposal = 20,000 - 16,666.67 = SEK 3333.33

Gain from 3 ETH disposals = 3*3,333.33 = SEK 9,999.99

Collective gain from both disposals =  SEK (90,000+ 9,999.99) = SEK 99,999.99

This capital gain will attract a blanket tax rate of 30%.

As far as crypto mining goes, tax will be calculated on the fair market value of the crypto mined.

Moreover, if the business criteria are met, then the Tax Agency may tax mining of cryptocurrency, specifically as income from business activities. Or else, it may be taxed as income from employment (hobby) of a natural person.

‍

Can the Skatteverket Track Crypto?

‍

Yes, Skatteverket can access your records from cryptocurrency exchanges, including your holdings, transaction history, and withdrawal addresses due to strict regulation and the availability of data on public blockchains.

Most exchanges require users to complete a 'Know-Your-Customer' (KYC) application before purchasing cryptocurrencies. Thus, if you have signed up for any exchange that requires this check, Skatteverket is likely to have your record.

Moreover, the European Union's stricter regulations regarding customer identification mean that data is shared between EU member states. This directive has made it easier for financial authorities like Skatteverket to gain access to data on cryptocurrency owners.

‍

Crypto Gains Tax

‍

As discussed earlier, cryptocurrencies fall under the category of "Other Assets" defined in Chapter 52 of the Swedish Income Tax Act. As a result, if you’re selling Bitcoin or other cryptocurrencies, it is subject to capital gains reporting requirements. However, numerous complex scenarios may require capital gains tax calculations, the fundamental expectation is that you, who hold cryptocurrencies, have to declare and pay capital gains taxes.

‍

The following scenarios are subject to capital gains tax:

‍

1. Selling a cryptocurrency for fiat currency (such as USD, EUR, or SEK)
2. Trading one type of cryptocurrency for another
3. Exchanging a cryptocurrency for a fiat currency
4. Using a cryptocurrency to purchase goods or services
5. Lending out a cryptocurrency (which may result in taxable income or capital gains, depending on the specific circumstances)

‍

Capital Gain Tax Rate

‍

If you are a Swedish resident and have earned capital gains from cryptocurrencies, you are subject to the same tax rate of 30% that applies to other types of assets such as bank savings, equities, dividends, and real estate. This means that the tax rate for cryptocurrency capital gains is not different from that of other capital gains in Sweden.

‍

How to Calculate Crypto Gains and Losses

‍

You have to use the “Average Cost Basis Method”, or Genomsnittsmetoden, while calculating capital gains tax. To accurately calculate your cryptocurrency gains tax, it is essential to establish your "Cost Basis" or Omkostnadsbelopp. Typically, the cost basis is the average price at which the cryptocurrency was purchased, which is mostly expressed in Krona(SEK).

While calculating your profit or loss, subtract your cost basis from the disposal amount of the asset. If you have made a profit, you will be required to pay a 30% tax on the gain, while if you have made a loss, you may deduct 70% of the loss.

A simple way to calculate taxable excess capital (your taxable gains) is to add all transactions with a gain together and all transactions with losses together and then finally deduct 70% of your losses from your gains to get the taxable base.

‍

Crypto Losses

‍

You can offset 70% of any capital losses you incur during a tax year against your capital gains and claim a tax deduction for the remaining losses. However, to take advantage of this tax deduction, you should actively track and record your losses.

Keeping accurate records of all your cryptocurrency transactions, including the purchase date, cost basis, and other relevant details is essential when calculating your capital gains and losses for tax purposes. If you maintain detailed records, you can claim your tax deductions and offset your capital losses against your capital gains, thereby minimising your tax liability.

‍

Here’s an example:

Let’s say Erik makes a total gain of 100,000 SEK in a tax year and a loss of 100,000 SEK as well. Now since only 70% of the loss is deductible, you can deduct 70,000 SEK from your 100,000 SEK gain and the excess capital comes out to be 30,000 SEK and at a 30% tax rate, your tax liability comes out to be 9,000 SEK.

If your losses far exceed your gains, you can claim a tax reduction and get a refund from Skatteverket. If a taxpayer's capital deficit does not exceed 100,000 SEK, they receive a 30 per cent tax reduction. However, if the deficit is greater than 100,000 SEK, the tax reduction consists of 30,000 SEK (30 per cent of 1,00,000 SEK) plus 21 per cent of the amount by which the deficit exceeds 100,000 SEK. Although the tax credit may not be carried forward to a later year in some instances.

‍

Consider this example:

Erik bought 4 Bitcoin for 500,000 SEK in year 1. In year 3, Erik sells 4 bitcoin for 250,000 SEK. The capital loss is 2,50,000 and 70 per cent of the loss is deductible, 175,000 SEK. Erik has no other incomes or expenditures in capital and the total capital deficit is therefore 175,000 SEK. The tax reduction is 30 per cent of 100,000 SEK (30,000 SEK) plus 21 per cent of 75,000 SEK (15,750 SEK), in total 45,750 SEK.

‍

Wash Trading and Its Tax Implications in Sweden

‍

Sometimes investors make fictitious losses by closing a position at a loss and immediately purchasing the same assets again, feeding wrong information to the market. This practice is called Wash Trading and some countries like the UK even have a 30-day rule against it to prevent investors from doing so. There are no existing guidelines against wash trading in Sweden, so we decided to reach out to Skatteverket to better understand how such actions are viewed by them and here’s what they had to say about it:

‍

“In Sweden, there is no equivalent to the 30-day rule that you mention in your email. The disposal of the asset, however, needs to be final and a real transfer of ownership has to take place. Selling an asset on the open market, for example on a trading platform, is usually regarded as a disposal. But if you sell the asset outside of a trading platform, especially to close relatives, the circumstances are different and if it is a disposal or not would have to be determined on a case-by-case basis. In that assessment, the time aspect is just one part. An agreement between buyer and seller, the transfer of the assets, that the price paid is based on market value, that the payment transaction took place, and how regularly the asset is traded are examples of other aspects of the disposal that might be considered.”

‍

Lost Or Stolen Crypto

‍

If you've experienced unfortunate events like losing your private keys, having your funds stolen, or facing losses from a collapsed exchange, you may be wondering if you can offset these losses against your capital gains. Unfortunately, Skatteverket has guided on this matter, and the news isn't favorable.

According to the guidelines issued by Skatteverket, if you've lost access to your crypto due to a lost private key or a hacking incident, you cannot claim deductions for the resulting losses. Moreover, if you still own multiple assets of the same kind and haven't disposed of them or lost access to them, your cost basis remains the same.

Skatteverket has also offered specific instructions for individuals who lent assets through Celsius or suffered from the FTX collapse. For FTX users, if your disposals on the platform led to capital gains or losses, you must report both in your tax return. However, to claim your losses, you need to make an open claim in the other information section and report the capital losses in the tax report. It's important to note that this only applies to losses incurred before the collapse of FTX, not for funds frozen on the platform. To claim losses from frozen funds, you'll likely have to wait for the conclusion of bankruptcy proceedings to assess your situation.

For Celsius users who lost crypto by lending it on the platform, the situation is a bit more complicated. According to Skatteverket, when you lent crypto, it was considered a disposal of the assets at the moment of transfer to Celsius. Therefore, individuals who lent their crypto assets to Celsius are deemed to have disposed of the assets and must perform a capital gain calculation in their Income Tax Return. Instead of holding the crypto assets, they now possess a claim against Celsius.

To deduct a loss on a claim related to Celsius, it is necessary, among other requirements, for the claim to have been disposed of. A claim is considered disposed of if the issuing company has been declared bankrupt and is a limited company or a cooperative association. Since Celsius is currently undergoing corporate restructuring under Chapter 11, the claim cannot be regarded as disposed of due to bankruptcy.

‍
Crypto Tax Breaks

‍

Despite crypto being a taxable asset in Sweden, some transactions are exempt from taxation:

‍

1. Gifting crypto

In Sweden, gifting and inheritance of crypto assets are tax-free. This means you can give away crypto without any tax obligations. However, it's important to note that gifted assets cannot be deducted from your profits.

If you receive crypto as a gift, you are not required to pay taxes on it until you decide to sell it. It is advisable to request the purchase receipt from the gifter, it can serve as your cost basis. Having the original purchase price as your cost basis can help reduce your tax liabilities when you eventually sell the gifted crypto.

‍

2. Donating Crypto

In Sweden, donating cryptocurrency is considered equivalent to giving a gift and is exempt from taxes. But unlike certain countries where donating cryptocurrency can be tax deductible, this is not the case in Sweden. The receiver of the donation has to be approved by the Swedish Tax Agency and the donations must be at least SEK 200 per donation with an aggregate donation of SEK 2000 per year to be considered tax deductible.

‍

3. Tax Loss Harvesting

You can deduct 70% of your losses from your tax base and lower your taxable income in Sweden. This method is called tax-loss harvesting and is often relied on by investors across the globe to lower their tax bill.

‍

Income Tax

‍

If you have received cryptocurrency as compensation for your labour or services, you are required to pay standard income taxes on it, just as you would if you were paid in your local currency.

If you choose to hold onto the cryptocurrency you received, any profits or losses that occur when you sell it will be subject to capital gains taxes. The cost basis for this purpose will be equivalent to the amount you reported on your income tax return.

‍

The following transactions attract income tax in Sweden:

‍

• Mining crypto
• Rewards (e.g., referrals)
• Income (e.g., salary, freelancing)
• Creating and selling NFTs

‍

Furthermore, per the Swedish Tax Agency, if the activities about cryptocurrency are being carried out in the ordinary course of business or the business criteria are met, then too, income tax would be levied.

‍
Crypto Income Tax Rate

‍

In Sweden, the income tax system comprises two types of taxes:

• National income tax
• Municipal income tax.

The national income tax applies if your income exceeds SEK 5,98,500 for the 2024 tax year.

For 2025 tax year the limit has been increased to SEK 6,25,800.

On the other hand, the municipal income tax rate varies between 29-35% depending on the municipality you reside in. The municipal income tax rate is determined by the municipality's tax rate, which can differ from one municipality to another.

‍

‍

‍
How to Calculate Crypto Income

‍

Calculating your crypto income is a simple process. All you need to do is add the FMV of the assets received through multiple avenues. As mentioned earlier, assets received as mining rewards, salary, or compensation for voluntary participation are counted as income.

‍

Let’s consider the following transactions:

‍

2024/01/13 - Astrid received 6.25 BTC as mining rewards (FMV - SEK 1,50,000 each)

2024/02/14 - Astrid received 2 ETH as compensation for her services (FMV - SEK 17,000)

2024/03/15 - Astrid received 1 ETH from a DAO referral program (FMV - SEK 18,000)

To calculate the crypto income for the tax year, Astrid just needs to add the value of the assets received from these three transactions.

Total Income = SEK (6.25*1,50,000 + 2*17,000 + 1*18,000) = SEK 9,89,500

This is Astrid’s taxable income base.

‍
Interest Income Tax

‍

If you have received cryptocurrency as loan interest or staking rewards, you will be subject to interest income tax, also known as "Ränteinkomst".

Interest Income is taxed at a flat rate of 30%.

‍

Interest Income Tax Rate

‍

In Sweden, interest income from loan interest and staking rewards are subject to a flat rate tax of 30%. The key difference between interest income tax and capital gains tax is that any losses incurred from interest payments you have made are fully deductible.

To calculate your interest income tax, you will need to sum up the total income you have received from your loan interest and staking rewards activities. This total amount will be subject to the flat rate of 30% tax.

‍

Tax-Free Crypto Transactions

‍

The following transactions are tax-free in Sweden:

‍

• Buying Crypto
• Holding crypto
• Transferring crypto between wallets
• Donating crypto
• Gifting crypto

‍

Taxed Crypto Transactions

‍

Following are transactions that attract tax liabilities in Sweden:

‍

• Converting crypto to fiat
• Swapping one crypto for another
• Buying goods and services with crypto
• Lending crypto
• Participating in liquidity pools and other DeFi transactions
• Earning tokens through mining, staking, or referral rewards
• Receiving crypto through airdrops, forks, and ICOs
• Receiving crypto as a salary

‍

Tax On Mining Crypto Sweden

‍

Skatteverket states that if you engage in mining as an individual, the earnings are classified as income from a hobby. Consequently, it is necessary to declare and pay Income Tax on your mining proceeds.

To determine the income tax amount owed on your mining earnings, you should calculate the value of the proceeds in your local currency on the day of receipt. The cost basis for the newly acquired coins is equal to the fair market value of the tokens at the time of receipt. However, if you choose to sell the cryptocurrency you have mined in the future, any gains incurred would be subject to regular capital gains taxes on any resulting profits or losses. This implies that if the value of the cryptocurrency has appreciated since the day of mining, you will owe capital gains taxes on the difference in value.

‍
Tax on Staking Crypto

‍

Skatteverket recently stated that staking crypto typically does not incur tax liabilities in most cases. However, the tax implications may vary depending on the platform you’re staking your tokens on.

Earning from staking crypto is likely to be taxed as interest income, on the fair market value at the time of receipt. Later, then later in the case price of rewards has increased - Capital Gain Tax in the moment you sell/spend them.

Furthermore, staking DeFi might be seen as disposing of an asset and therefore, might be subject to capital gains taxes.

‍

Crypto margin trading and futures

‍

The Skatteverket is yet to release any guidelines on how transactions involving crypto margin and future trades. However, such transactions would likely follow the same rules as regular trades.

We are constantly on the lookout for new guidelines around the subject and will add new updates here as soon as they arrive.

‍

NFT Taxes Sweden

‍

The tax implications of NFTs vary depending on the circumstance. If you have bought or sold an NFT, it is treated similarly to any other cryptocurrency, and you have to pay capital gains. And although there are no official guidelines on how the gains are to be calculated, the NFTs would likely inherit the cost base equal to the fair market value of the assets at the time of receipt. Moreover, the creation and sale of NFTs would be classified as income, as opposed to capital gain only if the same is done at such a scale, to derive an income.

Regardless of your involvement with NFTs, it's advisable to include a statement in your tax filing that clarifies how you handled NFT taxes. This statement, known as "Öppet Yrkande", can reduce the likelihood of incurring a tax surcharge due to errors.

‍

ICO Taxes

‍

ICOs or Initial Coin Offerings are special events that allow you to invest in new projects and get access to project-native tokens in exchange for mainstream tokens like BTC and ETH. It is similar to IPOs in traditional securities markets. ICOs are treated as simple crypto-to-crypto trades from a tax perspective. The tokens you send to the project are counted as disposal and attract capital gains tax. While the tokens you receive inherit the cost base equal to the disposal amount, to be taxed at a later date when you dispose of these assets.

‍

DAO Taxes

‍

Specific guidance from Skatteverket regarding assets received from DAOs (Decentralised Autonomous Organisations) as compensation or for completing bounties is currently unavailable. However, based on our inference, income from DAOs would likely be subject to taxation in the same manner as other tokens received as salary or compensation for providing products or services.

It is essential to declare any assets obtained from DAOs as income and fulfil the corresponding income tax obligations. Nonetheless, we highly recommend seeking advice from a knowledgeable tax professional for a more comprehensive understanding of the matter.

‍

DeFi Taxes Sweden

‍

While the Skatteverket has not issued explicit guidelines for DeFi taxation, it is crucial to recognize that engaging in DeFi activities does not exempt you from tax obligations. Whether you are involved in selling, swapping, utilising cryptocurrency, or receiving coins or tokens as income within the realm of DeFi, it is important to be aware that these activities are subject to taxation.

‍

Given below are some DeFi transactions that attract tax liabilities in Sweden:

‍

• Lending crypto through P2P lending platforms is considered a sale by the Swedish tax authorities and in turn attracts capital gains tax
• The interest incurred from lending crypto assets is viewed as an income and therefore attracts an income tax(the interest is to be declared in section D of Form K4).
• Using crypto as collateral to borrow funds from DeFi platforms is considered a sale and attracts capital gains tax
• Staking your assets is considered as a disposal by the Swedish tax authorities and attracts capital gains tax
• Staking rewards on the other hand are considered an income and therefore attract an income tax.

‍

Crypto Gifts and Donation Taxes

‍

In Sweden, gifting and donating cryptocurrency are exempt from taxation. You can send and receive crypto without incurring any tax liabilities. However, when you choose to dispose of the gifted crypto by selling or swapping it, you will be subject to capital gains tax. To reduce the tax burden, you can inherit the cost basis from the original gifter by obtaining a purchase receipt from them. This allows you to pay a lower capital gains tax when selling or swapping those assets.

Donating crypto to any registered organisation approved by the Swedish tax agency is tax-free in Sweden, given that the individual and aggregate donations cross the required threshold.

‍

How are Airdrops and Forks Taxed in Sweden?

‍

Airdrops and forks are generally considered "gifts" from token holders, thus not subject to immediate tax obligations. However, it would be considered a disposal as with gifting cryptocurrencies and therefore, capital gains taxes would be levied. And it is recommended to establish a cost basis of zero in such cases.

If an airdrop is received as compensation for a specific service, such as referring individuals, it may be classified as taxable income. While the Skattverket does not explicitly address the taxation of cryptocurrency hard forks, they are likely treated similarly to staking rewards.

When to Report Crypto Taxes in Sweden?

‍

In Sweden, the tax year runs from January 1st to December 31st. You should include your crypto taxes in your annual tax return and your employment income.

As per Skatteverket, tax returns for the year 2024, can be filed from the 18th of March to the 2nd of May 2025, unless an extension has been granted.

‍

What Crypto Records will the Skatteverket want?

‍

These are the general crypto records that need to be reported to Skatteverket:

‍

• Type of transaction
• Date of the transaction
• Which cryptocurrency was part of the transaction
• Exchange records and other relevant statements
• Transaction histories from personal wallets
• Details about the trading venue
• The amount bought, sold, or exchanged
• Wallet addresses that you possess the private keys for.
• Value of the cryptocurrency in SEK at the time of the transaction
• Documents about fiat transaction details moved to acquire crypto assets

‍

How to File Crypto Taxes in Sweden?

‍

Once you’ve calculated the cryptocurrency taxes, you can file capital gains tax, employment tax, and interest income taxes online, or via mail.

Let’s understand all these taxes one by one.

‍

Submitting Capital Gains Tax in Sweden

‍

There are three methods to submit your capital gains taxes:

‍

1. You can enter your crypto taxes in Section D of the K4 tax form using a paper form and mail it to Skatteverket.

“K4 Tax Form is where all profit and loss need to be addressed. Moreover, you need to keep in mind the gains and losses which must be reported separately.”

‍

2. Fill in the K4 form manually on Skatteverket's online portal.
3. Alternatively, you can upload SRU (Standardised Accounting Extract) files to the online portal which will automatically complete the K4 form.

‍

Submitting Employment Income Tax in Sweden

‍

Submitting employment income tax depends on the type of income you’ve received. The following are the steps to report various types of income:

‍

Salary:

Your employer should have already declared this income, but if they failed to do so, you can manually report it under the Inkomst av Tjänst section.

‍

Rewards/Mining:

To report income from rewards or mining, you need to fill out a T2 form. You can find the form in the online portal by going to Bilagor > Inkomst av hobby, internetinkomster m.m. (T2).

‍
How to File Crypto Taxes Using Kryptos?

‍

Now that you’re aware of how your crypto transactions are taxed and what forms you need to fill out to complete your tax report, here’s a step-wise breakdown of how Kryptos can make this task easier for you:

‍

1. Visit kryptos.io and sign up using your email or Google/Apple Account
2. Choose your country, currency, time zone, and accounting method
3. Import all your transactions from wallets and crypto exchanges
4. Choose your preferred report and click on the generate report option on the left side of your screen, and let Kryptos do all the accounting.
5. Once your Tax report is ready, you can download it in PDF format.

If you still need clarification regarding the integrations or generating your tax reports, you refer to our video guide here.

‍
How to Avoid Crypto Taxes in Sweden

‍

There’s no legal way to avoid crypto taxes in Sweden entirely. However, there are strategies you can use to lower your tax bill:

‍

• Sending and receiving crypto gifts is tax-free in Sweden
• You can offset 70% of your capital losses in a tax year in Sweden
• Donating crypto is tax-free in Sweden.

‍

FAQs

‍

1. Is crypto legal in Sweden?

‍

Yes, crypto is legal in Sweden and is categorised as “other assets” instead of a currency by the Skattverket (Swedish Taxation Office) and taxed accordingly.

‍

2. What are the non-taxable crypto transactions in Sweden?

‍

Here are the few non-taxable crypto transactions in Sweden that we haven’t discussed earlier.

‍

Purchasing Crypto with Fiat Currency:

Purchasing crypto doesn't incur any taxes, but it's essential to maintain a record of the price paid for it to include in your average cost basis or "Omkostnadsbelopp". If you've bought the crypto in a foreign currency such as USD or EUR, convert it to the local currency's value on the date of purchase. This is necessary for accurately calculating any future taxes you might incur upon selling the crypto.

‍

Transfer of Crypto between Wallets:

Transferring crypto between your wallets and exchanges is not subject to taxes. Only the transaction fee is taxable.

‍

Gifting or Receiving Crypto:

When you gift someone crypto, it's not taxable. However, you can't subtract it from your profits, similar to lost or stolen crypto. Receiving crypto as a gift is also non-taxable until you decide to sell it. In this case, the cost basis you should use is the price at which the person who gifted you the crypto originally purchased it.

‍

Donating Crypto:

Donating crypto is also non-taxable, but unlike in some other countries, it's not tax-deductible in Sweden. For a donation to qualify for a tax deduction, it must be given in the form of currency, which Skatteverket does not consider crypto to be. In addition to this, the donation should be made to an approved recipient by the Swedish Tax Agency and the individual, as well as the aggregate donation, should be of a specific threshold.

‍

3. What happens if I don’t report my Crypto taxes?

‍

If you don’t report your crypto taxes accurately or provide incorrect information to the Swedish Tax Authorities, you may end up paying penalties of up to 40% of the evaded taxes in addition to the regular tax rate, depending on the situation and periodic severe cases, you could even face criminal prosecution and up to 6 years in prison. The Skatteverket considers tax evasion a grave offence and may have access to data on individuals who have undergone KYC checks on centralised exchanges.

Interest would also be levied w.e.f. from February 14 if the tax arrear is more than 30,000kr, and if less than 30,000kr, then interest will be levied w.e.f. May 4

‍

4. How is staking taxed in Sweden?

‍

Staking rewards earned from cryptocurrency holdings are subject to interest income taxes in Sweden. Typically, staking rewards are paid in the same cryptocurrency as the one you are staking towards. The cryptocurrency received will have a cost basis equal to the local currency value on the day you gain access to the staking rewards. If you hold the crypto and sell it later, regular capital gains taxes will apply.

Staking ether in Ethereum 2.0 is equated with estaking ether and so it does not incur capital gains tax, which is also what the Guide clarified. However, the allocation of ether through either the deposit or the participation as a node in the network, as a result of which rewards are received in the form of either, is taxed as income in the capital income category. The amount of income is calculated at the market value of ether received when it can be used. But this position, per Skatteverket, applies to ether, and not staking as a whole alone.

Moreover, staking DeFi might be seen as disposing of an asset and therefore, might be subject to capital gains taxes.

‍

5. Can I claim tax benefits in Sweden if Celsius goes bankrupt?

‍

Celsius is currently undergoing a corporate restructuring process through Chapter 11, which means that any outstanding receivables cannot be regarded as disposed of due to the ongoing bankruptcy proceedings. If Celsius is ultimately declared bankrupt, the Swedish tax authority Skatteverket will evaluate whether your claim of disposal is valid.

To claim tax deductions for losses on your Celsius claim, it is currently necessary to sell or dispose of it. However, to ensure that your claim is considered disposed of, it must be sold in a manner that is not considered a gift or transferred below market value. Otherwise, such transactions will not be considered as disposal of the asset. Therefore, it is important to take appropriate action and sell your claim at market value to qualify for any tax benefits.

‍

All content on Kryptos serves general informational purposes only. It's not intended to replace any professional advice from licensed accountants, attorneys, or certified financial and tax professionals. The information is completed to the best of our knowledge and we at Kryptos do not claim either correctness or accuracy of the same. Before taking any tax position/stance, you should always consider seeking independent legal, financial, taxation or other advice from the professionals. Kryptos is not liable for any loss caused from the use of, or by placing reliance on, the information on this website. Kryptos disclaims any responsibility for the accuracy or adequacy of any positions taken by you in your tax returns. Thank you for being part of our community, and we're excited to continue guiding you on your crypto journey!

If you are deep into the crypto territory and have no idea how they’re taxed, you’re not alone. Thousands of residents struggle to understand the tax obligations these transactions entail and find themselves in the middle of tax complications and legal troubles.

That’s why we put together the most comprehensive crypto tax guide for Netherlands residents, to help them get acquainted with the crypto tax infrastructure. We’ve also touched upon how you can file your crypto taxes conveniently, and the records you need to keep to be able to report these transactions conveniently.

The Dutch tax authorities are yet to discuss the taxation of some crypto applications like DeFi. However, we assure you we will be among the first ones to update this guide and accommodate any new guidelines issued by the authorities in the forthcoming days.

So with that in mind, let’s get started…

‍

How is Crypto Taxed in the Netherlands

‍

Unlike most countries, the Netherlands does not have a specific capital gains tax for crypto assets. Instead of taxing gains from the sale of crypto assets, the Netherlands taxes the presumed gains of crypto assets throughout a tax year.

The presumed gains are calculated based on the Fair Market Value (FMV) of your assets as reported on January 1. This means that simply holding crypto in the Netherlands is a taxable event. The cost basis of your assets is reset on January 1 each year, so the tracing of the cost basis can only go back to January 1 of the previous year.

In the Netherlands, you are required to pay tax on the presumed gains of your total assets, and the Belastingdienst (Tax and Customs Administration) always assumes that you generate a gain, never a loss.

The taxable income is divided into three categories:

Box-1 is for Income from Job/Business

Box 2 is for any substantial Interest earned through crypto

Box 3 is for presumed Gains from assets, investments, and savings

Crypto assets are reported under Box-3, and the tax levied on the presumed gains is called Vermogensrendementsheffing. You pay 36% tax on a presumed return on the total value of your assets. However, it’s important to note that there are some instances where you must report crypto assets under Box-1. There are primarily three instances where Crypto assets are reported as Box-1 assets:

1. When you have insider knowledge of a project
2. When you’re involved in day trading with crypto assets
3. When you’re mining tokens, except at a hobby level

‍

Crypto Gains Tax

‍

In contrast to most countries, where the taxation of crypto assets is triggered by their disposal, the Netherlands follows an inclusive tax rule. This means that even if you do not sell or dispose of your crypto assets within a tax year, they are still subject to taxation.

The Belastingdienst requires all residents to report the value of their assets on January 1st of each year. The cost basis of these assets is considered equal to their market value on that specific day, and it resets exactly one year later.

The tax authorities utilise the cost basis to calculate the presumed gains on the asset throughout the financial year. Taxes must be paid on these gains regardless of whether the assets are sold or held onto.

Taxes in the Netherlands are divided into three categories, and each category has an independent tax rate.

1. Income from employment
2. Significant interest income from any source
3. Gains derived from assets, investments, or savings

Crypto happens to be in the third category, and the tax levied on Box 3 gains is called the Vermogensrendementsheffing, and it’s equivalent to the capital gains tax charged in other countries.

‍

Capital Gains Tax Rate

‍

As mentioned earlier, the Netherlands has no dedicated tax for capital gains. Any gains incurred from crypto assets are grouped as Box 3 gains by the tax authorities and are subjected to a flat tax rate of 36% regardless of income level. Note that individuals (resident taxpayers) have a personal income tax exemption limit of €57,684.

‍

How to Calculate the Presumed Gains on My Assets?

‍

The presumed gains are calculated based on the premise that the bigger your asset base, the more gains you make in a tax year. It’s a progressive system with fictitious gains varying from 0.92% - 6.17% based on the reported value of your assets. One should use the following rates when calculating presumed gains on bank balance, crypto investments, and debts.

‍

‍

Consider the following example:

Let’s say you reported the total value of your assets to be €70,000,

Now since the first €57,684 is exempt from any taxation, your taxable base is just €12,316 (€70,000 - €57,684).

The presumed gains rate for crypto investments is 5.88%

So presumed gains = 0.0588 * €12,316 = €724.18

Hence, you’ll pay a 36% tax on the presumed gains of €724.18.

‍

Crypto Losses

‍

Since the Belastingienst doesn't tax the actual gains, but the presumed gains on assets, any losses incurred from disposal don’t affect your tax bill in the Netherlands.

Since buying and selling crypto are non-taxable transactions in the Netherlands, there are no profits to offset your losses against. Therefore, any capital losses incurred in the Netherlands are simply losses, and you can neither write them off against them again nor carry them forward to the subsequent tax year.

‍

Lost or Stolen Crypto

‍

There are provisions in the Dutch crypto tax guidelines that allow you to use your lost or stolen crypto as a tax-deductible and reduce your tax bill. However, you need the documents to prove your loss of possession and the negligible chance of recovery of these assets.

‍

Crypto Tax Deductions Netherlands

‍

Although there’s no (legal) way to avoid paying taxes entirely in the Netherlands, there are ways you can claim some tax deductions and reduce your tax bill.

‍

1. Gift Crypto

You can give up to €2,690 worth of crypto tax-free in the Netherlands, and the amount doubles to €6,713 if you grant the assets to your children. You can use this to your advantage and lower your tax bill by gifting crypto to your spouse or children.

2. Donate Crypto

When contributing to a public benefits organisation (ANBI), philanthropic individuals can lower their taxable income by subtracting the value of their donations. It's important to note that donations below 10% of your annual taxable income are exempt from taxes.

‍

Crypto Cost Basis Method Netherlands

‍

As mentioned earlier, in the Netherlands, the disposal of crypto assets does not trigger taxation. Since capital gains from such disposals are non-taxable, there is no requirement for a specialized accounting method to calculate the cost basis. In the Netherlands, the cost basis is determined as the initial purchase price of the asset for tax purposes.

In the Netherlands, the cost basis is calculated based on the value of your assets at the start of the tax year, precisely at 00:00 on January 1st.

‍

Crypto Income Tax Netherlands

‍

Crypto is taxed as income in the Netherlands when it is reported under Box-1 assets. The following scenarios attract income tax:

‍

• When you get paid in crypto- for your work, contribution to a project, or sale of a product or service.
• When you earn interest from liquidity pools
• When you mine tokens as a business
• When you earn interest from DeFi protocols

‍

Crypto Income Tax Rate

‍

Income rates for Box 1:-

‍

‍

How to Calculate Crypto Income

‍

Calculating Income for Box-1 assets is pretty straightforward. All you need to do is add the fair market value of the tokens received from various sources like mining, staking, lending, and DeFi. The figure you end up with is your taxable income base.

‍

Tax-Free Crypto Transactions

‍

Following crypto transactions are tax-free in the Netherlands:

‍

• If you use one cryptocurrency to purchase another, this transaction is generally not subject to taxation.

• Suppose you receive a gift or donation in the form of cryptocurrency. In that case, this transaction is tax-free as long as the value of the gift or grant is less than the annual gift tax exemption amount of €2,690 which goes up to €6,713 if the person gifting you the assets happens to be your parents.

• If you mine cryptocurrency as a hobby, any profits you make from this activity are non-taxable

• Buying and selling crypto is non-taxable in the Netherlands since capital gains tax is not applicable.

‍

Taxed Transactions

‍

‍Here’s a list of taxed crypto transactions in the Netherlands:

‍

• Donating crypto to an unregistered charity
• Buying and holding crypto
• Mining crypto as a hobby

‍

Tax on Mining Crypto

‍

The taxability of mining as a source of income is contingent on whether it constitutes a business activity. In the absence of such, the gains from mining are classified as assets that are included in Box 3's asset base. However, if it can be anticipated that the mining activities will yield profit in the long term, it is typically considered as income derived from other sources and falls under the purview of Box 1 taxation.

‍

Tax on Staking Crypto

‍

Interestingly, staking rewards are categorised as Box-3 assets, unlike mining rewards. The value of the tokens received is added to other assets and investments of the taxpayer and taxed at a flat rate of 36%. 

‍

NFT Taxes Netherlands

‍

The taxes around NFTs depend on the underlying asset of the NFT. Generally, all the assets are to be reported as Box-3 assets, although there’s an exception in the case of art pieces. However, you must report your NFT art pieces under box 1 of your tax report if you are an art dealer.

As a business, any earnings made from the production, sale, or swap of NFTs are automatically included in the tax profit calculations and are subjected to a tax rate of 19% for profits up to €200,000 and a flat rate of 25.8% above that.

‍

NFTs and VAT

‍

Regarding NFTs, there aren't any clear rules about handling Value-Added Tax (VAT). Because it's unclear what kind of thing an NFT is, it's hard to know how it should be taxed. Unlike cryptocurrencies, it's possible that buying or selling NFTs might not be considered exempt from VAT.

And even though you're buying something when you get an NFT, it might not be considered a regular purchase of goods.

‍

ICO Taxes

‍

ICOs are special events that allow investors to invest in tokens from unreleased projects in exchange for mainstream tokens like Bitcoin and Ethereum. ICOs are similar to IPOs from traditional markets.

The Belastingdienst is yet to release specific guidance on the taxation of such transactions, although it is highly likely that any income from such transactions will be categorised under Box-3 and will be taxed accordingly. We do suggest seeking advice from an experienced tax professional to get a clear picture of how such transactions are taxed.

‍

DAO Taxes

‍

DAOs are member-owned communities with a shared vision. All the decisions in a DAO are made by the members in the absence of central leadership. DAOs are new-age institutions that aim to democratise decision-making and allow people to have a say in decisions that directly affect them. DAOs are often called the soul of Web3 and enable members to earn rewards in multiple ways. DAO contributors are rewarded for their contributions to the organisation, similar to how centralised organisations pay salaries to their employees. They also pay out bounties for one-time projects and redistribute any profits generated through operations.

The Belastingdienst is yet to release guidance on how income from DAOs is viewed from a tax perspective. We suggest seeking advice from a tax expert to better understand how such transactions are taxed.

‍

DeFi Crypto Taxes in the Netherlands

‍

DeFi, being a relatively new financial application of crypto assets, hasn't been touched upon by the Dutch tax authorities. However, it doesn’t imply in any way that the income made from DeFi transactions won’t attract any taxes in the Netherlands.

If you’re making significant gains using DeFi protocols, you should consider contacting a Dutch tax consultant and understanding the liabilities that entail these DeFi transactions.

Based on the existing crypto taxation guidelines, it may be inferred that most DeFi transactions may be considered Box 1 assets and may be subjected to income tax in the Netherlands. If you’ve been involved in the following DeFi transactions, you should consider reporting them to the Belastingdienst.

• Yield farming on crypto lending platforms like Aave
• If you’ve earned liquidity tokens or governance tokens on DeFi platforms
• If you’re earning recurring interest on crypto assets you’ve lent
• If you’ve earned crypto as dividends from platforms like CoinRabbit

‍

Crypto Gifts and Donation Taxes

‍

‍In the Netherlands, gifting or inheriting assets, including cryptocurrencies, is exempt from taxation up to €2,690. However, if the gift is received from parents, the tax-free threshold is more than doubled to €6,713. For charitable donations, individuals can deduct the value of their donations from their taxable income, given that the recipient charity is registered as a public benefits organisation (ANBI). If the donation amount is less than 10% of the individual's annual taxable income, it is considered tax-free.

‍

How are Airdrops and Forks Taxed in the Netherlands?

‍

Airdrops

‍

If you are not a trader, any tokens received from airdrops will be considered Box 3 assets by the tax authorities in the Netherlands and will be taxed accordingly. In the case of corporations, tokens received are subject to corporate income tax based on the market value of the assets at the time of receipt.

‍

Forks

‍

Since soft forks don’t result in any additional tokens, they’re considered non-taxable by the Dutch tax authorities. However, hard forks are a different story. Any additional tokens received after a hard fork must be reported as a Box 3 asset in the tax form and will attract income tax unless you’re a trader(Any income made as a trader is reported under Box 1 of the tax form).

‍

When to Report Crypto Taxes in the Netherlands

‍

In the Netherlands, taxpayers are required to submit their tax returns on an annual basis, with the typical deadline being May 1st of the subsequent year. It's important to be aware that specific types of taxes or situations might have different deadlines, so it's advisable to stay informed about any applicable variations.

‍

How to File Crypto Taxes in the Netherlands

‍

You can file crypto taxes in the Netherlands through the online portal after you have filled out your tax form which is available on the Belastingdienst website. You are required to file your tax return before the May 1 deadline. However, you can extend the deadline to accommodate some unforeseen circumstances.

You can file crypto taxes yourself, through a third-party intermediary like a tax accountant, or using a crypto tax software like Kryptos which is capable of generating legally compliant tax reports in a matter of minutes without you having to lift a finger. Regardless of how you file your taxes, you need your DigiD to prove your identity to the tax authorities.

If you don’t have one, you can apply for it here.

Once you have access to your DigiD, you can visit the tax authorities' website and download your electronic tax return report.

Here’s an overview of all the information you need to file your taxes online in the Netherlands.

‍

What crypto records will the Belastingdienst want?

‍

According to the official website of the Belastingdienst, you should maintain the following records:

‍

Personal details

‍

• Your citizen service number (burgerservicenummer, bsn), if applicable, those of your partner and children
• Your bank account details (IBAN, preferably a Dutch bank account)
• Your DigiD or – if you do not have one - your username/password combination or an EU-approved login key
• Your telephone number
• Your home address details

‍

Income (worldwide)

‍

• Your annual income statements for 2025
• If you do not have any income statements: your payslips.
• In the case of wages received from Belgium: all payslips
• Spousal maintenance payments received
• Bank account details (Dutch and foreign bank accounts)
• Your current account annual statement for 2025
• Your savings account annual statement for 2025, as well as the annual report of the savings accounts of your children under 18 years of age
• Your investment account annual statement 2025

‍

Property

‍

If you are considered a ‘non-resident taxpayer:

‍

• Your own home’s WOZ value on 1 January 2025
• You’ll find this value on last year’s municipal WOZ assessment.
• Your mortgage’s annual statement for 2025
• In case of purchase or sale of your house: the final settlement from your notary

‍

If you are considered a ‘qualifying non-resident taxpayer’ or if you are covered by Dutch social insurance, you will also need your foreign home’s details:

‍

• The value of your foreign home
• Your foreign home’s mortgage annual statement 2025

‍

Deductions (only if you are a ‘qualifying non-resident taxpayer’, or if you were living in Belgium, Surinam or Aruba, or if you were covered by Dutch social insurance)You will need proof of payment. For instance:

‍

• Gifts
• Costs for care that were not covered
• Your own Healthcare Insurance Act contribution. Non-deductible items are private care insurance premiums and any deductible excess.
• Paid partner alimony
• Costs for study, in case you were not entitled to any study loans or grants

‍

Other (only if you are a ‘qualifying non-resident taxpayer’, or if you were living in Belgium, Surinam or Aruba, or if you were covered by Dutch social insurance)

‍

• Details of grants or loans for study costs
• Details of other loans or debts
• Details of paid premiums for annuities
• Overview of paid premiums for occupational disability insurance
• Details of dividend

‍

How to File Crypto Taxes Using Kryptos?

‍

Now that you’re aware of how your crypto transactions are taxed and what forms you need to fill out to complete your tax report, here’s a step-wise breakdown of how Kryptos can make this task easier for you:

‍

1. Visit Kryptos and sign up using your email or Google/Apple Account
2. Choose your country, currency, time zone, and accounting method
3. Import all your transactions from wallets and crypto exchanges
4. Choose your preferred report and click on the generate report option on the left side of your screen and let Kryptos do all the accounting.
5. Once your Tax report is ready, you can download it in PDF format.

If you still need clarification regarding the integrations or generating your tax reports, you refer to our video guide here.

‍

How to Avoid Crypto Taxes in the Netherlands

‍

Although there’s no legal way to avoid crypto taxes entirely in the Netherlands, you can claim some tax deductions by employing some of these strategies:

‍

1. You can gift crypto in the Netherlands tax-free up to €2,690. This limit increases to €6,713 for tax-free gifts made to children by Parents.
2. When donating to a public benefits organisation (ANBI), individuals can deduct the value of their donations from their taxable income. Donations below 10% of annual taxable income are tax-exempt.

‍

FAQs

‍

1. Can the Belastingdienst Track Crypto Transactions?

‍

Yes, the Belastingdienst (the Dutch Tax and Customs Administration) can track crypto transactions like any other financial transaction. While the transactions are recorded on a decentralised ledger, the identities of the individuals involved in the transactions can be traced through the use of blockchain analysis tools, especially if the person has used an exchange or another centralised service to buy or sell cryptocurrencies.

‍

2. Is crypto legal in the Netherlands?

‍

Yes, owning, buying, and selling cryptocurrencies is legal in the Netherlands. The Dutch government has been relatively open to new financial technologies, including cryptocurrencies and blockchain.

The legal status of cryptocurrencies in the Netherlands is that they are not recognised as legal tender, but they are considered assets. Therefore, any gains or losses from buying, selling or exchanging cryptocurrencies are subject to taxes.

‍

3. Is crypto taxable in the Netherlands?

‍

Crypto transactions are taxable in the Netherlands and the Dutch tax authority Belastingienst has made it pretty clear that any transactions involving cryptocurrencies, even the ones where you just hold your assets and don’t dispose of them, will attract tax liabilities in the Netherlands.

‍

4. What is the tax rate for capital gains on cryptocurrencies in the Netherlands?

‍

The Netherlands has a flat tax rate of 36% for all crypto-related gains.

‍

All content on Kryptos serves general informational purposes only. It's not intended to replace any professional advice from licensed accountants, attorneys, or certified financial and tax professionals. The information is completed to the best of our knowledge and we at Kryptos do not claim either correctness or accuracy of the same. Before taking any tax position/stance, you should always consider seeking independent legal, financial, taxation or other advice from professionals. Kryptos is not liable for any loss caused by the use of, or by placing reliance on, the information on this website. Kryptos disclaims any responsibility for the accuracy or adequacy of any positions taken by you in your tax returns. Thank you for being part of our community, and we're excited to continue guiding you on your crypto journey!

Are you an ardent crypto enthusiast or someone who wants to be one, but the very thought of crypto taxes intimidates you? Don’t worry you’re not alone, thousands of Norwegians share the same line of thought. Crypto being a new asset class is hugely unregulated across markets in the world and the taxation of such assets is barely talked about even in the crypto space. Therefore, it is no surprise that people barely know how such transactions are taxed.

So we took it upon ourselves to create this comprehensive crypto tax guide for Norway residents so that the prospect of crypto taxation is not as intimidating. So that people can clearly understand their tax liabilities and pay their taxes properly. This guide has everything you need to know about crypto taxation in Norway and it will be regularly updated to accommodate any new regulations issued by the Skatteetaten.

So let’s get into it…

‍

How is Crypto Taxed in Norway?

‍

‍Skatteetaten doesn’t consider crypto to be a form of currency and instead categorizes it as a form of capital asset. This essentially means any capital gains or income you make from crypto assets is taxable. Since Norway doesn’t have a dedicated capital gains tax, all your gains or income will be taxed as income at a flat rate of 22%.

Furthermore, if your total wealth surpasses 1,700,000 NOK, the province and states you reside in may impose a Wealth tax on any crypto assets you possess. The amount of tax you are required to pay is determined by the total value of your assets as of January 1st annually.

‍

Your net wealth is calculated using the following formula:

‍

Net Wealth = Total Value of Assets -  Any Deductible Debt

‍

If you wish to get into the details of how wealth calculations work in Norway, you can visit this link here to know more.

‍

Example:

‍

‍Consider the following ledger of transactions:

12/02/2023 - Lucy buys 1 BTC for 1,80,000 NOK

15/04/2023 - Lucy buys 10 ETH for 14,000 NOK each

02/05/2024-  Lucy sells 1 BTC for 2,00,000 NOK

05/06/2024 - Lucy sells 5 ETH for 18,000 NOK each

For this example’s sake let’s assume that Lucy already has 1,800,000 worth of assets in her portfolio and a 3,00,000 NOK debt before she was involved in any of the following transactions.

Now there were two disposals made by Lucy, so let’s calculate the capital gain/loss incurred from these disposals.

‍

1st Disposal

‍

‍1 BTC sold for 2,00,000 NOK

This BTC was acquired for 1,80,000 NOK

Capital Gain =  Disposal amount - Cost basis = 2,00,000 - 1,80,000 = 20,000 NOK

‍

2nd Disposal

‍

‍5 ETH tokens sold for 18,000 NOK each

Now these are the same tokens that were acquired for 14,000 NOK each on 15/04/2023

Capital Gain on 1 ETH disposal = Disposal amount - cost basis =  18,000 - 14,000 = 4,000 NOK

Total Gain for 5 ETH tokens = 5 * 4,000 = 20,000 NOK

Collective Gain for both disposals = 20,000 + 20,000 = 40,000 NOK

That’s the final amount you’ll pay income tax on.

Now, it’s time to calculate Lucy’s wealth to see whether she owes any wealth tax to the authorities.

Of course, the example assumes that Lucy didn’t make any other transactions for the entire year, except for the ones mentioned above.

Now Lucy has 5 ETH left that she didn’t sell, so that must be added to the total assets.

(Assuming the value of 1 ETH token at the time of calculations to be 20,000 NOK)

Total assets =  1,800,000 + 1,00,000 = 1,900,000 NOK

Net Wealth = Total value of Assets -  Deductible Wealth = 1,900,000 - 3,00,000 = 1,600,000 NOK

Since Lucy’s net wealth is less than 1,700,000 NOK, she is not required to pay any wealth tax.

‍

Can Skatteetaten track crypto?

‍

‍Yes, Skatteetaten can track your crypto transaction. It has various means to obtain your financial data and ensure that you are adhering to tax regulations. Hence, if you were contemplating omitting certain transactions to reduce your tax bill, we advise you to abandon the idea and instead report all your transactions to Skatteetaten. Below are some channels that provide access points for taxpayers' cryptocurrency transactions to Skatteetaten:

‍

• All prominent cryptocurrency exchanges are obligated to perform Know Your Customer (KYC) verifications for all users.
• Anti-Money Laundering (AML) Regulations mandate that exchanges and custodial wallets divulge specific details about their users to government entities.
• Skatteetaten may conduct an audit of the tax document you will provide to check any malpractice or unreported crypto transactions

‍

Crypto Gains Tax

‍

‍The Norwegian tax administration doesn't consider crypto to be a form of currency and views it as a capital asset from a tax perspective. So if a person buys a crypto asset and later sells it for a profit, then it will be considered as a capital gain. However, Norway doesn't have a dedicated capital gains tax, and any gains incurred from the disposal of crypto assets are subject to income tax.

‍

‍The following transactions can result in a capital gain according to the Skatteetaten:

‍

• Selling crypto assets for NOK or any other fiat currency
• Buying goods or services with crypto assets
• Swapping one crypto asset for another

‍

Capital Gains Tax Rate Norway

‍

‍As discussed in the above section there is no capital gains tax in Norway, instead, all capital gains are taxed as income and are subject to a flat 22% income tax. The calculation of this rate is based on the aggregate value of cryptocurrencies held as of the first day of the tax year being assessed. It's important to note, however, that if an individual's monthly income surpasses 14,541 NOK or their annual income goes beyond 174,500 NOK, a progressive bracket tax will be imposed.

The income tax structure in Norway consists of a base rate (alminnelig inntekt) of 22%, which applies to the majority of taxpayers. However, residents of Finnmark and Nord-Troms benefit from a reduced rate of 18.5%. Additionally, Norway implements a progressive tax system known as the step tax (trinnskatt), often referred to as the bracket tax, which operates on four distinct levels as outlined below.

‍

This progressive tax is levied on personal income, such as salaries and benefits, with five steps:

‍

• Step 0: Income up to NOK 217,400 – 0%
• Step 1: Income from NOK 217,401 to NOK 306,050 – 1.7%
• Step 2: Income from NOK 306,051 to NOK 697,400 – 4.0%
• Step 3: Income from NOK 697,401 to NOK 942,400 – 13.7%
• Step 4: Income from NOK 942,401 to NOK 1,410,750 – 16.7%
• Step 5: Income above NOK 1,410,751 – 17.7%

Source: https://www.skatteetaten.no/en/rates/bracket-tax/ 

‍

How to Calculate Crypto Gains or Losses

‍

Capital gains or losses are calculated according to the following formula:

‍

Capital Gains = (Gains incurred from disposal) - (Cost Basis)

‍

And evidently, it’s a two-step process.

To streamline your crypto tax reporting, the initial step entails determining the cost basis for each asset you have swapped, sold, or gifted within a given tax year. This involves summing up the acquisition cost along with any applicable fees (such as transaction fees or gas fees) incurred during the acquisition process.

Once you have successfully determined the cost basis, calculating your capital gains or losses becomes a straightforward process. Simply subtract your cost basis from the disposal amount. If the result is positive, it signifies a gain and is subject to a flat income tax rate of 22%. Conversely, if the result is negative, it represents a loss. While no tax liabilities arise from losses, it is essential to actively track and report all losses to Skatteetaten. Doing so allows you to leverage them to reduce your overall tax bill effectively.

‍

Example:

‍

‍Consider the following transactions:

03/02/2023 - David buys 0.5 BTC for 80,000 NOK

06/04/2023 - David buys 3 ETH for 15,000 NOK each

05/06/2023 - David buys 1 BTC for 1,70,000 NOK and 2 ETH for 16,000 NOK each

13/06/2024 - David sells 1 BTC for 1,80,000 NOK

19/08/2024 - David sells 3 ETH for 19,000 NOK each

Now a total of two disposals were made by David during the year. So let’s calculate the gain for each disposal one at a time:

‍

1st Disposal

‍

‍David sells 1 BTC for 1,80,000 NOK.

Note that we will be using the FIFO accounting method as recommended by Skatteetaten. We have discussed accounting methods in more detail later in the guide. For now, a simple way to understand how the FIFO (First-In-First-Out) method works is to just assume that the first asset you buy is the first one you sell.

Now, there are two different types of BTC in this transaction.

BTC-1, acquired on 03/02/2023 for 80,000 NOK and BTC-2, acquired on 05/06/2023 for 1,70,000.

Cost Base for BTC-1 = 80,000 NOK for 0.5 BTC

Disposal Amount =  90,000 NOK for 0.5 BTC (1 BTC was sold for 1,80,000)

Capital Gain for BTC-1 = 90,000 - 80,000 NOK =10,000 NOK

Similarly, BTC-2 was acquired for 1,70,000 NOK (85,000 NOK for 0.5 BTC)

Capital Gain for BTC-2 = 90,000 - 85,000 NOK = 5,000 NOK

Total Gain =  10,000 + 5,000 NOK = 15,000 NOK

‍

2nd Disposal

‍

‍3 ETH sold for 19,000 NOK each.

If we use the FIFO accounting rules, these ETH tokens are the same ones that were acquired on 06/04/23 for 15,000 NOK.

Cost Base =  15,000 NOK

Disposal Amount = 19,000 NOK

Capital Gain for 1 ETH = 19,000 - 15,000 NOK = 4,000 NOK

So for 3 tokens, the total gain comes out to be = 3*4,000 NOK = 12,000 NOK

Total Gain for both disposals = 15,000 + 12,000 NOK =  27,000 NOK

‍

Crypto Losses

‍

‍In Norway, taxpayers can offset capital losses against capital gains or other taxable income incurred in the same fiscal year. If the total amount of capital losses exceeds the aggregate amount of capital gains in a particular year, the excess can be carried forward and applied as a tax deduction for up to 10 years.

It is important to note that only capital losses from the sale of assets that would have generated taxable gains are eligible for deduction. Moreover, the tax deduction for capital losses is subject to certain limitations. For instance, the maximum amount that can be deducted in a tax year is the lower of 10,000 NOK or 10% of the taxpayer's total taxable income.

You should maintain accurate records of your capital gains and losses and consult with a tax professional or the Norwegian Tax Administration for guidance on the rules and limitations regarding the use of capital losses as a tax deduction.

‍

Lost or Stolen Crypto

‍

‍Taxpayers in Norway may claim a tax deduction on lost or stolen crypto under certain conditions. The taxpayer must provide evidence that the loss resulted from theft or embezzlement and that a police report has been filed.

It is important to note that the Norwegian tax authorities will require proof to support the deduction claim. This may involve submitting a police report or other relevant documents to support your claim, and the tax authorities may carry out their investigation to confirm the loss.

Moreover, the amount of the tax deduction may be subject to certain limitations or restrictions, and the specific circumstances surrounding the loss may also influence the tax deduction available.

‍

Crypto Tax Breaks Norway

‍

‍The Norwegian tax authorities offer some legal gateways to reducing your tax bill and here’s what you need to know about them:

‍

1. Personal Tax Allowance

‍

Every Norwegian resident is offered a basic deduction on any form of income including general income, business income, capital gain, or interest income. For the 2024 tax year, it’s set at NOK 88,250.

However, it’s important to note that this allowance is significantly reduced when staying/living in Norway for only parts of the year.

‍

2. Tax-Loss Harvesting

‍

You can use your capital losses to offset your gains and reduce your tax bill. This has been thoroughly discussed in the section titled “Crypto Losses”.

‍

3. Pension savings

‍

You can deduct up to NOK 40,000 from your taxable income for pension savings.

‍

4. Childcare Expenses

‍

If you have children under the age of 12, you can deduct up to a certain amount for childcare expenses. For the 2024 tax year, the maximum deduction for childcare expenses is as follows:

‍

• For One Child: Up to NOK 25,000 per year (Aged 11 years or under).
• For Each Additional Child: An additional NOK 15,000 per child per year

‍

Important Considerations:

‍

• Age Limit: The child must be 11 years old or younger during the income year. For children aged 12 or older with special care needs due to disabilities, parents may still be eligible for the deduction upon providing appropriate documentation, such as a medical certificate.

• Documentation: Parents must retain original receipts and vouchers that clearly state the name and address of the service provider. For expenses exceeding NOK 10,000 annually, payments should be made via bank transactions or salary deductions to qualify for the deduction.

• Shared Custody: In cases where parents are separated or divorced, the deduction is typically granted to the parent with whom the child has lived for the majority of the year. If parents wish to distribute the deduction differently, both must adjust their tax returns accordingly.

• Employer Subsidies: If an employer provides subsidies for daycare, the taxed amount is considered part of the childcare expenses and can be included in the deduction, in addition to the parent's personal contribution.

‍

For comprehensive information and guidance on claiming the parental allowance, please refer to the Norwegian Tax Administration's official resources.

‍

Crypto Cost Basis Method Norway

‍

‍In Norway, the accounting method used for cost basis calculations is the FIFO (First-In, First-Out) method. This means that when you sell your crypto assets or any other asset for that matter, the cost basis of the asset sold is calculated based on the price and date of the oldest asset you possess.

‍For example, if you purchased 100 ETH tokens for NOK 2,000 per token on January 1, 2023, and then purchased an additional 100 ETH tokens for NOK 2,100 per token on January 1, 2024, the cost basis for the first 100 tokens sold would be NOK 2.000 per token, and the cost basis for the second 100 tokens sold would be NOK 2,100 per token.

Note that the FIFO method is the default method used in Norway, but there are other methods available, such as the LIFO (Last-In, First-Out) method and the HIFO method. However, these methods require specific approval from the tax authorities and are generally only available to certain types of businesses or taxpayers.

‍

Here’s how some of the other accounting methods work:

‍

1. Last-In-First-Out- The first token you buy is the last token you sell.
2. Highest-In-First-Out- The most expensive token you buy is the first token you sell.

‍

Crypto Wealth Tax Norway

‍

‍Individuals holding cryptocurrencies may be subject to the wealth tax imposed by their municipality and state, as the value of their crypto assets is taken into account when calculating their net wealth as of January 1st of each year. In other words, owning cryptocurrencies can impact an individual's overall net worth and potential tax liabilities.

‍

Your net wealth is calculated using the following formula:

‍

Net Wealth = (Total Value of Assets) - (Deductible Debt)

‍

Crypto Wealth Tax Rate Norway

‍

‍Your net wealth is taxed based on your Tax Class and Net Asset Threshold as mentioned below:

‍

Municipal Wealth Tax

‍

‍

State Wealth Tax

‍

‍

Tax-Free Crypto Transactions

‍

‍Not all crypto transactions are taxable in Norway. Here are some transactions that are considered non-taxable by the Norwegian tax authorities:

‍

• Lost/Stolen Crypto: Crypto assets that were stolen by phishing attacks, hacks, exchange frauds, or lost due to forgotten private keys are considered non-taxable and can even be used as tax-deductible in some instances.

• Transferring Crypto Between Wallets: Transferring crypto between your wallets is a non-taxable event as long as you can prove ownership of transferred assets.

• Buying Crypto with Fiat: Buying crypto with fiat currency is a non-taxable transaction as it doesn’t involve disposing of an asset.

• Gifting Crypto: Gifting Crypto is a non-taxable event in Norway as there are no gift taxes. However, make sure you keep detailed records of the transaction including the gift’s origin.

• Donating Crypto: Donating crypto to a registered charity with no connections to you or your business is also considered a non-taxable event.

‍

Taxed Transactions

‍

‍Listed below are some of the transactions that attract tax liabilities according to the Skatteetaten:

‍

• Sale of Crypto Assets: If you sell your cryptocurrencies at a profit, the profit is subject to capital gains tax. The tax rate is 22% for individuals and 25% for companies.

• Crypto Mining: If you mine cryptocurrencies as a business, the income from mining is subject to ordinary income tax. The tax rate is based on your income tax rate.

• Crypto Staking: If you earn staking rewards by holding crypto assets in a proof-of-stake network, the rewards are subject to ordinary income tax.

• Trading of crypto assets: If you trade crypto assets frequently, the profits are subject to ordinary income tax. The tax rate is based on your income tax rate.

• Using crypto assets to pay for goods and services: If you use crypto assets to pay for goods and services, the transaction is subject to value-added tax (VAT) at a rate of 25%.

‍

Tax on Mining Crypto Norway

‍

‍If you have earned any income from mining activities or received mining rewards you’re liable for income tax. Moreover, it is mandatory to declare the value of your mining earnings in NOK at the time of token receipt, and you should maintain records of the NOK market value of that time for each token.

What Skatteetaten says about mining:

“Mining of virtual currency means that you receive virtual currency in return for verification activity. Mining usually requires computing power for the method ‘Proof of Work’ to verify transactions on the blockchain and to extract virtual currency.”

You may claim deductions for expenses like equipment, software, and electricity, with an annual depreciation of 30%. Furthermore, if you’re involved in a cooperative mining operation, you must distribute the deductions equally amongst all participants.

‍

Tax on Staking Crypto

‍

‍Although mining and staking are different in the way they add and validate new blocks of transactions on the blockchain, they’re treated the same from a tax perspective. Staking rewards are taxed as regular income similar to mining rewards and you need to report these transactions to the tax authorities to steer clear of any tax complications.

‍

Crypto margin trading, futures, and CFDs Norway

‍

‍While margin and futures trading in cryptocurrencies can yield higher profits, it also entails greater risk. Presently, there is no official guidance on how such activities are to be taxed in Norway.

However, you can use the established regulations on margin, futures, and derivatives trading in conventional financial markets as a reference which explicitly states - any gains or losses arising from such trades are treated like regular income and will be subjected to income tax.

‍

Gifts and Donation Taxes

‍

‍Receiving crypto as a gift in itself is not a taxable event in Norway, you only pay taxes when you dispose of the gifted assets by selling or swapping them. Note that gifted assets inherit the cost base equal to the acquisition cost paid to acquire these assets by the gifter.

As far as gifting crypto is concerned, there are no clear guidelines on whether tax exemptions can be claimed on gifted assets. Crypto donations are in the same boat as well, because Skatteetaten is yet to release any guidelines on the matter. However, if we assume crypto donations to be similar to fiat donations, you can claim a tax deduction if certain criteria are met.

• The organization you’re making the donations to must comply with the tax law’s requirements for activity, purpose, and national scope.

• Each donation should be more than 500 NOK

• The donations must be pre-filled in the tax return

You can access a list of all approved organizations here. Note that you should never fill your donations yourself in the tax return, if your donations are not pre-filled you can contact the organization to report the donation on your fødselsnummer or birth number.

‍

NFT Taxes in Norway

‍

According to Norway's taxation guidelines NFTs are classified as virtual assets and are subject to the same tax regulations as other virtual assets. Although there are various use cases for NFTs, they are all treated as assets and are subject to the following tax treatment.

Minting an NFT may be subject to income tax if the smart contract involved in the process burns crypto assets for minting the NFT on-chain, as this would result in a realization. However, minting an NFT without disposing of any assets, which may be the case with free mints, does not attract any tax liabilities.

Note: Realization typically refers to the conversion of an asset into cash or other forms of value, such as securities or goods.

When selling an NFT, the transaction is considered a realization and therefore, attracts income tax.

‍

DAO Taxes

‍

‍Skatteetaten is yet to release guidelines on the taxation of income received from DAOs, however, from what we can extrapolate from the existing guidelines, it will be viewed the same way as income from other sources like staking, mining, and airdrops.

We do suggest seeking advice from an experienced tax accountant for transactions concerning DAOs to avoid legal complications in the future.

‍

ICO Taxes

‍

‍ICOs are events that allow you to receive tokens from an unreleased project at a discounted price. It functions in a similar way as IPOs in the traditional securities market, you use mainstream tokens like BTC and ETH to fund the project and receive native tokens in return.

ICOs are viewed the same way as crypto-to-crypto trades from a tax perspective, you are taxed on the disposal of mainstream tokens like BTC and ETH at receipt and you pay taxes again when you decide to dispose of these assets. Note that the new tokens received inherit the cost base equal to the FMV of these tokens at the point of receipt i.e. the price you paid using mainstream tokens.

‍

DeFi Crypto Taxes Norway

‍

‍If you’re engaging in financial activities on a decentralized platform, also known as DeFi, it is crucial to be aware of the tax implications. While many countries, such as the USA and Germany, have not yet provided clear guidelines on DeFi taxes, taxpayers always take caution to avoid any potential issues.

Fortunately, in Norway, Skatteetaten has issued guidelines regarding DeFi transactions, which offer a detailed insight into the tax treatment of DeFi transactions.

Skatteetaten has split virtual currencies into seven categories, each with different subcategories for incoming and outgoing transactions. It's important to understand when you've "realized" a cryptocurrency, which means you've transferred ownership in exchange for payment and stopped owning it.

If you're involved in decentralized finance (DeFi) transactions, you need to keep records of your realizations and pay income tax. Moreover, you must figure out whether you've made a profit, loss, or income from your DeFi transactions. Norway has some specific rules for DeFi that are different from other countries.

‍

Here are a few examples:

‍

• If you swap or exchange cryptocurrency or tokens, it's considered a realization.
• The same goes for exchanging wrapped tokens, making deposits in liquidity pools, and receiving returns from those pools.
• Any income you receive from participation in the liquidity pool is taxable, even if it's not a change in value.
• Finally, if you receive a management token, it's considered income when you receive it, and any sale or exchange of that token is also considered a realization.

‍

How are Airdrops and Forks Taxed in Norway?

‍

‍Airdrops are typically regarded as gifts offered by either the blockchain or token holder. And although airdrops are generally small or negligible in value, you are liable for income tax. In some cases, the value of an airdrop at the time of acquisition may be zero, and if so, you can assign a zero acquisition cost. Moreover, you will still be liable to pay income tax when you sell the received assets.

Similar to airdrops, hard forks are also considered as income at the time of receipt. If there is no market value available for the received currency, you may set the acquisition cost to NOK 0. However, you will still be required to pay taxes upon the disposal of the received assets.

‍

When To Report Crypto Taxes in Norway?

‍

‍The deadline for reporting cryptocurrency taxes in Norway usually falls on April 30th. If you’re a prior taxpayer or have filed tax earlier, you will receive an email notification containing your preliminary tax return information between March 14th and March 31st.

‍

‍

How To File Crypto Taxes in Norway?

‍

‍If you are a crypto trader or investor in Norway, you must know how to report your crypto taxes. Fortunately, Skatteetaten has simplified the process and made it more convenient with its online tax portal.

You can submit your taxes online or by mail, depending on your preference and you need to submit your wealth, capital gains, and income tax together. If you have any questions regarding taxes or if you need assistance, you can contact Skatteetaten between 9:00 and 15:00 on weekdays.

Living outside Norway? No problem.

Dial +47 22 07 70 00 or 800 80 000, and the Norwegian tax authority is at your service guiding you through all the steps of your crypto taxation. Moreover, Skatteetaten offers a video guide on how to file your crypto taxes, which might be helpful for you if it’s your first time filing crypto taxes.

Our guide will primarily cover how to file your crypto taxes online in Norway. If you choose to use Skattetaten's online platform, follow these steps to ensure a hassle-free process and avoid potential tax complications down the line:

‍

Option 1:

‍

‍If you wish to enter information for each cryptocurrency

1. Go to skatteetaten.no and scroll down to the "Finans" heading
2. Click on "Andre finansprodukter og virtuell valuta/kryptovaluta" and then "Virtuell valuta/kryptovaluta"
3. Check the box saying "Jeg vil legge inn opplysninger for hver enkelt" (I will enter information for each individual)
4. For each cryptocurrency, fill out the following information:

• Name of the cryptocurrency/digital currency
• Amount owned on 31 December in the income year
• Property value
• Taxable gains
• Deductible losses
• Other taxable capital income (e.g., mining, staking, etc.)
• The Wallet address used for this currency

‍

Option 2:

‍

‍If you wish to enter aggregated tax information for many virtual currencies/cryptocurrencies

1. Go to skatteetaten.no and scroll down to the "Finans" heading

2. Click on "Andre finansprodukter og virtuell valuta/kryptovaluta" and then "Virtuell valuta/kryptovaluta"

3. Check the box saying "Jeg vil legge inn summertime skatteopplysninger for mange virtuelle valuta/kryptovaluta og må laste opp vedlegg som viser detaljer" (I want to enter aggregated tax information for much virtual currency/cryptocurrency and need to upload attachments showing details)

4. Upload a PDF file that shows your total wealth, gains, losses, and other capital income for the year, along with the exchanges and wallet addresses you have used

5. Fill out the following information:

• Property value
• Taxable gains
• Deductible losses
• Other taxable capital income

‍

After entering your information with either option, scroll down to "Årsak til endring/nye opplysninger" (reason for the change/new information), tick the box "Lagt til opplysninger som manglet" (Added information that was missing), and click "Ok". After you click “Ok”, you have successfully submitted your crypto tax return to Skattetaten.

However the process may seem cumbersome, there's no need to worry. You can sign up for online platforms like Kryptos which can simplify the procedure by offering step-by-step guidance, identifying potential deductions and credits, and facilitating the direct e-filing of your tax return with Skatteetaten.

‍

What crypto records will the Skatteetaten want?

‍

‍Skatteetaten would ask you to maintain sufficient documentation to substantiate the positions taken on your tax returns. Some of these documents are as follows.

‍

• The market value of your crypto assets on the day of purchase
• The market value of your crypto assets on the day of sale
• A detailed record of all profits and losses
• Date and time of each transaction
• Proof of all sales and purchases
• Documentation of all transfers made between personal and external wallets

‍

How to File Crypto Taxes Using Kryptos?

‍

‍Now that you’re aware of how your crypto transactions are taxed and what forms you need to fill out to complete your tax report, here’s a step-wise breakdown of how Kryptos can make this task easier for you:

‍

1. Visit Kryptos and sign up using your email or Google/Apple Account
2. Choose your country, currency, time zone, and accounting method
3. Import all your transactions from wallets and crypto exchanges
4. Choose your preferred report and click on the generate report option on the left side of your screen and let Kryptos do all the accounting.
5. Once your Tax report is ready, you can download it in PDF format.

If you still need clarification regarding the integrations or generating your tax reports, you refer to our video guide here.

‍

How to avoid crypto taxes in Norway

‍

‍Although there is no legal way to avoid crypto taxes entirely, the Norwegian tax authorities do offer some legal gateways to lower your tax bill:

‍

1. Use the tax allowances and credits to lower your tax bill
2. Use tax loss harvesting to lower your tax base
3. If you’re paying child support, you can claim a deduction as long as your children are less than 12 years of age.
4. Pension savings are tax deductible, you can deduct up to 40,000 NOK from your tax base as pension savings.

‍

FAQs

‍

1. Is crypto legal in Norway?

‍

Yes, cryptocurrency is legal in Norway. The Norwegian government recognizes cryptocurrency as an asset and a means of payment. In 2019, the Norwegian Financial Supervisory Authority (FSA) issued new regulations that required cryptocurrency exchanges operating in Norway to register with the FSA and comply with anti-money laundering (AML) and counter-terrorist financing (CTF) regulations. Additionally, cryptocurrency mining is also legal in Norway, and there are no restrictions on individuals or businesses holding cryptocurrencies.

‍

2. How is crypto taxed in Norway?

‍

Crypto transactions are considered taxable by the Skatteetaten and are subjected to two separate classes of tax. The first is income tax and the second is a wealth tax. Any gains or income that you make as a result of crypto transactions is taxed under the income tax laws and your crypto assets are considered in your net wealth calculations and therefore attract a marginal wealth tax as well. This has been thoroughly discussed in the above sections of the tax guide.

‍

3. Do you have to pay taxes on buying crypto in Norway?

‍

No, buying crypto in itself is not a taxable event. However, if it involves the disposal of another asset, then it is most certainly a taxable event. In other words, buying crypto with fiat is not taxable, however, buying one crypto asset and making the payment with another is a taxable event.

‍

4. How to file crypto taxes using Kryptos?

‍

We’ve already discussed how to file your crypto taxes in the above sections of the guide offering a step-wise breakdown of the entire process. However, we agree that it is unreasonably complicated even for someone with a fair amount of prior knowledge. Although there’s an easy way to file your crypto taxes using a crypto tax software called Kryptos.

Where all you need to do is log in on the platform, add all your trading accounts, wallets, and DeFi accounts and sip coffee while Kryptos does all the heavy lifting for you. The platform can auto-fetch all your transactions from the tax year and generate a legally compliant tax report within a matter of minutes while also suggesting ways to lower your tax bill. It works like magic, all you need to do is try it once.

‍

All content on Kryptos serves general informational purposes only. It's not intended to replace any professional advice from licensed accountants, attorneys, or certified financial and tax professionals. The information is completed to the best of our knowledge and we at Kryptos do not claim either correctness or accuracy of the same. Before taking any tax position/stance, you should always consider seeking independent legal, financial, taxation or other advice from professionals. Kryptos is not liable for any loss caused by the use of, or by placing reliance on, the information on this website. Kryptos disclaims any responsibility for the accuracy or adequacy of any positions taken by you in your tax returns. Thank you for being part of our community, and we're excited to continue guiding you on your crypto journey!

Kryptowährungen haben die Welt im Sturm erobert, und Deutschland ist keine Ausnahme. Doch mit den steigenden Krypto-Gewinnen kommt die Verantwortung, Steuern auf diese Gewinne zu zahlen. Als Krypto-Investor in Deutschland ist es wichtig, die Feinheiten der Krypto-Besteuerung zu verstehen, um rechtliche Probleme oder hohe Geldstrafen zu vermeiden. Aus diesem Grund haben wir diesen umfassenden Steuerleitfaden erstellt, um Ihnen zu helfen, sich durch die Komplexität der Krypto-Besteuerung in Deutschland zu navigieren. Von der Berechnung Ihrer Steuern über die Reduzierung der Steuerlast durch das HODLen von Vermögenswerten bis hin zu allem dazwischen – dieser Leitfaden ist Ihr Begleiter.

‍

Wie wird Krypto in Deutschland besteuert?

‍

Laut den Richtlinien des Bundesministeriums der Finanzen (BMF) sind alle Kryptowährungen, die Sie halten, digitale Wertdarstellungen, die nicht von einer Zentralbank oder einer öffentlichen Behörde ausgegeben oder garantiert werden. Dies bedeutet, dass Ihre Krypto-Vermögenswerte nicht als gesetzliches Zahlungsmittel oder Währung betrachtet werden, sondern für steuerliche Zwecke als Privatvermögen angesehen werden.

Da Kryptowährung als Privatvermögen betrachtet wird, was sich von Immobilien unterscheidet und spezifische steuerliche Auswirkungen hat, unterliegt jeder Gewinn aus solchen Transaktionen der individuellen Einkommensteuer und nicht der Kapitalertragssteuer. Der Verkauf Ihrer Krypto für Fiat-Währung, der Tausch von einer Krypto in eine andere oder das Verschenken von Krypto wird in Deutschland als Veräußern betrachtet und zieht steuerliche Verpflichtungen nach sich. Kapitalgewinne werden je nach Dauer des Haltens in kurzfristige oder langfristige Gewinne unterteilt. Wenn Sie Ihre Vermögenswerte innerhalb eines Jahres nach dem Erwerb veräußern, gelten Ihre Gewinne als kurzfristig und unterliegen der Einkommensteuer. Ein jährlicher Freibetrag von 1.000 € pro Person gilt für kurzfristige Gewinne.

Wenn Sie Ihre Vermögenswerte länger als ein Jahr halten, bevor Sie sie veräußern, ist die Transaktion in Deutschland steuerfrei.

Tokens, die als Mining- oder Staking-Belohnungen erhalten werden, gelten als zusätzliches Einkommen und müssen versteuert werden. Jeder Steuerzahler hat einen Freibetrag von 256 € für zusätzliches Einkommen.

‍

Beispiel:

‍

Betrachten Sie die folgenden Transaktionen:

‍

2024/02/13 - Sonia kauft 1 BTC für 10.000 € im Binance Wallet

2024/04/16 - Sonia verkauft den BTC für 13.000 € aus dem Binance Wallet

Kapitalgewinn = 13.000 € - 10.000 € = 3.000 €

Da dieser Gewinn höher als der Freibetrag von 1.000 € ist, ist er steuerpflichtig. Sie können jedoch den Freibetrag von Ihrem Gewinn abziehen, um Ihre tatsächliche Steuerbasis zu ermitteln.

Steuerbasis = 3.000 € - 1.000 € = 2.000 €

Betrachten wir nun eine weitere Reihe von Transaktionen:

2024/05/19 - Sonia erhält 6,25 BTC als Mining-Belohnungen im Binance Wallet

Wenn wir den Marktpreis von BTC bei Erhalt mit 12.000 € annehmen:

Der Gesamtwert der erhaltenen Tokens = 12.000 € * 6,25 = 75.000 €

Und das liegt weit über dem Freibetrag von 256 € für zusätzliches Einkommen. Aber Sie können diesen Betrag von Ihrem Einkommen abziehen, um Ihre Steuerbasis zu berechnen.

Steuerbasis = 75.000 € - 256 € = 74.744 €

Dies ist der Endbetrag, den Sie versteuern müssen.

‍

Kann das BZSt Krypto nachverfolgen?

‍

Falls Sie sich fragen, ob Sie einige Ihrer Transaktionen vor dem BZSt verstecken können, indem Sie diese nicht in Ihrer Steuererklärung angeben – die Antwort ist ein klares Nein mit Ausrufezeichen. Das BZSt hat Zugriff auf alle Ihre Aufzeichnungen und kann Ihre Steuererklärung leicht mit ihrer Datenbank abgleichen und feststellen, was nicht stimmt.

Seit die sechste EU-Anti-Geldwäsche-Richtlinie im Dezember 2020 in nationales Recht umgesetzt wurde, wurden regulierte Stellen in den EU-Mitgliedstaaten verpflichtet, die neuen Vorschriften bis zum 3. Juni 2021 zu erfüllen. Diese Stellen umfassen alle Börsen, die Finanzdienstleistungen im Krypto-Bereich anbieten, und müssen nun strengere Richtlinien befolgen, wann und wie sie ihre Kunden identifizieren.

Voraussichtlich später in diesem Jahr wird die kommende DAC-8 EU-Richtlinie zur Datenteilung dem Bundeszentralamt für Steuern (BZSt) die Möglichkeit geben, die Eigentümerschaft von Kryptowährungen zu überprüfen. Mit der vorgeschlagenen Richtlinie wird die deutsche Steuerbehörde ermächtigt, die Finanzdokumentation von Krypto-Unternehmen zu prüfen, um ein umfassendes Verständnis ihrer Krypto-Bestände zu erlangen.

‍

Kapitalertragssteuer Deutschland

‍

Wie bereits erwähnt, werden in Deutschland kurzfristige Kapitalgewinne als Einkommen behandelt und unterliegen den normalen Einkommensteuervorschriften. Langfristige Gewinne sind jedoch von der Besteuerung befreit. Daher ist es ratsam, eine vorsichtige Strategie zu verfolgen, indem man seine Vermögenswerte länger als ein Jahr hält, bevor man sie verkauft.

‍

Wie man Krypto-Gewinne und -Verluste berechnet

‍

Die Berechnung der Gewinne oder Verluste aus Ihren Kryptowährungsinvestitionen ist entscheidend in Steuerhoheitsgebieten, die Einkommensteuer auf Krypto-Verkäufe erheben. Um Ihren Kapitalgewinn zu berechnen, ziehen Sie den Verkaufspreis vom Kaufpreis ab. Wenn das Ergebnis positiv ist, handelt es sich um einen Gewinn, andernfalls um einen Verlust. Es ist wichtig zu beachten, dass in Deutschland alle Werte, die in der Berechnung von Kapitalgewinnen verwendet werden, in Euro angegeben werden müssen.

Die Standardformel zur Berechnung des Kapitalgewinns lautet:

‍

Kapitalgewinn = Verkaufspreis – Kaufpreis

‍

Der Verkaufspreis entspricht dem Wert der Kryptowährung zum Zeitpunkt der Veräußern. Diesen können Sie an einer Börse oder bei einem bekannten Preisaggregator entnehmen. Allerdings kann die Festlegung des Kaufpreises schwierig sein, da Sie den tatsächlichen Preis, den Sie bezahlt haben, um den Vermögenswert zu erwerben, genau ermitteln müssen.

‍

Beispiel:

‍

Betrachten Sie die folgenden Transaktionen:

‍

2024/03/14 - Michael kaufte 1 BTC für 12.000 € im Binance Wallet

2024/04/16 - Michael kaufte 3 ETH-Token zu je 1.400 € im Binance Wallet

2024/06/15 - Michael verkaufte 1 BTC für 20.000 € aus dem Binance Wallet

2025/05/01 - Michael verkaufte 3 ETH zu je 1.800 € aus dem Binance Wallet

Da der BTC-Verkauf innerhalb eines Jahres nach dem Erwerb erfolgte, sind die Gewinne unter den Regeln der Einkommensteuer steuerpflichtig.

Kapitalgewinn = Veräußern-Betrag – Kostenbasis = 20.000 € – 12.000 € = 8.000 €

Da der ETH-Verkauf jedoch nach mehr als 12 Monaten stattfand, ist diese Transaktion steuerfrei.

‍

Krypto-Verluste Deutschland

‍

Wenn Sie Kryptowährung innerhalb eines Jahres verkauft haben und dabei einen Verlust anstelle eines Gewinns erzielt haben, sind Sie nicht verpflichtet, Steuern darauf zu zahlen. Es ist jedoch wichtig, diese Verluste zu dokumentieren, da sie verwendet werden können, um zukünftige Gewinne auszugleichen, was zu einer Verringerung Ihrer Steuerlast führt.

Wenn Sie keine Gewinne haben, die ausgeglichen werden können, erlaubt das deutsche Steuerrecht, dass Verluste in zukünftige Steuerjahre vorgetragen werden. Diese Regelung ermöglicht es, Ihre Steuerpflicht auf potenzielle zukünftige Gewinne zu reduzieren, was eine vorteilhafte Möglichkeit zur Optimierung Ihrer Steuersituation darstellt.

‍

Verlust und Diebstahl von Krypto

‍

Falls Sie Ihre Kryptowährung aufgrund betrügerischer Aktivitäten oder Krypto-Rug Pulls verlieren, könnte es möglicherweise möglich sein, dies als Verlust geltend zu machen. Es ist jedoch wichtig zu beachten, dass die spezifischen Kriterien für die Geltendmachung eines solchen Verlustes noch nicht vom BZSt (Bundeszentralamt für Steuern) eindeutig festgelegt wurden.

Wir empfehlen, sich direkt an das BZSt zu wenden, um Ihre Situation zu besprechen und ihnen alle relevanten Informationen zu liefern, wie zum Beispiel:

• Wann Sie den privaten Schlüssel erlangt haben und verloren haben
• Die Wallet-Adresse
• Die Kosten, die für den Erwerb der verlorenen oder gestohlenen Kryptowährung angefallen sind
• Menge der Kryptowährung in der Wallet zum Zeitpunkt des Verlustes
• Nachweise, dass die Wallet unter Ihrer Kontrolle war
• Alle Transaktionen, die mit Ihrer Identität oder einem verifizierten Konto an einer digitalen Börse verbunden sind.

Wenn Ihr Antrag vom BZSt genehmigt wird, kann dieser verwendet werden, um andere Einkommensteuern in demselben Steuerjahr auszugleichen.

‍

Krypto Steuererleichterungen Deutschland

‍

Obwohl es keinen legalen Weg gibt, die Krypto-Steuern vollständig zu vermeiden, gibt es einige Möglichkeiten, wie Sie weniger Krypto-Steuern zahlen können:

‍

1. Halten Sie Ihre Vermögenswerte länger als ein Jahr
2. Nutzen Sie steuerfreie Freibeträge wie 1.000 € für kurzfristige Gewinne und 256 € für zusätzliches Einkommen
3. Verluste erfassen und steuerlich nutzen, um Ihre Steuerlast zu senken
4. Nutzen Sie DeFi-Transaktionen strategisch, um Steuern auf solche Transaktionen zu vermeiden
5. Verschenken Sie Ihre Vermögenswerte an Ihren Ehepartner, wenn dieser in einer niedrigeren Steuerklasse ist
6. Führen Sie zulässige Ausgaben wie Gas-, Transaktions-, Slippage- und Netzwerkgebühren und ziehen Sie diese von Ihrer Steuerlast ab.

‍

Krypto-Kostenbasis-Methode Deutschland

‍

Wenn Sie den Kaufpreis nicht ermitteln können, wäre es eine konservative Vorgehensweise, ihn als null zu betrachten. In diesem Fall müssten Sie jedoch Steuern auf den vollen Betrag zahlen, was zu zusätzlichen Steuern führen kann.

Es wäre jedoch ungerecht, wenn Sie auf den vollen Betrag Steuern zahlen müssten.

Das BZSt hat klare Richtlinien, wie der Kaufpreis oder die Kostenbasis Ihrer Krypto-Vermögenswerte berechnet werden kann. Wenn möglich, können Sie die individuelle Identifikation verwenden und müssen über unterstützende Dokumente verfügen. Wenn jedoch eine individuelle Identifikation nicht möglich ist, wird die empfohlene Methode für die Buchführung "First in First out" (FIFO) verwendet, was bedeutet, dass die ältesten Coins zuerst verkauft werden.

‍

Beispiel:

‍

Betrachten Sie die folgenden Transaktionen:

2024/01/13 - Selim kaufte 1 BTC für 11.000 € im Binance Wallet

2024/01/23 - Selim kaufte einen weiteren BTC für 11.500 € im Binance Wallet

2024/02/13 - Selim kaufte 2 ETH-Token zu je 1.000 € im Binance Wallet

2024/04/11 - Selim kaufte 1 ETH für 1.200 € im Binance Wallet

2024/06/04 - Selim verkaufte 1 BTC für 14.000 € aus dem Binance Wallet

2024/06/24 - Selim verkaufte 1 ETH für 1.300 € aus dem Binance Wallet

2025/08/26 - Selim verkaufte den verbleibenden BTC für 15.000 € und die restlichen ETH-Token für je 1.500 €

Beachten Sie, dass wir die FIFO-Buchführungsmethode für die Berechnung des Kapitalgewinns verwenden.

Nun, wie aus dem oben stehenden Transaktionsbuch ersichtlich ist, wurden insgesamt 3 Veräußern getätigt.

‍

Gewinn aus der ersten Veräußern

‍

Die erste Veräußern fand am 2024/06/04 statt.
1 BTC wurde für 14.000 € verkauft.
Da wir die FIFO-Buchführungsmethode verwenden, handelt es sich bei diesem BTC um den am 2024/01/13 für 11.000 € gekauften.

Kapitalgewinn = Veräußern-Betrag - Kostenbasis = 14.000 € - 11.000 € = 3.000 €

‍

Gewinn aus der zweiten Veräußern

‍

Die zweite Veräußern fand am 2024/06/24 statt.
1 ETH wurde für 1.300 € verkauft.
Dieser ETH-Token wurde am 2024/02/13 für 1.000 € erworben.

Kapitalgewinn = Veräußern-Betrag - Kostenbasis = 1.300 € - 1.000 € = 300 €

‍

Gewinn aus der dritten Veräußern

‍

Die dritte Veräußern fand am 2024/08/26 statt.
2 ETH wurden für 1.500 € verkauft
1 BTC wurde für 15.000 € verkauft

Die BTC-Veräußern ist ziemlich einfach. Es handelt sich um den gleichen BTC, der am 2024/01/23 für 11.500 € erworben wurde.

Gewinn aus BTC-Verkauf = 15.000 € - 11.500 € = 3.500 €

Die ETH-Veräußern ist etwas komplizierter, weil nach der FIFO-Buchführungsmethode einer der ETH-Token für 1.000 € (ETH1) und der andere für 1.200 € (ETH2) erworben wurde. Daher wird der Gewinn für beide Token unterschiedlich sein:

Gewinn für ETH1 = 1.500 € - 1.000 € = 500 €
Gewinn für ETH2 = 1.500 € - 1.200 € = 300 €

‍

Gesamtkapitalgewinn

‍

Gesamtgewinn = 3.000 € + 300 € + 3.500 € + 500 € + 300 € = 7.600 €
Und da die Steuerbehörden einen Freibetrag von 1.000 € für kurzfristige Gewinne anbieten, können Sie diesen vom Gesamtbetrag abziehen, um Ihre Steuerbasis zu berechnen.

Steuerbasis = 7.600 € - 1.000 € = 6.600 €

‍

Krypto-Einkommensteuer Deutschland

‍

Da Kryptowährungen als Privatvermögen betrachtet werden, unterliegen sie nicht der Kapitalertragssteuer wie Aktien oder Wertpapiere. Gewinne aus dem Verkauf von Kryptowährungen unterliegen jedoch der Einkommensteuer.

‍

Kurzfristiger Handel

‍

Wenn Sie Ihre Kryptowährung weniger als ein Jahr halten, bevor Sie sie veräußern, unterliegen die erzielten Gewinne der regulären Einkommensteuer. Dies gilt für alle Arten der Veräußern, einschließlich dem Verkauf von Kryptowährung gegen Fiat-Währung, dem Tausch gegen eine andere Kryptowährung oder der Nutzung von Kryptowährung zum Kauf von Waren oder Dienstleistungen. Es ist zudem zu beachten, dass Ihnen ein steuerfreier Betrag von 1.000 € pro Kalenderjahr für kurzfristige Gewinne zur Verfügung steht.

‍

Langfristiger Handel

‍

Möchten Sie in Deutschland Krypto-Steuern sparen?

Das Warten von mindestens einem Jahr vor dem Verkauf Ihrer Krypto hilft Ihnen, Steuern vollständig zu vermeiden, was für deutsche Krypto-Investoren, die Geduld haben, eine gute Nachricht ist.

Neben den bereits erwähnten steuerpflichtigen Ereignissen für kurzfristige und langfristige Kapitalgewinne werden bestimmte Krypto-Transaktionen, wie Mining- oder Staking-Belohnungen, ebenfalls als Einkommen betrachtet und unterliegen der Einkommensteuer.

Wir werden diese im Detail besprechen. Zuvor möchten wir jedoch einen Blick auf die Einkommensteuersätze werfen, um zu verstehen, wie viel Sie möglicherweise schulden.

‍

Einkommensteuersatz Deutschland

‍

Die Höhe der Steuer, die Sie zahlen, hängt von Ihrem individuellen Einkommensteuersatz ab, der je nach Ihrem Gesamteinkommen im Steuerjahr zwischen 0 % und 45 % liegt. Diese Tabelle zeigt die Einkommensteuersätze für das Steuerjahr 2024.

‍

‍

Es ist wichtig zu beachten, dass diese Steuersätze den zusätzlichen Solidaritätszuschlag von 5,5 % nicht enthalten, der für alleinstehende Steuerzahler greift, die mehr als 19.450 € (früher 16.956 €) Einkommensteuer zahlen, sowie für verheiratete Steuerzahler, die mehr als 39.900 € (früher 33.912 €) Einkommensteuer zahlen.

‍

Wie man Krypto-Einkommen berechnet

‍

Wie bereits erwähnt, werden die meisten Transaktionen, die zu einem Gewinn führen, als Einkommen besteuert, und Einkommen aus Mining und Staking wird ebenfalls als zusätzliches Einkommen betrachtet und unterliegt der Einkommensteuer.

Daher müssen Sie lediglich alle individuellen Gewinne und Verluste aus Ihren Transaktionen addieren, und die Steuerbasis, die Sie erhalten, ist Ihr endgültiges Einkommen.

‍

Steuerfreie Krypto-Transaktionen Deutschland

‍

Wenn Sie sich an einer dieser Transaktionen beteiligt haben, unterliegen Sie in Deutschland (mit Ausnahme einiger Fälle) keiner Steuerpflicht:

• Verkauf von Kryptowährungen, die länger als ein Jahr gehalten wurden
• Schenkung von Kryptowährung an Freunde oder Familie
• Einnahmen von weniger als 1.000 € in kurzfristigen Gewinnen und Einkommen innerhalb eines Jahres
• Erwerb von Kryptowährung mit EUR
• Verkauf von gestaketen oder geliehenen Kryptowährungen nach einem Jahr
• Übertragung von Kryptowährung zwischen Wallets
• Erhalt eines Airdrops ohne eigene Handlung
• Erhalt neuer Coins durch Hard Forks
• Erhalt und Einlösen von Utility-Tokens

‍

Hinweis: In einigen Fällen können Airdrops und Hard Forks steuerpflichtige Krypto-Transaktionen sein, die wir später noch im Detail besprechen werden.

‍

Taxed Crypto Transactions Germany

‍

If you engage in any of the following activities within one year, you may be subject to taxation.

‍

• Selling cryptocurrency for fiat currency
• Exchanging cryptocurrency for another coin
• Using cryptocurrency to purchase goods or services
• Investing in an ICO or IEO, earning cryptocurrency as income, &
• Receiving Cryptocurrency through mining or staking activities

‍

Steuer auf Mining von Krypto Deutschland

‍

In Deutschland löst das Mining von Kryptowährungen steuerpflichtige Ereignisse aus, unabhängig davon, welcher Token abgebaut wird. Wenn Sie am Mining beteiligt sind und Token als Belohnungen erhalten, unterliegen diese Token der Einkommensteuer.

Es ist wichtig, daran zu denken, dass alle mit dem Mining-Prozess verbundenen Ausgaben als Steuerabzüge geltend gemacht werden können. Diese Kosten sollten vom Marktwert der Token zum Zeitpunkt des Erhalts abgezogen werden. Der resultierende Wert wird Ihre steuerpflichtige Einkommensbasis darstellen.

Darüber hinaus müssen Sie Einkommensteuer zahlen, wenn Sie diese Vermögenswerte durch Verkauf, Tausch oder Schenkung veräußern.

‍

Steuer auf Staking von Krypto Deutschland

‍

Obwohl Mining und Staking sehr unterschiedliche Aktivitäten sind, werden sowohl Mining- als auch Staking-Belohnungen steuerlich gleich behandelt. Das BZSt hat klargestellt, dass alle Staking-Belohnungen als zusätzliches Einkommen versteuert werden und die Kostenbasis dem Marktwert der Token bei Erhalt entspricht.

Wenn Sie diese Token veräußern und dabei einen Kapitalgewinn erzielen, unterliegen diese ebenfalls der Besteuerung. Wenn Sie die Token jedoch länger als ein Jahr halten, bevor Sie sie veräußern, müssen Sie keine Steuern zahlen.

‍

Krypto Margin Trading, Futures und CFDs

‍

Krypto-Nutzer, die im Margin- oder Futures-Handel aktiv sind, können höhere Gewinne erzielen, aber auch mehr Risiko eingehen. Derzeit gibt es keine offizielle Anleitung zur Besteuerung solcher Handelsaktivitäten in Deutschland, jedoch können bestehende Vorschriften zum Margin-, Futures- und Derivatehandel in traditionellen Finanzmärkten als Grundlage dienen. Wenn Handelspositionen in Kryptowährung beglichen werden, unterliegen sie der Einkommensteuer, und wenn sie in Nicht-Krypto-Vermögenswerten beglichen werden, unterliegen sie wahrscheinlich der Kapitalertragssteuer. Die Besteuerung erfolgt zum Zeitpunkt des Schließens der Position, und es wird empfohlen, für spezifische Situationen einen Steuerberater hinzuzuziehen.

‍

Krypto Geschenke und Spenden Steuer

‍

In Deutschland wird das Verschenken von Bitcoin oder anderen Kryptowährungen an Ihre Liebsten wie jedes andere Geschenk behandelt. Geschenke sind bis zu 20.000 € für Freunde und bis zu 500.000 € für Ehepartner steuerfrei. Beträge, die diese Grenzen überschreiten, unterliegen der „Schenkungssteuer“, die je nach Empfänger (z. B. Ehepartner, Kinder, Eltern, Geschwister oder Freunde) unterschiedlich ausfällt. Die Steuersätze für Geschenke reichen von 7 % bis 50 %. Die Steuerbefreiungsgrenzen werden alle 10 Jahre zurückgesetzt.

Krypto-Spenden wiederum sind eine Grauzone, was die Besteuerung von Krypto in Deutschland betrifft. Wir werden mehr Details zu ihrer Besteuerung hinzufügen, sobald neue Richtlinien zu diesem Thema verfügbar sind.

‍

NFT-Steuern Deutschland

‍

NFTs werden von den Steuerbehörden wie andere Token behandelt, was zu vergleichbaren steuerlichen Auswirkungen für diese Krypto-Vermögenswerte führt, es sei denn, Sie sind der Schöpfer der NFTs.

Wenn Sie NFTs besitzen und diese innerhalb eines Jahres nach Erwerb verkaufen, unterliegen alle erzielten Gewinne der Einkommensteuer. Wenn Sie sie jedoch länger als ein Jahr halten, sind alle Gewinne aus dem Verkauf steuerfrei.

Andererseits, wenn Sie als Schöpfer NFTs aus der Blockchain prägen und diese mit Gewinn verkaufen, wird das Einkommen aus diesem Verkauf als künstlerisches oder geschäftliches Einkommen betrachtet und unterliegt daher der Einkommensteuer. Es besteht die Möglichkeit, dass diese Transaktionen auch der Gewerbesteuer unterliegen. Das BMF (Bundesministerium der Finanzen) hat jedoch noch keine Richtlinien zur Besteuerung von NFTs veröffentlicht. Daher empfehlen wir, sich an einen Steuerberater zu wenden, um ein besseres Verständnis der steuerlichen Auswirkungen von NFTs zu erhalten.

‍

Krypto ICO-Steuern

‍

Krypto-ICOs sind spezielle Fundraising-Events, bei denen Investoren Tokens aus einem noch nicht veröffentlichten Projekt kaufen können, ähnlich wie bei IPOs in traditionellen Wertpapiermärkten. Die Transaktionen betreffen in der Regel gängige Tokens wie BTC und ETH.

Das BZSt betrachtet diese Transaktionen als Krypto-zu-Krypto-Deals und diese Transaktionen stellen ein steuerpflichtiges Ereignis dar. Die Tokens erben die Kostenbasis, die dem FMV (fair market value) der Tokens zum Zeitpunkt des Erhalts entspricht.

Beachten Sie, dass Sie nur dann Steuern zahlen, wenn Sie diese Tokens innerhalb eines Jahres nach Erhalt veräußern. Wenn Sie die Tokens länger als ein Jahr halten, bevor Sie sie veräußern, entstehen keine Steuerverpflichtungen.

‍

DAO Steuern

‍

Es gibt keine klare Anleitung vom BZSt bezüglich Einkünften aus DAOs. Es besteht jedoch eine hohe Wahrscheinlichkeit, dass diese Einkünfte als zusätzliches Einkommen behandelt und entsprechend besteuert werden. Wir empfehlen, einen erfahrenen Steuerberater zu Rate zu ziehen, wenn es um Einkünfte aus DAOs geht.

Wir werden hier weitere Details hinzufügen, sobald neue Richtlinien bekannt werden.

‍

DeFi Krypto-Steuern in Deutschland

‍

DeFi, oder dezentrale Finanzen, ist ein relativ neuer Markt, und wie bei vielen anderen Steuerbehörden hat das BZSt in Deutschland noch keine detaillierte Anleitung veröffentlicht, wie DeFi-Investitionen besteuert werden. Das bedeutet jedoch nicht, dass DeFi-Investoren keine Steuern auf ihre Transaktionen zahlen müssen. Stattdessen müssen Investoren die aktuellen Richtlinien zur Krypto-Steuer des BZSt interpretieren und auf ihre DeFi-Investitionen anwenden. Alternativ wird empfohlen, einen erfahrenen Krypto-Steuerberater zu Rate zu ziehen, um sich im komplexen Steuermarkt für DeFi zurechtzufinden.

Im Hinblick auf die steuerlichen Auswirkungen von DeFi gibt es einige mögliche Szenarien:

Zunächst wird das Verdienen neuer Tokens über DeFi-Protokolle, wie Staking, Liquidity Mining oder Yield Farming, wahrscheinlich vom BZSt als zusätzliches Einkommen betrachtet. In diesem Fall werden neue Tokens oder Coins, die durch diese Transaktionen erhalten werden, mit der Einkommensteuer zum Zeitpunkt des Erhalts besteuert, wenn das zusätzliche Einkommen des Investors €256 übersteigt.

Zweitens können auch Token, die in DeFi-Protokollen an Wert gewinnen, steuerpflichtige Transaktionen darstellen. Viele DeFi-Protokolle stellen Liquiditätspool-Token anstelle neuer Tokens aus, die das Kapital des Investors im Pool repräsentieren und an Wert gewinnen können, basierend auf den Belohnungen, die aus dem Pool erhalten werden. Wenn ein Investor sein Kapital durch den Handel mit seinen Liquiditätspool-Token zurückzieht, realisiert er einen Gewinn, der je nach Haltezeit seiner ursprünglichen Kapitalanlage und seiner Liquiditätspool-Token steuerpflichtig sein kann.

‍

Wie werden Airdrops und Forks in Deutschland besteuert?

‍

Airdrops

‍

Tokens, die über Airdrops erhalten werden, sind möglicherweise steuerpflichtig, abhängig von den Handlungen des Empfängers. Wenn der Empfänger etwas getan hat, um sich für den Airdrop zu qualifizieren, werden die Airdrops als Einkommen betrachtet und unterliegen somit der Einkommensteuer.

Wenn der Empfänger nichts für den Airdrop getan hat, wird der Verkauf der erhaltenen Assets von den Steuerbehörden nicht als steuerpflichtiges Ereignis angesehen.

‍

Forks

‍

Da Soft Forks keine neuen Tokens für die Nutzer generieren, gelten sie als steuerfreies Ereignis. Bei Hard Forks hat das BMF klargestellt, dass für Privatpersonen keine Einkommensteuer beim Empfang von Krypto durch einen Hard Fork zu zahlen ist. Wenn jedoch diese Krypto innerhalb eines Jahres nach dem Empfang verkauft wird und einen Wert von mehr als 1.000 € erreicht, muss Einkommensteuer gezahlt werden.

‍

Wann sollten Krypto-Steuern in Deutschland gemeldet werden?

‍

Als Steuerzahler müssen Sie Ihre Steuererklärung für das vergangene Jahr bis zum 31. Juli des Folgejahres einreichen. Zum Beispiel, wenn Sie 2024 Einkommen erzielt haben, müssen Sie Ihre Steuererklärung bis zum 31. Juli 2024 einreichen.

Wenn Sie jedoch einen Steuerberater hinzuziehen, kann dieser Ihre Steuererklärung bis zum 31. Mai des Folgejahres einreichen. Wenn Sie also einen Steuerberater für das Steuerjahr 2026 beauftragen, hat dieser bis zum 31. Mai 2026 Zeit, die Steuererklärung einzureichen.

‍

Wie man Krypto-Steuern in Deutschland einreicht

‍

Alle Gewinne oder Einkünfte, die Sie aus Krypto-Assets erzielt haben, müssen dem BZSt in Ihrer Steuererklärung gemeldet werden. Nachdem Sie Ihr zu versteuerndes Einkommen und die Kapitalgewinne ermittelt haben, können Sie einen der folgenden Wege wählen, um Ihre Steuern einzureichen:

‍

Über ELSTER (Online-Steuerportal) Verwendung von Papierformularen

‍

Steuern über ELSTER einreichen

‍

Folgen Sie den unten aufgeführten Schritten, um Ihre Steuern online einzureichen, ohne unterwegs auf Blockaden zu stoßen:

‍

1. Gehen Sie auf die ELSTER-Website und registrieren Sie sich für ein Konto. Sie benötigen Ihre persönlichen Daten, einschließlich Ihres Namens, Ihrer Adresse und Ihrer Steueridentifikationsnummer (TIN).
2. Nach der Registrierung laden Sie die ELSTER-Software auf Ihren Computer herunter. Die Software ist kostenlos auf der ELSTER-Website erhältlich.
3. Öffnen Sie die ELSTER-Software und geben Sie Ihre Steuerinformationen ein. Die Software führt Sie durch den Prozess und Sie können Ihre Fortschritte speichern und später fortfahren, falls erforderlich.
4. Wenn Sie Ihre Steuererklärung abgeschlossen haben, reichen Sie diese über die ELSTER-Software ein. Sie erhalten eine Bestätigung, dass Ihre Steuererklärung eingereicht wurde.
5. Nachdem Sie Ihre Steuererklärung eingereicht haben, müssen Sie diese elektronisch mit Ihrem ELSTER-Zertifikat unterschreiben. Wenn Sie noch kein ELSTER-Zertifikat haben, können Sie eines auf der ELSTER-Website beantragen.
6. Nach der Einreichung Ihrer Steuererklärung erhalten Sie einen Steuerbescheid vom Finanzamt. Dieser informiert Sie, ob Sie zusätzliche Steuern zahlen müssen oder ob Sie eine Rückerstattung erhalten.

‍

Steuern mit Papierformularen einreichen

‍

Um Ihre Steuern auf die traditionelle Weise mit Papierformularen einzureichen, benötigen Sie folgende Formulare, um alle Ihre Transaktionen korrekt zu melden:

‍

• Hauptvordruck ESt 1 A (Das allgemeine Steuerformular) Sie müssen das Formular Hauptvordruck ESt 1 A ausfüllen, um alle Ihre Kapitalgewinne und Einkünfte aus Quellen außer Krypto zu melden. Dieses Formular fordert reguläre Einkommenssteuerdaten an.
• Anlage SO (Für sonstige Einkünfte) Dieses Formular ist für die Kapitalgewinne und Einkünfte, die Sie aus Krypto-Assets erzielt haben. Sie müssen alle Ihre Krypto-Transaktionen und die Gewinne, die Sie im gesamten Steuerjahr erzielt haben, melden.

‍

Welche Krypto-Aufzeichnungen benötigt das BZSt?

‍

Wie viele andere Steuerbehörden erwartet auch das BZSt von Ihnen, dass Sie detaillierte Aufzeichnungen über alle Ihre Transaktionen der letzten 5 Jahre führen. Sie müssen folgende Aufzeichnungen führen:

‍

• Datum Ihrer Krypto-Transaktionen
• Den Wert der Krypto zum Zeitpunkt der Transaktion
• Details zur Art der Transaktion und den beteiligten Parteien

‍

Wie man Krypto-Steuern mit Kryptos einreicht?

‍

Nachdem Sie nun wissen, wie Ihre Krypto-Transaktionen besteuert werden und welche Formulare Sie ausfüllen müssen, um Ihre Steuererklärung zu erstellen, hier eine Schritt-für-Schritt-Erklärung, wie Kryptos diese Aufgabe für Sie erleichtern kann:

‍

1. Besuchen Sie Kryptos und melden Sie sich mit Ihrer E-Mail-Adresse oder Ihrem Google/Apple-Konto an.
2. Wählen Sie Ihr Land, Ihre Währung, Ihre Zeitzone und Ihre Buchhaltungsmethode.
3. Importieren Sie alle Ihre Transaktionen von Wallets und Krypto-Börsen.
4. Wählen Sie Ihren gewünschten Bericht aus und klicken Sie auf die Option „Bericht erstellen“ auf der linken Seite Ihres Bildschirms. Lassen Sie Kryptos all Ihre Buchhaltungsbedürfnisse nahtlos erledigen.
5. Sobald Ihr Steuerbericht fertig ist, können Sie ihn im PDF-Format herunterladen.

‍

Wenn Sie noch Zweifel bezüglich der Integrationen oder der Erstellung Ihrer Steuerberichte haben, können Sie unser Video-Tutorial hier einsehen.

‍

Wie vermeidet man Krypto-Steuern in Deutschland?

‍

Obwohl es nicht möglich ist, Ihre Krypto-Steuern vollständig auf legale Weise zu vermeiden, gibt es einige Möglichkeiten, Ihre Steuerrechnung zu senken, ohne in rechtliche Schwierigkeiten zu geraten:

• Halten Sie Ihre Assets länger als ein Jahr, um keine Steuern zu zahlen
• Nutzen Sie Steuerverlust-Verrechnung, um Ihre Kapitalgewinne zu reduzieren
• Wählen Sie Ihre Assets strategisch, wenn Sie in DeFi-Transaktionen involviert sind
• Nutzen Sie Ihre steuerfreien Freibeträge
• Verschenken Sie Krypto-Assets an Ihren Ehepartner, wenn dieser in einer niedrigeren Steuerklasse ist
• Miningausschüsse, Gasgebühren, Transaktionsgebühren und Softwarevorbereitungskosten sind steuerlich absetzbare Ausgaben in Deutschland, nutzen Sie diese, um Ihre Steuerrechnung zu senken.

‍

FAQs

‍

1- Ist Krypto in Deutschland legal?

‍

Ja, Kryptowährungen sind in Deutschland legal. Die deutsche Regierung erkennt Kryptowährungen als digitale Wertrepräsentation und eine Form von Privatgeld an. Der Umgang mit Kryptowährungen ist in Deutschland nicht eingeschränkt, und sowohl Einzelpersonen als auch Unternehmen können Kryptowährungen frei kaufen, halten und handeln. Unternehmen, die mit Kryptowährungen handeln, unterliegen jedoch regulatorischen Anforderungen, wie der Registrierung bei den Finanzbehörden und der Einhaltung von Anti-Geldwäsche-Vorschriften.

‍

2. Wie berechnet und reicht man Krypto-Steuern in Deutschland mit Kryptos ein?

‍

Das Einreichen Ihrer Krypto-Steuern selbst kann eine mühsame Aufgabe sein und Sie benötigen möglicherweise Unterstützung, um sicherzustellen, dass alles korrekt und ohne rechtliche Probleme gemacht wird. Kryptos kann Ihnen mit seiner Software-Lösung zur Krypto-Steuererklärung helfen, die alle Ihre Transaktionen automatisch abruft und innerhalb weniger Minuten einen gesetzeskonformen Steuerbericht erstellt.

‍

3. Wie wird Krypto in Deutschland besteuert?

‍

In Deutschland gelten Kryptowährungen als private Währung oder Vermögenswert und unterliegen somit der Besteuerung. Die Besteuerung von Kryptowährungen hängt von den individuellen Umständen des Steuerzahlers und dem Zweck ab, für den die Kryptowährung erworben wurde.

‍

4. Wie hilft Kryptos beim Einreichen Ihrer Krypto-Steuern?

‍

Wir sind uns einig, dass die Einreichung Ihrer Krypto-Steuern eine unangemessen komplizierte Aufgabe ist, selbst für Personen mit grundlegenden Vorkenntnissen. Es gibt jedoch eine einfache Möglichkeit, Ihre Krypto-Steuern mit einer Krypto-Steuersoftware wie Kryptos einzureichen.

‍

5. Wie viel Steuern müssen Sie auf Krypto in Deutschland zahlen?

‍

Der Steuerbetrag, den Sie auf Krypto in Deutschland zahlen müssen, hängt von Ihren Umständen und dem Zweck ab, für den die Kryptowährung erworben wurde.

‍

Alle Inhalte auf Kryptos dienen nur allgemeinen Informationszwecken. Sie sind nicht dazu gedacht, professionelle Beratung von lizenzierten Buchhaltern, Anwälten oder zertifizierten Finanz- und Steuerfachleuten zu ersetzen. Die Informationen wurden nach bestem Wissen erstellt, und Kryptos übernimmt weder die Richtigkeit noch die Genauigkeit derselben. Bevor Sie eine Entscheidung treffen, sollten Sie stets unabhängige rechtliche, finanzielle, steuerliche oder andere Beratung durch Fachleute einholen. Kryptos haftet nicht für Verluste, die durch die Nutzung der Informationen auf dieser Website oder durch das Vertrauen auf diese entstehen. Kryptos übernimmt keine Verantwortung für die Richtigkeit oder Angemessenheit der von Ihnen in Ihrer Steuererklärung getroffenen Positionen. Vielen Dank, dass Sie Teil unserer Community sind, und wir freuen uns darauf, Sie weiterhin auf Ihrer Krypto-Reise zu begleiten!

The CRA (Canada Revenue Service) classifies crypto as a commodity for tax purposes, which essentially means that any gains derived from the disposal of such assets will be considered capital in nature and attract capital gains tax. However, you only pay taxes on 50% of your gains in Canada. Although there are instances where transactions can be categorised as business income such as:

‍

• If you indulge in crypto transactions for commercial reasons
• You’re involved in promoting a product or service
• You show the intent of making a profit
• You are involved in repetitive transactions

‍

Note that, unlike most countries where there are separate tax rates for long-term and short-term capital gains tax, Canada doesn’t have a dedicated capital gains tax structure. Instead, crypto capital gains are taxed based on the prevailing Federal Income Tax and Provincial Income Tax rates. The federal income tax rates range between 15-33% while the provincial income tax rate varies based on where you live in Canada. This guide covers all the different types of crypto transactions that entail tax liabilities such as mining, staking, or trading crypto assets. It also answers some crucial questions like “How to calculate my income or capital gains?”,  “Are there any tax-free crypto transactions?”, and “How can I pay fewer taxes on my crypto gains/income?” to help resolve all your crypto-tax-related queries.

‍

How is Crypto Taxed in Canada?

‍

As previously mentioned, the Canada Revenue Agency classified crypto assets as commodities, which means that any gains you make by disposing of such assets are taxable and attract capital gains tax. However, you only need to pay CGT on 50% of your gains in Canada. Moreover, depending on the nature of your transactions your income may also be categorised as business income and you will be required to pay income tax on the full amount.

‍

The CRA makes individual assessments for every taxpayer to determine whether certain transactions will be categorised as business income or capital gains. An individual can have a mix of business income and capital gains transactions

‍

The following transactions are considered taxable in Canada:

‍

• Trading one type of cryptocurrency for another type (e.g., selling Bitcoin for Ethereum)
• Selling cryptocurrency for Canadian dollars or any other currency
• Using cryptocurrency to purchase goods or services
• Mining cryptocurrency as a business or commercial activity
• Receiving cryptocurrency as payment for goods or services
• Receiving cryptocurrency as a reward for staking or participating in a proof-of-stake network
• Receiving cryptocurrency as a result of a hard fork or airdrop

‍

Capital Gains Tax

‍

In Canada, there are no specific capital gains tax rates for short or long-term crypto investments. Instead, crypto capital gains are subject to taxation based on the prevailing Federal Income Tax and Provincial Income Tax rates. It's important to note that as an individual holding crypto, you will only be taxed on 50% of your total capital gains. However, professional day traders are required to pay taxes on the full 100% of their gains.

‍

The following transactions attract capital gains tax in Canada:

‍

• Selling crypto for fiat
• Gifting crypto
• Buying a product or service with crypto
• Swapping crypto for other crypto assets

‍‍

Listed below are the federal income tax rates for the 2024-25 tax year:

‍

‍

You can view a detailed list of provincial taxes for all the provinces in Canada here.

‍

Income Tax

‍

If you appear to be making a regular or recurring income from crypto assets, you will be liable to pay income tax to the authorities. Listed below are some transactions that attract income tax in Canada.

‍

• Getting paid in crypto
• Minting crypto or NFTs from blockchain
• Referral awards
• Rewards from staking
• Selling self-curated NFTs

‍

Moreover, any take-home profits you make from play-2-earn or engage-2-earn platforms may also qualify as income and be taxed accordingly. Some examples of such platforms are:

‍

• Earnings from CoinMarketCap Learning and Binance Learning platforms
• Earnings from P2E games like Axie Infinity and Decentraland
• Any income made from browse-2-earn platforms like Brave and Permission.io
• Income made from Watch-2-Earn platforms like Odysee

‍

The income tax rates in Canada are the same as the Provincial income tax rates and the federal income tax rates as mentioned in the “Capital Gains Tax Rate” section above. You can revisit the section or look at a comprehensive list of income tax rates in Canada here.

Note that it’s mandatory to declare crypto transactions in your tax return and failing to do so might result in legal trouble as the CRA is more than capable when it comes to tracking investor activity.  Here’s how the CRA tracks crypto transactions:

‍

• The CRA can track the crypto investments of Canadians
• It is also working with crypto exchanges to obtain customer information
• The CRA is using the information to track Canadian crypto investors to ensure accurate reporting of investments and taxes.
• Money service businesses in Canada have to report transactions greater than CA$ 10,000 to the CRA.
• The CRA is registered with FINTRAC which investigates money laundering and tax evasion.
• Crypto exchanges registered with FINTRAC in Canada are required to obtain a government-issued ID and proof of address.
• It is yet to specify which crypto exchanges they're working with other than Coinsquare.
• Most crypto exchanges operating in Canada have had the same data request from the CRA.

‍

Classification of Cryptocurrency for Tax Purposes

‍

Crypto assets are not considered a currency and are categorised as property for tax purposes. This implies that any gains made from the disposal of these assets will be considered capital gains. From a tax perspective, this translates to the disposal of capital assets being taxable, and the gains incurred will be subjected to capital gains tax.

Although there are some instances where gains derived from crypto assets may be considered as income due to their recurring nature in which case they shall be taxed as income. However, since there is no dedicated capital gains tax in Canada, the tax rates remain the same for both these transactions.

‍

How to Calculate Crypto Income in Canada?

‍

Calculating your crypto income is simple. All you need to do is to find the fair market value of the assets at the time you receive them do it for all the assets you’ve received over a tax year and then add them all up. The number you get is your taxable income base and you can apply the federal and provincial income tax rates to them to calculate how much you owe as income tax to the CRA.

However, calculating your capital gains is not that simple. When you dispose of your cryptocurrency assets through selling, swapping, or gifting, you create a capital gain or loss, whether it is intentional or unintentional. This capital gain or loss represents the difference between the amount received from the disposal and your cost basis. Now, the cost basis is simply the price you pay to an exchange to acquire a certain crypto asset. However, because investors usually buy multiple assets of the same kind at different prices, determining the cost basis becomes tricky. That’s exactly why investors should use dedicated cost-basis methods as specified by the tax authorities for cost-basis

‍

Cost Basis Method

‍

‍In Canada, the average cost basis method is employed for calculating the cost basis of crypto assets. This is a fairly simple method that considers the average acquisition price across all assets of the same type as the cost basis. For instance, In a Binance Wallet, if Josh buys BTC 3 times within the tax year for CA$ 31,000, CA$ 26,000, and CA$ 30,000 respectively. The cost basis would simply be equal to CA$ 29,000 (average of CA$ 31,000, CA$ 26,000, and CA$ 30,000).

‍

‍For more complex transactions where more than 1 BTC is acquired at separate instances, investors are required to take the weighted average as the cost basis.

‍

Consider the following transaction block:

‍

24/07/24 - Jocelyn bought 2 BTC for CA$ 31,000 in Binance Wallet

16/12/24 - Jocelyn bought 1 BTC for CA$ 38,000 in Binance Wallet

08/01/25 - Jocelyn bought 2 BTC for CA$ 30,000 in Binance Wallet

In this case, the cost basis will be equal to the weighted average of all the acquisitions.

Cost Basis = CA$ (2*31,000 + 1*38,000 + 2*30,000)/5 = CA$ 32,000

‍

It's essential to note instances where investors attempt to fabricate gains by selling an asset and repurchasing it shortly afterwards, creating artificial losses to offset gains. This practice, known as wash trading, is addressed by Canadian authorities through the superficial gains rule. According to this rule, if an investor buys the same asset within 30 days before or after its disposal, they are not permitted to deduct the losses.

‍

Superficial Loss Rule

‍

The Superficial Loss Rule in Canada is a tax regulation designed to prevent taxpayers from claiming capital losses on certain transactions where there is no substantial change in the ownership of the asset. Here's how it works:

‍

Key Points of the Superficial Loss Rule:

‍

1. What Triggers the Rule?
   
   • A superficial loss occurs when you sell or dispose of capital property at a loss, but you (or an affiliated person, such as your spouse, a corporation you control, or a trust) repurchase or reacquire the same or an identical property within 30 calendar days before or after the sale.
2. Effect of the Rule:
   
   • Instead of allowing you to claim the capital loss immediately, the loss is denied and added to the adjusted cost base (ACB) of the reacquired property. This means the loss is effectively deferred until the reacquired property is eventually sold outside the 30-day window.
3. Affiliated Persons:
   
   • Affiliated persons include your spouse or common-law partner, a corporation you control, or a trust with which you have a connection. Transactions involving these parties are also subject to the rule.
4. Application to Cryptocurrencies:
   
   • The rule applies to cryptocurrency trades as well since the Canada Revenue Agency (CRA) treats cryptocurrencies as capital property. If you sell crypto at a loss and then reacquire the same type of cryptocurrency within the 30-day window, the loss may be denied under the superficial loss rule.

‍

Example:

‍

• You sell shares (or cryptocurrency) for $5,000, incurring a capital loss of $2,000.
• Within 30 days, you or your spouse buy back the same shares for $5,000.
• The $2,000 loss is denied but added to the ACB of the reacquired shares, increasing their cost base to $7,000. This adjustment will affect the calculation of gains or losses when the shares are sold in the future.

‍

Exceptions and Planning:

‍

• Selling assets outside the 30-day window or ensuring that an unaffiliated third party owns the property during this period can help avoid the rule.
• It’s crucial to consider this rule during year-end tax planning or while executing tax-loss harvesting strategies.

‍

For further clarification, the CRA provides detailed guidance in its tax interpretation bulletins, which you can refer to:

www.canada.ca/en/department-finance/news/2024/06/government-of-canada-delivering-tax-fairness-for-every-generation.html

‍

Exemptions and Deductions Available in Canada

‍

The CRA offers the following tax breaks to Canadian residents:

‍

1. Personal Tax Allowance

The CRA offers a tax-free allowance of first CA$ 15,705 to every resident which means that the first CA$ 15,705 you make will be tax-free in Canada. 

‍

2. Spousal Tax Credit

The spousal tax credit allows you to transfer your unused tax credit to your married or legal partner. If your income is CA$ 8,000 while your partner makes CA$ 20,000, you can transfer the remaining CA$ 7,705 (CA$ 15,705- CA$  8,000) of your tax credit to your partner.

‍

3. 50% Capital Gains Taxation

As mentioned above, only 50% of your capital gains are taxable in Canada, therefore you don’t need to worry about your entire earnings being taxed.

‍

4. Use a Tax-Free Savings Account or a Registered Retirement Savings Plan

Contributions to the TFSA account are capped at CA$ 7,000 while the RRSA contributions are 18% of one’s previous year’s income or CA$ 32,490 (whichever is lower). Contributions to both are tax deductible.

‍

Tax-Free Crypto Transactions

‍

Although crypto transactions are taxable in Canada, some transactions are tax-free:

‍

• Buying crypto with fiat currency
• Holding crypto
• Crypto being gifted to you
• Creating a DAO
• Moving crypto assets between wallets

‍

Treatment of Crypto Losses

‍

Don’t worry if a market correction has left you with a pile of losses, you won’t be taxed on any of it. But instead of just letting it all go to waste, you can use them to reduce your tax bill by offsetting them against your capital gains. Remember that you can only offset 50% of your losses against your gains in a tax year similar to the capital gain taxation rule. If you still have leftover losses after that, you can carry them forward into the subsequent tax year as future losses and write them off against future gains.

Even if you’ve made no capital gains in a tax year, you can report all your capital losses to the CRA and carry them forward as a contingency write-off fund for any future gains you make.

Note that Canada has a Superficial Loss Rule to prevent investors from generating fictitious losses, which states that an individual can’t claim a capital loss if they buy the same crypto 30 days before or after disposal.

‍

Taxation of Crypto-Specific Activities

‍

Now that we have a good grip on how crypto taxes work and how to calculate them. Let’s look at how specific crypto transactions are taxed.

‍

Crypto Mining Taxes

‍

‍Your mining activities are taxed based on your intentions and the nature of your returns. If you’re seen as an individual doing it as a hobby, you will attract capital gains tax. While if you appear to be mining as a business, the gains will be taxed as income.

‍

Mining as a Hobby

‍

If you’re mining as a hobby, you will not attract income tax. The tokens received as mining rewards will inherit the cost basis equal to CA$ 0. Which makes sure that all your gains are taxed once you dispose of these tokens by selling, swapping, or gifting these assets.

‍

Mining as a Business

‍

Mining as a business is different from mining as an individual. Any tokens that you own are considered an inventory and you have to value these assets using any one of the following methods:

‍

• Value each asset by the acquisition cost or their fair market value at the end of the tax year.
• Value the entire inventory at its fair market value at the end of the tax year.

‍

When determining the value of your inventory, you have the option to use either the cost or fair market value. If you go with the former, you can choose the lower value for each particular cryptocurrency you own, which is a great way to plan for taxes. 'Cost' refers to the price paid for acquiring the property, as well as all relevant expenses associated with its purchase. Maintaining consistency in the method used to value your property year after year is crucial.

Note that the CRA has made new amendments to the Excise Tax Act in section 188.2 which defines “crypto assets” for the specific purpose of applying goods and services / harmonised sales tax (GST/HST) to crypto asset mining activities.

Where a taxable property or service is exchanged for cryptocurrency, the GST/HST that applies to the property or service is calculated based on the fair market value of the cryptocurrency at the time of the exchange.

If your business accepts cryptocurrency as payment for taxable property or services, the value of the cryptocurrency for GST/HST purposes is calculated based on its fair market value at the time of the transaction.

‍

Crypto Staking Taxes

‍

Staking is how proof-of-stake networks add and validate new transactions onto their blockchain. The chain selects a network participant to add and validate the most recent set of transactions on-chain, and in return offers them a reward. This reward is called staking rewards and they are the same as mining rewards as far as their taxation is concerned.

These tokens are taxed as income and inherit a cost base equal to the fair market value on receipt, to ensure that any gains upon disposal are taxed appropriately as capital gains.

‍

Airdrops and Forks

‍

The CRA is yet to release dedicated guidelines for the taxation of airdrops and forks but based on the interpretation of the existing guidelines, it is highly improbable that any tokens received through airdrops and forks will be taxed as income. Although you might have to pay capital gains tax on any gains you make upon disposal.

For more clarity on the subject, consult an experienced tax professional.

‍

Crypto Gifts and Donation Taxes

‍

Gifting crypto in Canada constitutes a taxable event as it is seen as the disposal of crypto assets. You’re liable to pay CGT when you gift crypto to others if the value of the asset has increased since the acquisition.

Note that you only pay CGT on 50% of your gains.

Crypto donations to a registered charity are also considered as a disposition of assets and entail a gains tax liability if the value of donated assets has increased.

When you donate crypto to a registered charity, it is classified as a Gift of Kind donation. As such, it falls under the deemed fair market value rule. This requires you to inform the charity about the acquisition date of your crypto asset. If the asset was received and donated within three years of the acquisition date, the charity may issue a tax receipt based on the value at the time of acquisition.

‍

Defi Transactions

‍

The CRA is yet to release guidelines on the taxation of Defi transactions. However, that doesn’t mean that you won’t have to pay any taxes on Defi transactions, the following can be said based on the existing guidelines about Defi transactions and their taxation.

When you receive tokens as compensation for provisioning a service or selling a product, it will be taxed as income. However, when you sell these tokens in an open market for a profit, the gains will attract capital gains tax.

‍

Here are some details about specific Defi transactions and how they will be taxed according to what we could find and extrapolate:

‍

• Earning Interest from Defi protocols: Income tax
• Borrowing funds from Defi protocols: No tax
• Paying Interest in Defi protocols: CGT
• Selling or Swapping NFTs: Income tax if you’re the creator, CGT if you’re not
• Buying NFTs: CGT when bought with crypto
• Staking on Defi protocols: Income tax
• Yield and Liquidity Farming: Income tax
• Adding/Removing Liquidity: CGT
• Returns from Defi Margin trades: CGT

‍

We do suggest contacting a tax consultant for more clarity on the subject.

‍

ICOs and Token Sales

‍

It’s still not clear whether income from ICOs is viewed as business income or just regular income by the CRA. We will be adding more details regarding the taxation of tokens received from ICOs once the guidelines regarding the same hit our radar.

‍

Crypto Lending and Borrowing

‍

There are no specific guidelines on how lending and borrowing of crypto assets will be taxed. However, based on the current guideline, interesting income from lending crypto assets will most likely be taxed as income since it is a form of recurring income.

Also, borrowing crypto is a tax-free transaction as taking a debt is tax-free in most instances.

‍

NFTs and DAOs

‍

NFTs

‍

The CRA is yet to release relevant guidelines on NFT taxation. However, they would likely be considered as crypto assets for tax purposes. Which essentially means that they will be regarded as capital property and taxed accordingly.

‍

• Creating and selling NFTs is considered business income and is taxed according to the income tax rates.
• Buying NFT for crypto, selling NFT for crypto or fiat, and swapping NFT for another attracts capital gains tax.
• Gifting NFTs attracts capital gains tax due to the increase in value of the asset from the time you acquired it to the time you gifted it.

‍

DAOs

‍

DAOs (Decentralised Autonomous Organizations) are gaining popularity in the crypto space. These member-owned communities operate without central leadership, allowing stakeholders to make governing decisions collectively. Instead of a centralised authority, DAOs rely on token holders to vote on important matters. For instance, Uniswap is an exemplary DAO where UNI token holders vote on protocol-related issues such as fee allocation and new feature implementation.

DAO members can derive benefits from the organisation in various ways. They may receive a share of profits or sell their DAO tokens for investment purposes.

The taxation of DAOs lacks specific guidance from the CRA. However, since DAOs are not registered entities and lack centralised control, they are similar to flow-through entities. In this interpretation, any income distributed to DAO members would likely be subject to Income Tax, and capital gains taxes would apply to the sale of appreciated DAO tokens acquired over time.

‍

Crypto Margin Trades, Futures, and CFDs

‍

The taxation of margin trades, futures, and CFDs depends on whether you’re seen as an individual investor or day trader which depends on the scale of transactions.

‍

Individual Investor

‍

If the CRA considers you to be a private investor, any gains from margin trades, derivatives, and other CFDs will be subject to Capital Gains Tax. You won't owe any tax when you initiate a position. Instead, the tax is applicable only when you settle your position, and any gains resulting from it will be subjected to Capital Gains Tax.

‍

Day Trader

‍

On the other hand, if the CRA perceives you as a day trader who trades frequently at the same level of scale, you'll be liable to pay Income Tax on all the profits you earn from your trades. As discussed earlier you won't owe any tax on initiating a position while margin trading, dealing in derivatives, or other CFDs. Instead, you'll be taxed only when you close your position and realise any profits.

‍

How to Avoid Paying Tax on Cryptocurrency in Canada?

‍

Although you can’t avoid paying crypto taxes entirely there are some ways you can bring down your tax liabilities legally:

‍

1. Invest in a TFSA

‍

Canadian residents can use a Tax-Free Savings Account (TFSA) for tax-free profits. Instead of directly buying cryptocurrency, they can invest in Bitcoin ETFs on the Toronto Stock Exchange, such as Purpose Bitcoin ETF (BTCC), Evolve Bitcoin ETF (EBIT), and CI Galaxy Bitcoin ETF (BTCX). These ETFs track Bitcoin's price and offer a convenient way to invest without the complexities of self-custody and with potential management fees.

‍

2. Invest in RSP

‍

Investing in a Retirement Savings Plan is the best way to ensure a secure future and lower your tax bill at the same time. Contributions to RSP are tax deductible and can be used to lower your tax bill. You can even contribute to your spouse’s RSP and claim a tax deduction on that too.

‍

3. Use Tax Loss Harvesting

‍

Use your losses as an offset against your gains to lower your tax bill. You can close positions with potential losses and use them as an offset against any gains you’ve made within the tax year.

‍

Reporting Requirements, Compliances, and Deadlines

‍

The tax year in Canada is the same as the calendar year running from January 1st to December 31st. All crypto-related income, capital gains, and losses must be reported to the CRA by April 30th, 2025.

In the event that the deadline falls on a weekend, taxpayers can file their taxes by May 1st, 2025. It would be best to not delay the affair as individuals can start filing their tax returns by the end of February.

Please note that your tax payment will be considered timely only if it is received or processed by the CRA on or before May 1st each year.

‍

How to File Crypto Taxes in Canada

‍

There are several ways you can choose to file your taxes in Canada. We have listed some of them below:

‍

1. File your taxes using tax software

‍

You can use certified tax software like Kryptos.io to file your taxes in Canada. It is quite convenient and creates a legally compliant tax report in a matter of minutes by auto-fetching all your transactions and incorporating any deductions that are possible. With certified tax software, you can complete your tax returns within 2 weeks.

‍

2. File your taxes through a tax accountant

‍

A tax accountant is someone well-versed in the tax infrastructure and can help you save a lot of time and money by utilising existing loopholes in the system. The only demerit of using this option is the high accountant consulting fee which may not make sense to you if you have a nominal income.

‍

3. File your taxes through a volunteer tax clinic

‍

Tax clinics have volunteers who can file your taxes for free. All you need to do is find one and hand over your transaction records. Note that this might not be the ideal option for someone with a complex set of transactions and high income.

‍

4. Through a Discounter(preparer)

‍

A Discounter is a tax preparer who provides an upfront discounted tax refund by computing your refund amount, even before submitting your tax return. Filing your tax return through a tax preparer is the fastest way to file your taxes because the discounter pays you a discounted return right away before filing your taxes.

‍

What Tax Records Will the CRA Want

‍

The CRA has issued clear guidelines regarding the record-keeping of transactions for tax purposes. Here’s a list of documents you should maintain according to the CRA:

‍

• Date and time of transaction
• Receipts of all buy/sell transactions
• A record of the fair market value of assets at the time of purchase
• Transaction description crypto address of other parties involved
• Additional charges
• Exchange records
• Digital wallet records and wallet addresses

‍

How to File Crypto Taxes Using Kryptos?

‍

Now that you’re aware of how your crypto transactions are taxed and what forms you need to fill out to complete your tax report, here’s a step-wise breakdown of how Kryptos can make this task easier for you:

‍

1. Visit Kryptos.io and sign up using your email or Google/Apple Account
2. Choose your country, currency, time zone, and accounting method
3. Import all your transactions from wallets and crypto exchanges
4. Select your desired report and click the "Generate Report" option on the left side of your screen. Let Kryptos handle all your accounting needs seamlessly.
5. Once your Tax report is ready, you can download it in PDF format.

‍

If you still have any doubts regarding the integrations or generating your tax reports, you refer to our video guide here.

‍

Resources and Support

‍

Canada Revenue Agency

Provincial Income Tax Rates

‍

Frequently Asked Questions(FAQs)

‍

1. Is crypto legal in Canada?

‍

Yes, crypto is legal in Canada. The Canadian government does not consider cryptocurrency as legal tender, but it is recognized as a commodity subject to tax laws. The country has a regulatory framework for cryptocurrencies and exchanges called the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), which requires cryptocurrency businesses to register with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) as money services businesses (MSBs) and comply with certain anti-money laundering and know-your-customer (KYC) requirements.

‍

2. How is Crypto Taxed in Canada?

‍

In Canada, cryptocurrency is subject to taxation and is treated as a commodity for tax purposes. The Canada Revenue Agency (CRA) treats cryptocurrency transactions similar to barter transactions, meaning that buying, selling, or trading cryptocurrencies can result in capital gains or losses. Here are some ways crypto is taxed in Canada:

‍

• When you sell or dispose of cryptocurrency, you may incur capital gains or losses that are taxable. Capital gains are calculated by subtracting the cost of the cryptocurrency from the proceeds of the sale.

• If you earn cryptocurrency as payment for goods or services, it is considered business income and is subject to income tax. The amount of tax you owe will depend on your marginal tax rate.

• If you mine cryptocurrency as a business, the value of the coins mined is considered business income and is subject to income tax.

• Cryptocurrency transactions may be subject to the Goods and Services Tax/Harmonized Sales Tax (GST/HST), depending on the type of transaction and the parties involved.

‍

3. How much tax do you pay on crypto in Canada?

‍

The amount of tax you pay on crypto in Canada depends on the type of transaction, the amount of profit or gain you make, and your overall income tax bracket. Here are some examples:

‍

• Capital Gains Tax: When you sell or dispose of cryptocurrency, any gains you make are subject to capital gains tax. The tax you pay depends on your marginal tax rate, which ranges from 20% to 53.53% in Canada. However, only 50% of the capital gains are taxable.

• Income Tax: If you earn cryptocurrency as payment for goods or services, the income is considered business income and is subject to income tax. The amount of tax you pay depends on your marginal tax rate and income.

• Mining Income: If you mine cryptocurrency as a business, the value of the coins mined is considered business income and is subject to income tax. The amount of tax you pay depends on your marginal tax rate and the amount of income you earn.

• GST/HST: Cryptocurrency transactions may be subject to the Goods and Services Tax/Harmonized Sales Tax (GST/HST), depending on the type of transaction and the parties involved.

‍

4. Which crypto exchanges are banned in Canada?

‍

There are thousands of crypto exchanges in Canada operating under the nose of tax authorities and offering their services without their approval, and we can’t mention all of them here. Instead, we have prepared a list of crypto exchanges approved by the CRA in Canada.

‍

• Bitbuy
• Coinberry
• CoinSmart
• Coinsquare
• NDAX
• Netcoins
• Newton

‍

All content on Kryptos serves general informational purposes only. It's not intended to replace any professional advice from licensed accountants, attorneys, or certified financial and tax professionals. The information is completed to the best of our knowledge and we at Kryptos do not claim either correctness or accuracy of the same. Before taking any tax position/stance you should always consider seeking independent legal, financial, taxation or other advice from professionals. Kryptos is not liable for any loss caused by the use of, or by placing reliance on, the information on this website. Kryptos disclaims any responsibility for the accuracy or adequacy of any positions taken by you in your tax returns. Thank you for being part of our community, and we're excited to continue guiding you on your crypto journey!

Tax authorities in Finland consider crypto a form of personal asset instead of legal tender, which means that most crypto transactions in Finland would attract tax liabilities in the region. Luckily, the Finnish Tax Authority has released relevant guidelines regarding the taxation of different crypto transactions.

However, it may be quite overwhelming for regular investors to go through these guidelines and interpret them on their own. Therefore, we decided to offer a detailed transcript of these guidelines that is more digestible and gives a clear understanding of how specific crypto transactions are taxed in Poland. The goal of this guide is to equip investors with enough information so that they can file their taxes without much trouble.

Bear in mind that cryptocurrency taxes are complex, and this guide goes at length to explain certain guidelines and concepts. However, we will do our best to simplify and tabulate the data to make this guide more digestible. We suggest reading it thoroughly to avoid overlooking any important details.

‍

Key Information

‍

‍

Understanding Crypto Taxation in Finland

‍

Vero defines Cryptocurrencies “as a form of digital value that can be used to settle liabilities, electronically transferred, saved, and exchanged, and are not issued by any central bank or public authority.”

In Finland, cryptocurrency purchases and transfers between wallets and exchanges are tax-free. However, profits generated from selling or exchanging cryptocurrencies are subject to Capital Gains Tax and are considered capital income. 

Income generated from mining and staking activities is subject to Income Tax, while capital gains from crypto assets are taxed at varying rates. For capital gains up to €30,000, the tax rate is 30%. Any amount exceeding this threshold is taxed at 34%. This implies that the tax liability on your crypto profits will be 30% or 34%, depending on your total capital income for the tax year.

‍

Assets received as compensation for a product or service are considered income and are subjected to income tax. Three different types of income taxes are levied on crypto income:

1. National Taxes
2. Municipal Taxes
3. Church Taxes

‍

National income taxes are progressive and range from 12-44% based on the total value of your reported income. Municipal taxes are flat tax rates levied by individual municipalities that vary from 16.5-23.5%. 

The church tax applies to members of the Evangelical Lutheran, Orthodox, or Finnish German churches. It is imposed at a flat rate ranging from 1.0% to 2.1%, depending on where you live.

Consider this example to understand how these taxes work.

‍

Here’s a list of all transactions Emir was involved in during 2022:

Transaction-1: 13/02/2022 - Bought 1 BTC 

Transaction-2: 15/04/2022 - Received 2 BTC as compensation for a sale

Transaction-3: 18/04/2022 - Received 2 ETH as mining reward

Transaction-4: 21/05/2022 - Bought 1 ETH 

Transaction-5: 04/06/2022 - Sold 1 BTC

Transaction-6: 17/09/2022 - Sold 1 ETH

From the above ledger of transactions, transactions 5 and 6 will attract capital gains taxes, while transactions 2 and 3 are income tax-bearing transactions.

Let’s assume gains incurred in the BTC and ETH disposal were €20,000 and €1,500, respectively.

Total Gain = € 21,500 

This is your total capital gain, and a capital gains tax will be levied on it.

Now, we assume that the FMV (Fair Market Value) of the BTC and ETH tokens on receipt in transactions 2 and 3 were €20,000 and €1,800, respectively, at the time of receipt.

Total Income = 6.25 * 20,000 + 2 * 1,800 = €1,28,600

This is your taxable income base, and income tax will be levied on it.

‍

‍

How Does Capital Gains Tax Work in Finland?

‍

As discussed, cryptocurrencies are categorised as ‘personal assets’ from a tax perspective. This means that the disposal of such assets attracts capital gains tax in Finland. Here’s what categorises as a disposal in Finland-

• Trading one cryptocurrency for other cryptocurrencies.
• Converting a cryptocurrency into fiat currency such as USD or EUR.
• Using cryptocurrency to purchase goods or services.
• Trading NFTs.
• Participating in cryptocurrency staking.
• Earning income from margin/futures trading in cryptocurrency.

‍

Tax Rates

‍

Capital gains for up to €30,000 will be taxed at 30%, while anything above this will be taxed at 34%.

‍

Decoding Income Tax in Finland

‍

Crypto assets received as compensation for provisioning a service or selling a product will be considered income, similar to when you receive compensation in fiat currency for your work. This income will be taxed at the regular income tax rates.

In Finland, the following activities are known to generate taxable income and should be reported accordingly.

• Mining rewards
• Income (e.g., freelancing, salary, rewards, online gaming)
• Create & Sell NFTs

‍

Tax Rates

‍

Finland has a progressive tax system, meaning the tax rate increases as the total taxable income increases. There are three categories of income tax:

1. National Taxes 
2. Municipal Taxes 
3. Church Taxes.

‍

National taxes come with a tax-free allowance of €19,000 for the 2022 tax year, with tax rates ranging from 12% to 44% above this threshold, depending on your total income. You can understand the national tax rates in the table below.

‍

In contrast, municipal taxes are applied at a flat rate and set by individual municipalities, with tax rates ranging from 16.5% to 23.5%.

Finally, there's the church tax that applies to all members of the Evangelic Lutheran, Orthodox, or Finnish German church. The church tax is also levied at a flat rate, varying between 1.0% and 2.1%, depending on where you live in Finland.

‍

What Happens When You Don’t Report Crypto Transactions in Finland?

‍

If you are wondering whether you can omit certain transactions from your tax report to pay fewer taxes, we strongly recommend against it, as this would attract some unwanted legal repercussions. If you’re an individual engaged in crypto transactions in Finland, you might have undergone a Know-Your-Customer (KYC) verification process while signing up for an exchange. Therefore, it is likely that Vero possesses a record of these activities, and they can easily track your crypto transactions.

‍

Made a Loss? Here’s How to Use It to Your Advantage

‍

Losses are inevitable when you are involved with speculative assets like crypto. However, there are ways you can claim concessions on these losses.  Under § 50 of the Income Tax Act, you can claim tax deductions for losses resulting from the sale of cryptocurrencies as long as the total sales price is over €1,000.

‍

Moreover, the losses you make can be used to offset gains from the same or other crypto assets made during the same year. Excess losses can be carried forward for up to 5 years. If the value of your currencies has decreased, but you still hold them, you cannot claim any losses for tax purposes. It is crucial to consider these factors when assessing your overall tax situation related to cryptocurrency investments.

‍

Lost Or Stolen Crypto

‍

If you've had your cryptocurrency stolen, you won't be required to pay taxes on it. The same goes for instances where you've experienced losses due to chain hacks, scams, or lost private keys. 

It would be unfortunate if you've had to go through such a situation, but keep all the relevant documentation as proof of evidence for any unknown circumstances.

‍

Tax Credits/Incentives in Finland

‍

Listed below are some strategies that allow you to pay fewer taxes without getting into legal trouble:

‍

1. Write Off Your Losses

‍

Under § 50 of the Income Tax Act, you can claim tax deductions for losses resulting from the sale of cryptocurrencies as long as the total sales price is over €1,000.

‍

2. Gift Crypto Assets

‍

Crypto gifts under €5,000 are tax-free in Finland.

‍

Cost Basis Calculations in Finland

‍

Not every investor transaction is a simple buy/sell transaction. There are instances where an investor buys multiple assets of the same kind at different prices. This leads to a lot of complications upon disposal because one gets confused picking the right acquisition cost for an asset. That’s why it’s imperative to use specialised cost basis methods as specified by the tax authorities.

Tax authorities have proposed guidelines regarding the use of accounting methods for cost-basis calculations. Two commonly used methods are FIFO (First-In-First-Out) and LIFO (Last-In-First-Out). These methods help determine the cost basis of assets and minimise discrepancies in tax reports. By following these guidelines, investors can navigate the complexities of cost-basis calculations more effectively.

‍

1. FIFO Accounting- Under FIFO accounting, the first asset you buy is considered the first asset you sell
2. LIFO Accounting- Under LIFO accounting, the last asset you buy is considered the first one you sell. 

‍

Consider the following transactions:

‍

02/01/22 - Emilio bought 1 BTC for €18,000

15/04/22 - Emilio bought 1 BTC for €20,000

18/06/22 - Emilio bought 1 BTC for €23,000

20/07/22 - Emilio sold 1 BTC for €25,000

Now, if Emilio uses the FIFO accounting method, the BTC sold would be the one bought on 02/01/22 for €18,000.

Cost Basis = €18,000

Disposal Amount = €25,000

Capital Gain = €25,000 - €18,000 = €7,000

And if he decides to use the LIFO accounting method, the BTC he disposed of would be the one bought on 18/06/22 for €23,000

Cost Basis = €23,000

Disposal Amount = €25,000

Capital Gain = €25,000 - €23,000 = €2,000

‍

Deemed Acquisition Cost Method 

‍

Sometimes, it may be difficult for you to determine the original purchase price of your cryptocurrency due to reasons like losing access to your trading history. You can tackle this situation with the Finnish Tax Administration's exclusive method called the Deemed Acquisition Cost Method. This method allows you to deduct a fixed percentage of the sales price instead of the purchase price.

The process is straightforward. Here's how it works: If you have held your cryptocurrency for less than 10 years, the deemed acquisition cost is 20% of the selling price. On the other hand, if you have held your crypto for more than 10 years, the deemed acquisition cost is 40% of the selling price. This calculation helps determine the taxable amount based on the duration of your cryptocurrency holding.

This method is more suited for transactions where one cannot determine the cost basis due to the inability to access the transaction's history. However, if you decide to use this method for reporting your crypto taxes, you may be required to provide evidence that the previous records are inaccessible. This documentation is necessary to support your use of the deemed acquisition cost method for accurate tax reporting purposes.

‍

Tax-Free Crypto Transactions in Finland

‍

Not all crypto transactions incur tax liabilities. Here are some transactions that Vero considers tax-free.

‍

• Buying crypto with fiat currency
• Moving crypto between personal wallets
• Crypto received as a gift
• Lost or stolen crypto
• Donating any crypto without seeking profits
• Crypto Forking

‍

Taxed Crypto Transactions

‍

If you’re engaging in any of the following activities during the tax year, you may result in potential tax liabilities to Vero:

‍

• Selling cryptocurrency for fiat currency 
• Trading one cryptocurrency for another 
• Using cryptocurrency to purchase goods or services 
• Earning cryptocurrency as income 
• Borrowing or lending crypto
• Receiving cryptocurrency through mining or staking activities
• Receiving cryptocurrency as a gift (subject to gift tax rules)
• Creating or Selling NFTs

‍

Mining Crypto in Finland? Here’s How the Taxes Work

‍

Mining rewards are viewed as income and taxed based on the existing income tax rules. If you mine crypto tokens, then you’re required to report the value of the mined income in euros at the time of receipt.

To calculate your income from mining, you can use the average exchange rate for the period you are reporting, daily or monthly. Also, you have to remain consistent with your chosen period throughout the year.

Some costs related to mining can be deducted from your income to lower your tax base. Some of them are listed below.

‍

1. Expenses that you incur while mining can be deducted from your income (only the portion that is directly related to mining) 
2. Any energy used for the computer or device not directly involved in mining cannot be tax-deductible.
3. The purchase price of mining equipment is deductible 
4. If the equipment is used for personal use occasionally, you can still deduct some expenses based on the frequency of personal use.

‍

This table will help you understand the deduction based on occasional personal use of equipment.

‍

‍

Note that if you use the mining hardware for more than three years, then you should make deductions as a series of depreciating expenses at a rate of 25% per year.

‍

Understanding Crypto Staking Taxes in Finland

‍

Based on Vero’s Guidelines on crypto staking, any rewards acquired by staking crypto tokens are viewed as capital gains and not as income. Here’s the official statement that highlights why Staking rewards are treated as capital gains instead of income.

‍

“...taxation is based on the idea that you are receiving income because you owned virtual currency previously.  What you own previously is seen as your capital. Accordingly, the amount added to it is capital income.”

‍

The guidance further clarifies that the taxation of assets occurs when you acquire them and dispose of them. Moreover, the guidance also extends to transactions where gains are derived from previously owned tokens, including staking on Defi protocols.

‍

How are Airdrops and Forks taxed in Finland?

‍

While Vero does not offer explicit guidance on the taxation of airdrops, we hold the view that treating airdrops as capital income rather than earned income for tax reporting purposes is appropriate. This perspective is based on the similarity between airdrops and staking rewards, thus suggesting that they share comparable characteristics.

Once Vero releases updated guidance on the tax treatment of airdrops, we will incorporate this information into our guide and provide further clarification.

Receiving crypto from a hard fork does not incur tax liabilities. However, selling the received assets may be subject to capital gains tax. In this case, the cost of acquiring the newly received cryptocurrency is considered €0, and taxes are calculated based on the total market value when disposing of the assets.

‍

Gifting or Donating Crypto in Finland? Here’s Some Good News For You

‍

  Vero has this to say about gifts and their taxation.

“If the total value of the gifts you receive from the same donor in 3 years is €5,000 or more, you must pay gift tax.”

As evident from the above statement, gifts, in general, do not attract tax liabilities for the gifter. However, the person receiving these assets might have to pay a gift tax if the total value of the assets received from the same person over 3 years exceeds €5,000.

Vero has yet to release specific guidelines on the taxation of crypto donations. Existing guidelines do not offer a clear picture of how such transactions are taxed. Therefore, we advise seeking guidance from an experienced tax professional to help you navigate this.

‍

What About Crypto Margin Trades, Futures, and CFDs?

‍

Individual investors participating in margin trading, crypto futures, and contracts for difference (CFDs) should consider the tax treatment based on securities and derivatives regulations, as specified in the guidelines.

In margin trading, where investors borrow funds to take leveraged positions, profit or loss resulting from trades after factoring in margin fees is considered realised. It's crucial to understand that realised profits from margin trading are subject to capital income tax. However, losses incurred during property transfers can be offset against gains made in the same tax year and carried forward for up to five years after the tax year.

‍

Participating in ICOs? Here’s What You Owe to Vero

‍

Vero offers guidance on taxation for initial coin offerings (ICOs). According to this guidance, investors are considered to have acquired virtual currency, and any realised growth in its value is subject to Capital Gains Tax.

‍

NFT and DAO Taxes Finland

‍

NFTs

‍

In Finland, the following transactions attract taxation.

1. Create or Sell NFTs
2. Resell NFTs

If you are the creator or artist of the NFT, any income earned from its sale or commissions on subsequent sales is considered earned income and is subject to taxation. The realised income is based on the value of the received cryptocurrency in euros at the time of the sale, and you’ll be liable for income tax in Finland.

However, as the artist, you may deduct expenses incurred while making the art, such as NFT marketplace fees and drawing software expenses. These expenses are reported under the same section as mining expenses: "Expenses for the production of other income than wage income."

The resale of NFTs is treated similarly to trading cryptocurrency. Any gains from the resale of an NFT should be reported and are subject to capital gains tax.

You can refer to the complete NFT tax guide here

‍

DAOs

‍

Currently, there is a lack of clear guidance on the taxation of income from DAOs. However, it is reasonable to assume that such income would be subject to income tax, just like mining rewards and salary earned for work. To ensure compliance and minimise any potential complications, it is recommended that you seek the advice of an experienced tax professional who can offer personalised guidance.

‍

Decoding Defi Taxes in Finland

‍

Vero has yet to offer definitive guidelines on how Defi transactions will be classified for tax purposes. With Defi being a nascent and constantly evolving field, offering novel ways of earning income worldwide, it is not possible to include all Defi transactions and returns within a standardised set of tax regulations.

‍

Note that engaging in Defi transactions that result in an income or capital gain could trigger tax obligations. The following are some Defi transactions that may incur tax liabilities as determined by Vero:

• Receiving liquidity tokens or new tokens as rewards from Defi protocols.
• Using collateral to obtain a loan from Defi protocols or private lenders.
• Realising profits from margin trading activities within Defi protocols.
• Participating in staking, yield farming, and adding or removing liquidity from liquidity pools.

‍

When to Report Crypto Taxes in Finland

‍

You may be wondering about the deadline for filing taxes in Finland. While Vero has not yet released specific dates, the past trend suggests the deadline could be April 1st, May 10th, May 17th, or May 24th (any of these dates). 

So, hang tight as the deadline approaches, and the official date may be announced by the end of March or April.

‍

How to File Crypto Taxes in Finland?

‍

When you’re done with your capital gain calculation, you can start filing the taxes to Vero. You can file your crypto taxes online or offline in Finland. However, in this guide, we’ll mainly focus on the online mode for filing taxes. So, stick to these steps to make sure everything goes smoothly and you don’t end up with tax problems at the end of it:

1. Log in to the MyTax platform.
2. Navigate to the “Individual income tax” section and select the year you want to report your crypto taxes for (e.g. the Tax year 2021).
3. Select "Check pre-completed tax return".
4. On the new page that appears, click "Correct."
5. Navigate to the "Other income" section and select "Yes" in the box for "Capital gains".
6. Click "Add new transfer" and select "Virtual currencies".
7. Enter details for all the capital gains transactions you made in 2021, or enter the total sales price and acquisition cost of all cryptocurrencies sold during the year.
8. Enter any expenses related to your purchases or sales in the appropriate fields.
9. In the "Property acquisition costs" field, you can input expenses directly linked to your purchases. Likewise, in the "Selling costs" field, enter any expenses related to your sales as required.
10. Click on the "Add file" button located at the end of the capital gain calculation, then choose "Attachment" and specify that it pertains to virtual currencies. If you have manually calculated your crypto taxes, you can select your PDF file, and your filing is completed.

‍

Note: For transactions with both gains and losses, use separate fillable fields in MyTax for each calculation - one for gains and one for losses.

Additionally, to report mining, staking, NFT, and airdrop income, go to the "Other income" section of MyTax. Additionally, you can input your mining expenses by selecting Deductions > Expenses for the production of income > Expenses for the production of other income than wage income.

Although these steps may seem overwhelming, there's no need to fret. You can opt for an online crypto tax platform such as Kryptos.io that can assist you throughout the process. This platform can provide you with step-by-step guidance, help you identify deductions and credits, and even submit your tax return directly to Vero.

‍

What Crypto Records will the Vero want?

‍

If you’re filing tax returns to Vero, you should maintain sufficient documentation to substantiate the claims made on their tax returns. 

1. Transaction date
2. Crypto involved in the transaction
3. Type of transaction
4. Quantity of cryptocurrency bought, sold, or exchanged
5. Euro value of the cryptocurrency at the time of the transaction
6. Records from exchanges and any other pertinent documents
7. Wallet addresses for which you possess the private keys.

‍

How to File Crypto Taxes Using Kryptos?

‍

Now that you’re aware of how your crypto transactions are taxed and what forms you need to fill out to complete your tax report, here’s a step-by-step breakdown of how Kryptos can make this task easier for you:

1. Visit Kryptos.io and sign up using your email or Google/Apple Account
2. Choose your country, currency, time zone, and accounting method 
3. Import all your transactions from wallets and crypto exchanges
4. Choose your preferred report and click on the generate report option on the left side of your screen and let Kryptos do all the accounting.
5. Once your Tax report is ready, you can download it in PDF format.

If you still need clarification regarding the integrations or generating your tax reports, you can refer to our video guide here.

‍

How to Avoid Crypto Taxes in Finland

‍

There’s no legal way to avoid crypto taxes. However, you can use these strategies to lower your tax bill. 

1. Offset your capital losses to lower your tax bill. Vero allows you to offset your losses as long as the disposal is worth more than €1,000.
2. Gifting crypto assets is tax-free for the gifter in Finland. The recipient might have to pay gift taxes if the total value of assets received from one person over 3 years exceeds €5,000.

‍

Frequently Asked Questions (FAQ)

‍

1. Is crypto legal in Finland?

‍

Yes, crypto is legal in Finland and is considered a "personal asset" rather than a currency by the Finnish Taxation Authority, Vero. As such, cryptocurrency is subject to taxation following specific guidelines issued by Vero, which include different tax rules and regulations.

‍

2. Do you pay tax on crypto in Finland?

‍

As per the tax laws in Finland, cryptocurrency is classified as property, and any profits or losses incurred through buying, selling, or trading crypto are subject to capital gains tax. The rate of tax is variable and determined by several factors, including the amount of gain realised and the individual's income tax bracket.

Moreover, it is necessary to report crypto tax annually and always seek advice from a tax professional or accountant to understand your particular tax liabilities regarding cryptocurrency. They can provide you with guidance on the specific requirements and help you file your crypto taxes accurately and on time.\

‍

3. How is staking taxed in Finland?

‍

As per the tax regulations, mining rewards are categorised as earned income, whereas staking rewards earned by locking up existing cryptocurrency holdings are classified as capital income. This classification means that staking rewards are liable for Capital Gains Tax, not Income Tax.

‍

4. Do crypto gifts attract tax liabilities in Finland?

‍

If you receive cryptocurrency as a gift and decide to sell it within one year, you will inherit the donor's acquisition value as your own. As a result, you would be required to pay taxes on the difference between the selling price and the acquisition value. 

Furthermore, if the cumulative value of gifts received from the same donor exceeds €5000 over three years, you are liable to pay gift tax according to the Vero gift tax guidelines.

‍

‍‍All content on Kryptos serves general informational purposes only. It's not intended to replace any professional advice from licensed accountants, attorneys, or certified financial and tax professionals. The information is completed to the best of our knowledge, and we at Kryptos do not claim either correctness or accuracy of the same. Before taking any tax position/stance, you should always consider seeking independent legal, financial, taxation or other advice from the professionals. Kryptos is not liable for any loss caused from the use of, or by placing reliance on, the information on this website. Kryptos disclaims any responsibility for the accuracy or adequacy of any positions taken by you in your tax returns. Thank you for being part of our community, and we're excited to continue guiding you on your crypto journey!

Since the TAA(Tax Authority Austria) released revised guidelines on crypto taxation effective March 1st, 2022, completely overhauling the crypto tax infrastructure, there has been confusion and uncertainty in the Austrian crypto space. People need clarification about whether their investments and holdings fall under the old or new tax regime. And this led to friction for crypto enthusiasts across the country.

Therefore, we decided to curate an extensive crypto tax guide for Austrian residents covering crypto taxation before and after the new guidelines came into effect. The idea is to clarify new rules clearly for investors so they don’t have to be intimated by the tax guidelines and can file their taxes conveniently.

The new guidelines make things more complicated for us to explain. Although we have tried our best to segment this guide in a way that’s convenient for you to understand, we suggest going through the sections carefully to avoid missing out on crucial details.

With that out of the way, let’s get into it.

How is Crypto Taxed in Austria?

Austria implemented a new tax reform on March 1st, 2022, that has changed the way crypto transactions are taxed.

The amount of taxes you pay on crypto transactions depends on their nature in Austria. Under the new regulations, a straightforward flat tax rate of 27.5% will apply to all cryptocurrency transactions.

You’ll incur a 27.5% tax in the following cases:

• Converting cryptocurrency into fiat currency
• Using cryptocurrency to purchase goods or services
• Mining cryptocurrency
• Receiving interest or earnings from cryptocurrency investments

It is important to note that, unlike other tax jurisdictions, Austria doesn't have a dedicated capital gains tax and any profits generated by selling, swapping, or spending crypto assets are taxed under the existing income tax laws.

Some crypto transactions were subject to the 27.5% interest-bearing tax rate. Cryptocurrency purchased or obtained on or after February 28, 2021, falls under the updated tax regulations.

However, cryptocurrency acquired prior to February 28, 2021, remains governed by the earlier tax provisions.

Example:

Consider the following transactions:

08/01/2021 - Alex bought 2 ETH for €2,000 each in Binance Wallet

06/09/2023 - Alex bought 1 BTC for €15,000 in Binance Wallet

16/10/2023 - Alex bought 1 BTC for €18,000 in Binance Wallet

18/06/2024 - Alex sold 1 ETH for €2,200 from Binance Wallet

13/08/2024 - Alex sold 1 BTC for €40,000 from Binance Wallet

17/09/2024 - Alex sold 1 BTC for €42,500 from Binance Wallet

Now as evident from above, a total of three disposals were made. So let’s look into the capital gains calculations of each one and the tax consequences arising from them.

1st Disposal

I ETH sold for €2,200 on 18/06/2024

Now, since we’re using the FIFO accounting method as recommended by the BMF,

This is the same ETH token that was acquired on 08/03/2021 for €2,000

Disposal Amount = €2,200
Cost basis = €2,000
Capital Gain = Disposal Amount - Cost Basis = €2,200 - €2,000 = €200

These gains are non-taxable because the disposed token was acquired before 28th February 2021, and it was a long-term gain.

‍

2nd Disposal

1 BTC sold for €40,000 on 13/08/2024

If we go by the FIFO accounting rule, this is the same BTC acquired on 06/01/2023 for €18000.

Disposal Amount = €40,000
Cost basis = €18,000
Capital Gain = Disposal Amount - Cost Basis = €40,000 - €15,000 = €25,000

The gains will attract a 27.5% tax liability. 

‍

3rd Disposal

1 BTC sold for €42,500 on 17/09/2024

Based on the FIFO accounting this is the same BTC acquired on 16/10/2023 for €18,000.

Disposal Amount = €22,000
Cost Basis = €18,000
Capital Gain =  €42,500 - €18,000 = €24,500

The gains will attract a 27.5% tax liability. 

‍

Additionally, an interest-bearing tax applies to transactions where you earn interest income. All transactions that generate interest income are taxed at a flat rate of 27.5%.

The following transactions fall under the interest-bearing tax category in Austria:

• Staking crypto.
• Lending crypto.
• Yield farming.
• Liquidity mining.

‍

Can the BMF Track Crypto?

Indeed, Austria's crypto tax reform has made it clear that investors are required to report their crypto transactions to the BMF and fulfil their tax obligations accordingly.

In line with the practices of other European tax authorities, the BMF is working with prominent crypto exchanges to acquire KYC (Know Your Customer) data.

Furthermore, the forthcoming EU directive, DAC8, grants BMF the authority to verify crypto ownership and scrutinize the accounts of crypto companies.

‍

Crypto Capital Gains

Old Tax Regime

Before the enforcement of the new regulations on March 1st, 2022, Austria did not have a dedicated capital gains tax structure in effect.

Instead, all proceeds obtained from the disposal of assets were subjected to taxation under the income tax regulations.

If the assets were held for less than one year before being sold, they were treated as short-term capital gains and incurred tax obligations as per the income tax rules. Conversely, if the assets were held for over one year before their sale, no taxes were imposed on the resulting gains.

The rate at which your short-term gains are taxed depends on your income level and the type of transaction you’re involved in. Here are the tax rates based on income level:

You might be wondering how these tax rules apply to investors in 2023. Well, any assets that were purchased before March 1st, 2022, will continue to be taxed based on the previous tax rules. Additionally, assets that were acquired on or before February 28th, 2022, and are still held by investors are considered non-taxable under the new guidelines.

It is important to note that certain transactions involving interest-bearing activities such as staking, lending, liquidity mining, and yield farming will be subject to a fixed interest-bearing tax rate of 27.5%.

‍

New Tax Regime

‍The recent tax reform brings about significant changes that impact crypto investors. The rates at which gains are taxed have been altered, and long-term capital gains are no longer exempt from taxes, except for specific legacy holdings, which we will delve into shortly.

However, it's worth noting that the taxation of interest-bearing transactions remains unchanged even after the tax reform, providing a sense of stability.

The latest tax reform has introduced a notable shift for crypto investors, as all transactions resulting in short-term capital gains are now subject to the stock tax rate of 27.5%.

Furthermore, any assets that were held before the implementation of the new tax regime will be categorized as legacy holdings and will not be subject to taxation under the revised tax laws.

You can voluntarily opt-in to the new tax laws from January 1, 2022, if you wish to.

But why would someone want to do that?

Well, because it can save you money.

Note that in the previous tax regime, your gains were taxed based on your income, so if you happen to be in the higher income group, attracting a 35-40% tax rate, you can opt-in to the new tax regime where you only have to pay a flat tax rate of 27.5%.

One important addition to the tax framework has been the allowance for taxpayers to offset their capital losses against their capital gains, which was previously not allowed.

‍

Capital Gains Tax Rate

We’ve already discussed the tax rate from the previous tax regime in the table above. After the tax reform, all your gains will be subjected to a flat stock tax rate of 27.5%.

‍

How to Calculate Crypto Gains and Losses

‍Now that you understand how your gains will be taxed and the taxes you'll be responsible for, it's crucial to determine the extent of your gains to estimate the corresponding tax amount owed to the tax authorities.

Calculating your capital gain or loss is relatively straightforward. You can use the following formula:

Capital Gain/Loss =
(Disposal Amount or Selling Price) - (Cost Basis)

For an accurate calculation of your capital gain or loss, two key pieces of information are required: the disposal amount or selling price of the asset and the cost basis. If you are uncertain about the cost basis, there is no need to be concerned. It simply refers to the total amount you paid to acquire the asset, including any additional fees like gas or transaction fees.

It is essential to understand that when determining the cost basis, one should adhere to the accounting method recommended by the tax authorities, which is typically the First-In-First-Out (FIFO) method.

We will provide more comprehensive information regarding this accounting method later in the guide.

‍

Example:

Consider the following transactions:

03/02/2022 - Andrew buys 2 BTC for €14,000 each
06/04/2022 - Andrew buys 3 ETH for €1,400 each
05/06/2022 - Andrew buys 1 BTC for €18,000 and 2 ETH for €1,600 each
13/06/2024 - Andrew sells 1 BTC for €20,000
19/08/2024 - Andrew sells 3 ETH for €2,000 each

As you can see, Andrew made two disposals. Let’s calculate the gain for each disposal one at a time.

‍

1st Disposal

Andrew sells 1 BTC for €20,000

Please be aware that in this guide, we will be using the FIFO accounting method as recommended by the BMF. A more comprehensive discussion of accounting methods is provided later in the guide.

For now, a straightforward way to comprehend how the FIFO (First-In-First-Out) method operates is to imagine that the first asset you purchase is the first one you sell.

Now, this is the same BTC acquired on 03/02/2022 for €14,000

Cost Basis = €14,000
Disposal Amount = €20,000
Capital Gain/Loss = Disposal Amount - Cost Basis = €20,000 - €14,000 = €6,000

‍

2nd Disposal

3 ETH sold for €2,000 each.

If we use the FIFO accounting rules, these ETH tokens are the same ones that were acquired on 06/04/22 for €1,400 each

Cost Base =  €1,400
Disposal Amount = €2,000
Capital Gain for 1 ETH = €2,000 - €1,400 = €600

So for 3 tokens, the total gain comes out to be = 3*600 = €1,800

Total Gain for both disposals = €6,000 + €1,800 = €7,800

‍

Crypto Losses

Old Tax Regime

Before March 2022, taxpayers were not allowed to offset their capital losses and had to do away with them without availing of tax benefits.

New Tax Regime

Under the new tax regime in Austria, taxpayers are granted the ability to offset their capital losses with their capital gains, considering that cryptocurrencies are now recognized as tangible assets.

However, it's important to note that you can only offset your losses against gains by applying the same taxation principles. This means that if you intend to neutralize your crypto losses, you can only do so by offsetting them against capital gains that fall within the 27.5% tax bracket.

In simpler terms, losses incurred before March 1, 2022, cannot be utilized to offset gains achieved after the implementation of the tax reform, unless you voluntarily choose taxation under the new tax regulations.

‍

Lost or Stolen Crypto

The BMF is yet to release specific guidance on how lost or stolen crypto is viewed from a tax perspective.

However, it is likely that these losses will be assessed on a case-by-case basis and may be deducted from your overall income to lower your tax bill, given that you can offer all the supporting documents to prove the ownership of assets before theft.

‍

Crypto Tax Breaks Austria

Most countries offer tax breaks to crypto investors, and Austria is no exception. The Austrian tax authorities offer multiple tax breaks under both the old and new tax regimes. Listed below are some of them:

‍

Old Tax Regime

1. Personal Income Tax Allowance: Under the old income tax laws, you wouldn’t have to pay any taxes on your gains if your total income was less than €11,000.‍
2. HODling Crypto: Under the previous tax laws, long-term capital gains were exempt from taxation. This meant that if you held onto your assets for a period exceeding 12 months before selling them, the resulting gains were not subject to taxes.

‍

New Tax Regime

1. ‍Speculative Trade Allowance: If you make less than €440 in speculative trades in a tax year, then your gains or profits are considered tax-free.

‍

Crypto Cost Basis Method Austria

The FIFO (First-In First-Out) cost basis method is recommended for cost basis calculations in Austria. This method assumes that the first assets purchased or acquired are also the first assets sold or disposed of.

In crypto investments, FIFO would mean that the first cryptocurrencies purchased are also the first ones sold.

Here's an example of how the FIFO accounting method works:

Consider the following transactions made by Mark:

• Bought 1 BTC for €10,000 on 01/01/2024 in Binance Wallet
• Bought 1 ETH for €1,000 on 01/02/2024 in Binance Wallet
• Bought 1 BTC for €20,000 on 01/03/2024 in Binance Wallet
• Bought 2 ETH for €2,000 each on 01/04/2024 in Binance Wallet
• Bought 3 BTC for €30,000 each on 01/05/2024 in Binance Wallet
• Bought 3 ETH for €3,000 each on 01/06/2024 in Binance Wallet

Let's say you decide to sell 2 BTC on 01/07/2024 when the price is €35,000 per BTC.

Using the FIFO accounting method, you would sell the 2 BTC you purchased on 01/01/2024 and 01/03/2024 as they were the first two BTC purchased.

For the BTC purchased on 01/01/2024, the cost basis is €10,000 and for the BTC purchased on 01/03/2024 the cost basis is €20,000.So the collective cost basis for both BTC tokens would be = €10,000 + €20,000 = € 30,000

Now the total amount received on the disposal of 2 BTC = €70,000

Capital Gain/Loss = €70,000 - €30,000 = €40,000

‍

Crypto Income Tax Austria

As previously mentioned, the tax authorities regarded gains from crypto-related transactions as income and subjected them to taxation according to income tax laws.

However, under the new tax guidelines, a new overarching tax known as the stock tax has been introduced, replacing the previous income tax system. This change signifies a shift in the taxation framework for crypto-related gains.

We have discussed it in detail in the above section titled “Crypto Capital Gains”.

‍

How to Calculate Crypto Income

For assets bought before March 1, 2022, your net income is simply the sum of capital gains made for all short-term trades, as any disposal made after over a year of holding these assets is not taxable under the old tax guidelines.

You can refer to the above section titled “How to calculate crypto gains and losses” if you have any doubts about how to calculate your capital gains.

‍

Tax-Free Crypto Transactions

Listed below are some tax-free transactions in Austria under both the new and old tax laws:

1. Buying crypto with fiat
2. HODLing crypto
3. Transferring crypto between wallets
4. Disposing of crypto assets acquired before February 28, 2022, after having held them for over a year
5. Gifting crypto

In addition to this, by opting into the new tax reform, you can avail of some additional tax benefits:

1. Swapping one crypto asset for another
2. Staking rewards from PoS networks

‍

Taxed Crypto Transactions

Listed below are some of the taxed crypto transactions in Austria:

1. Selling crypto
2. Earning interest income from lending, staking, and yield farming
3. Mining crypto
4. New tokens received from hard forks and airdrops

‍

Tax On Mining Crypto in Austria

Mined tokens are taxed based on the timing of the mining activity. If the tokens were mined on or before February 28, 2022, they would be subject to income tax and if the tokens were mined on or after March 1, 2022, they would be taxed upon receipt at a flat rate of 27.5%.

When disposing of these mined tokens, if the disposal occurs before March 1, 2022, income tax will be imposed on the transactions, with the tax rate varying based on your income bracket. However, if the disposal takes place after March 1, 2022, a flat rate of 27.5% will be applicable.

Starting from March 1, 2022, the trading of mined coins is tax-free. Furthermore, if you mined coins before February 28, 2021, and held them for over a year, these holdings will be considered legacy assets. As a result, any profits from selling, trading, or utilizing these coins will not be subject to tax.

‍

Tax on Staking Crypto

The BMF under the new tax reform clearly states that income deemed to be generated is taxable. According to a document titled Tax Treatment of Cryptocurrencies published by the Federal Ministry Republic of Austria

“...current income is not deemed to be generated if:

The service associated with processing the transaction consists primarily of investing (staking) existing cryptocurrency…”

However, tokens received as staking rewards inherit a cost basis of zero to ensure that all your gains are taxed once you decide to dispose of these tokens.

‍

Crypto Margin Trades, Future, and CFDs

The BMF lacks a definitive framework for determining the tax implications of trading activities involving crypto margin trading, futures, and other CFDs. Nonetheless, it's worth noting that the 27.5% tax rate that applies to capital gains from financial assets, including derivatives, generally also pertains to crypto.

It's recommended that you consult with a tax expert for specialized guidance regarding the taxation of crypto derivatives and other CFDs.

‍

DAO Taxes

Although the BMF guidelines do not specifically mention income from DAOs, they do mention cryptocurrency holdings acquired using a technical activity involving transaction processing services are deemed to be currency income and are subject to income tax.

However, the nature and scope of these technical activities should not extend beyond simple asset management work. Otherwise, the income would be classified as income from commercial activity. Working at a DAO involves completing more complex tasks. And therefore income from DAOs may be categorised as income from commercial activity.

We suggest seeking advice from an experienced tax advisor to understand how income from DAOs is taxed.

‍

ICO Taxes

ICOs are events that allow investors to own native tokens from unreleased projects at a discounted price. It is similar to IPOs from traditional markets and involves swapping mainstream tokens like BTC and ETH to get access to project-native tokens.

Although the guidelines do not specifically mention how income from ICOs will be taxed, these transactions will likely be viewed as crypto-to-crypto trades. The BMF does not consider crypto-to-crypto trades as taxable.

However, it is advisable to seek guidance from an experienced tax accountant to avoid legal complications in the future.

‍

Crypto Gifts and Donations Taxes

If you're considering gifting or donating crypto assets in Austria, there is good news for you. Gifting crypto is not subject to taxation. However, there are certain reporting requirements to be aware of.

If you are gifting assets to your relatives, any donations exceeding €50,000 should be reported to the BMF. If you are gifting to friends or third parties, the reporting threshold decreases to €15,000.

While the BMF still needs to provide specific guidelines for crypto donations, based on existing knowledge about fiat donations, it is reasonable to assume that crypto donations made to registered charities are eligible for tax deductions. Furthermore, you are not required to report these transactions to the BMF.

The organization receiving the grant is responsible for reporting the transactions to the BMF, and the information will be automatically included in your employee tax assessment report.

‍

NFT Taxes Austria

In Austria, the taxation of NFTs largely depends on their intended use and the specific circumstances of their acquisition and sale.

If an individual buys an NFT as an investment and later sells it for a profit, any capital gains realized from the sale will be taxed based on the date of disposal.

If acquired and disposed of on or after March 1, 2022, the gains will be subjected to a flat rate of 27.5% in the new tax regime, and if disposed of before that, the gains will be subjected to the regular income tax rates.

On the other hand, if an NFT is acquired and sold as part of a business activity, the transaction may be subject to Value Added Tax (VAT) at a rate of 20%.

This would be the case. For example, if a company creates and sells NFTs as part of its regular business operations.

‍

DeFi Crypto Taxes Austria

The BMF is yet to release clear guidelines on the taxation of DeFi transactions. However, this does not imply that DeFi transactions are tax-free.

It just means that you need to interpret the current guidelines and apply them to your DeFi transactions to calculate your NFT taxes.

Lucky for you we deliberated this matter with tax professionals, and here’s what we found about the taxation of DeFi transactions:

• Interest income from DeFi Protocols: A flat 27.5% tax on receipt of tokens and upon disposal
• Borrowing Crypto assets from DeFi Protocols: Tax-Free‍
• Paying interest back to DeFi Protocols: The transaction is considered tax-free until you’re making interest payments using fiat currency.‍
• Staking and Liquidity Mining on DeFi Protocols: A flat 27.5% tax on the tokens upon receipt.‍
• Yield Farming: A flat 27.5% tax rate on tokens upon receipt and disposal.‍
• Adding/Removing Liquidity: Tax-Free‍
• Income from Engage/play to Earn DeFi Protocols: A flat 27.5% tax rate on tokens upon receipt and disposal.‍
• Income from Margin Trades and Futures on DeFi Protocols: A flat 27.5% tax on any realized gains.

‍

How are Airdrops and Forks Taxed in Austria

Soft forks are non considered taxable by the BMF as no new tokens are redistributed among the chain participants.

Tokens received through airdrops and hard forks are treated similarly for tax purposes. They are not taxed upon receipt and have a cost basis of €0, which is not good news. This means that when you sell your tokens, you will be taxed on their entire value, not just the gains.

If you sell these tokens on or before February 28, 2022, regular income tax rules will apply, but if you sell them after that date, a flat tax rate of 27.5% will be charged on the sale.

‍

When to Report Crypto Taxes in Austria

The financial year in Austria runs from January 1 to December 31. Taxpayers must file their returns by April 30 (for paper forms) or June 30 (for online returns) of the following year.

For instance, the current financial year is from January 1, 2024, to December 31, 2025, and the deadline for postal returns is April 30, 2025, while for online returns, it's June 30, 2025.

It's essential to keep these dates in mind to avoid penalties for late submissions.

‍

How to Report Crypto Taxes in Austria

When filing taxes in Austria, cryptocurrency investments are considered part of the taxpayer's annual return.

Such investments should be reported electronically using the FinanzOnline portal before the 30th of June. Specifically, individuals should report their cryptocurrency investments under the "other income" category on their Income Tax Return - E1.

‍

How to File Crypto Taxes in Austria

Here’s a step-wise tutorial on how to file your crypto taxes using the online Finanz portal:

1. Create a FinanzOnline account - If you don't already have one, you must register with the Austrian tax authorities by creating a FinanzOnline account. You can do this by visiting the FinanzOnline website and following the registration process.‍
2. Gather all necessary information - Before starting the tax filing process, you should gather all the relevant information and documents to complete the process. This includes your income information, deductions, and any crypto investments you made during the tax year.‍
3. Log in to your FinanzOnline account - Once you have all the necessary information, log in to your FinanzOnline account using your username and password.‍
4. Select the tax return form - From the menu, select the tax return form that applies to you. For example, if you are an individual, select the "Income Tax Return - E1" form.‍
5. Fill out the tax return form - You will be directed to the tax return form, which you need to fill out with your income and expense details. Ensure that you accurately report all your crypto investments under the category of "other income."‍
6. Submit the tax return - After filling out the form, you need to submit it electronically by clicking the "Submit" button. Once submitted, you will receive a confirmation message that your tax return has been successfully filed.‍
7. Pay any outstanding tax - If you owe any tax, you will be required to make the payment electronically via the FinanzOnline portal. You can do this using various payment options provided by the portal.‍
8. Track the status of your return - You can check the status of your tax return by logging into your FinanzOnline account and selecting the "Tax Return Status" option from the menu.

Note that you need to complete all your income calculations and review them thoroughly before you file your taxes so that you can validate the tax calculations made by the software. One way to avoid this is by using crypto tax software like Kryptos to do these calculations.

The platform can auto-fetch all your transactions and calculate the cost basis for each one of them, generating legally compliant tax reports in a matter of minutes.

‍

How to File Crypto Taxes Using Kryptos?

Now that you’re aware of how your crypto transactions are taxed and what forms you need to fill out to complete your tax report, here’s a step-wise breakdown of how Kryptos can make this task easier for you:

1. Visit Kryptos and sign up using your email or Google/Apple Account
2. Choose your country, currency, time zone, and accounting method
3. Import all your transactions from wallets and crypto exchanges
4. Choose your preferred report and click on the generate report option on the left side of your screen and let Kryptos do all the accounting.
5. Once your Tax report is ready, you can download it in PDF format.

If you need clarification regarding the integrations or generating your tax reports, you refer to our video guide here.

‍

What Crypto Records Will the BMF Want?

The BMF hasn’t released an official list of documents that taxpayers need to maintain, but as a general rule, maintain the following documents to avoid complications while filing taxes:

• The date of the transaction
• Which cryptocurrency was part of the transaction
• Type of transaction
• How much was bought, sold, or exchanged
• The value of the cryptocurrency in euro at the time of the transaction
• Exchange records and other relevant statements
• Wallet addresses

‍

How to Avoid Tax on Cryptocurrency in Austria

There is no legal way to avoid crypto taxes altogether in Austria and you might end up in trouble with the tax authorities if you choose to do so. However, there are ways you can reduce your tax bill and pay less taxes. We’ve already discussed most of them in detail in prior sections of the guide under the section titled “Crypto Tax Breaks Austria''. Here’s a summary:

• HODL assets bought on or before Feb 28, 2022, as long-term capital gains were not considered taxable under the old tax laws
• Swap one crypto asset for another. It’s considered non-taxable after the tax reform.
• Opt-in for taxation under the new tax rules as it might significantly reduce the rate at which your gains will be taxed, especially if you fall in the higher tax bracket.
• Donate because gifts to registered charities are tax-deductible.

‍

FAQs

‍

1. Is Crypto legal in Austria?

‍

Yes, crypto is legal in Austria. Austria has a clear regulatory framework for cryptocurrencies and has recognised them as a means of payment since 2019. The country has implemented anti-money laundering (AML) regulations that apply to cryptocurrency exchanges and service providers, and the Financial Market Authority (FMA) is the responsible regulatory body for overseeing compliance with these regulations. Overall, Austria has been proactive in embracing blockchain technology and cryptocurrencies, with several initiatives aimed at promoting innovation in this field.

‍

2. How is Crypto taxed in Austria?

‍

In Austria, cryptocurrencies are treated as assets and are subject to capital gains tax. Therefore, any profit from buying and selling cryptocurrencies is subject to taxation, just like any other investment.

It's also worth noting that any income received in cryptocurrency, such as through mining or airdrops, is subject to income tax. Additionally, if a business accepts cryptocurrency as payment, the transaction is subject to value-added tax (VAT) in the same way as any other transaction.

‍

3. Is any crypto tax-free in Austria?

‍

In Austria, there is no tax-free cryptocurrency. All gains from buying and selling cryptocurrencies are subject to taxation, just like any other investment. Even if you receive cryptocurrencies as a gift or through an airdrop, they are still subject to taxation as income.

‍

4. How to file crypto taxes using Kryptos?

‍

We’ve already discussed how to file your crypto taxes in the above sections of the guide offering a stepwise breakdown of the entire process. However, we agree that it is unreasonably complicated even for someone with a fair amount of prior knowledge. Although there’s an easy way to file your crypto taxes using a crypto tax software called Kryptos.

Where all you need to do is log in on the platform, add all your trading accounts, wallets, and DeFi accounts and sip coffee while Kryptos does all the heavy lifting for you. The platform can auto-fetch all your transactions from the tax year and generate a legally compliant tax report within a matter of minutes while also suggesting ways to lower your tax bill. It works like magic, all you need to do is try it once.

‍

All content on Kryptos serves general informational purposes only. It's not intended to replace any professional advice from licensed accountants, attorneys, or certified financial and tax professionals. The information is completed to the best of our knowledge and we at Kryptos do not claim either correctness or accuracy of the same. Before taking any tax position/stance, you should always consider seeking independent legal, financial, taxation or other advice from professionals. Kryptos is not liable for any loss caused by the use of, or by placing reliance on, the information on this website. Kryptos disclaims any responsibility for the accuracy or adequacy of any positions taken by you in your tax returns. Thank you for being part of our community, and we're excited to continue guiding you on your crypto journey!

Crypto investments are fun, but crypto taxes aren’t. Most Danish residents have no idea how crypto gains are taxed, and that’s because the guidelines around crypto taxation in Denmark are comparatively new and still evolving. Danish tax authorities consider crypto to be personal assets from a tax perspective, meaning that you will pay taxes on them whenever you treat them as a speculative asset or use them for business purposes.

The guidelines around crypto taxation are comprehensive and cover almost every aspect of crypto taxation. However, one might find it overwhelming to get acquainted with the guidelines and then decode them to cater to their specific transactions.

That’s why we’ve put together this comprehensive guide on crypto taxes in Denmark to help you keep up with the new and existing guidelines issued by the Danish tax authority, Skattestyrelsen.

Once you finish this tax guide, you’ll have everything you need to know about crypto taxation in Denmark. This guide will be regularly updated as the tax authorities issue new guidelines. So make sure you keep revisiting this guide to stay updated.

‍

Key Information

‍

‍

Understanding Crypto Taxation in Denmark

‍

Bitcoin and other cryptocurrencies are classified as personal assets in Denmark,  meaning that every time someone treats crypto as a speculative asset or uses it for business, tax liabilities follow.

Note that any crypto you purchase and hold is considered a speculative asset by default, resulting in taxable gains or losses. If you’re not sure whether or not your assets classify as speculative, you also have the option to request a personal assessment.

According to Skattestyrelsen, the tax treatment of crypto assets depends on the specific nature of the transactions. Activities like capital income from trading, receiving crypto through airdrops, or earning crypto through mining are considered personal income and are subject to a variable tax rate that may go up to 52%. On the other hand, trading in stablecoins is recognised as deriving gains from a financial contract, leading to it being classified as capital income and subject to a capital gains tax of up to 42%.

Here’s an example to better understand how taxes work in Denmark.

‍

Consider the following transactions:

‍

24/01/13 - Fredrik buys 2 BTC for 1,20,000 DKK each in Binance Wallet

24/02/22 - Fredrik buys 1 ETH for 10,000 DKK in Binance Wallet

24/03/28 - Fredrik buys 1 ETH for 11,000 DKK in Binance Wallet

24/05/21 - Fredrik sells 2 BTC for 1,50,000 DKK each from Binance Wallet

24/06/04 - Fredrik sells 1 ETH for 15,000 DKK from Binance Wallet

As evident from the above ledger of transactions, two disposals were made, so let’s see how these disposals will be taxed.

‍

1st Disposal

‍

2 BTC sold for 1,50,000 DKK each

These tokens were acquired for 1,20,000 DKK each on 24/01/13

Cost Basis (Acquisition Price) = 1,20,000 DKK

Disposal Amount = 1,50,000 DKK

Capital Gains = Disposal Amount - Cost Basis = 1,50,000 - 1,20,000 = 30,000 DKK (for 1 BTC)

Gain from 2 BTC = 2*30,000 = 60,000 DKK

‍

2nd Disposal

‍

1 ETH sold for 15,000 DKK

Since two ETH tokens are acquired at different dates and prices, calculating the acquisition price becomes a little complex.

Here, we have to use an accounting method to identify which ETH token was disposed of. Every country suggests a specific accounting method for calculating the cost base.

Skattestyrelsen recommends using the FIFO accounting method. We will discuss more about this method later in the guide. For now, a simple way to understand how FIFO accounting works is that the first asset you buy is the first asset you sell.

So the first ETH was acquired on 24/02/22 for 10,000 DKK

Cost basis = 10,000 DKK

Disposal Amount = 15,000 DKK

Capital Gain/loss = Disposal amount - Cost Basis = 15,000 - 10,000 = 5,000 DKK

Collective gain from both disposals = 60,000 + 5000 = 65,000 DKK

This is your tax base, and taxes will be levied on it.

‍

Cost Basis Calculations in Denmark

‍

Sometimes, when investors buy the same asset multiple times at different prices, calculating the acquisition price or cost basis for disposal becomes very challenging. That’s exactly why one must rely on specialised accounting methods as specified by the tax authorities.

The Danish tax authorities recommend using the FIFO accounting method to calculate the cost basis if you’re a Danish resident. The FIFO or First-In-First-Out accounting method implies that the first token you buy is the first token you sell. This accounting method is beneficial when dealing with multiple transactions from across your portfolio of tokens.

‍‍Here’s an example to better understand how it works.

Consider the following transactions:

2024/01/13 - Astrid bought 1 BTC for 1,10,000 DKK

20224/03/12 - Astrid bought 1 BTC for 1,20,000 DKK

2024/04/15 - Astrid sold 1 BTC for 1,50,000 DKK

As evident from the above ledger of transactions, two BTC tokens were purchased on two different dates and prices. So to determine which token was sold on 2024/04/15, we will use the FIFO accounting method.

The first token purchased will be the first one to be disposed of. The BTC token purchased on 2024/01/13 will be the one disposed of on 2024/04/15.

Cost Basis = 1,10,000 DKK

Disposal Amount = 1,50,000 DKK

Capital Gain/loss = Disposal Amount - Cost Basis = 1,50,000 - 1,10,000 = 40,000 DKK

‍

How Does Capital Gains Tax Work in Denmark?

‍

The Skattestyrelsen doesn't consider crypto as fiat currency but as a personal asset for tax purposes.  Personal assets are only taxed in Denmark under two specific circumstances:

1. If the assets are associated with your business
2. If it is considered a speculative asset

However, if you think you can evade crypto taxes just by HODLing your assets, you might be in for a surprise because the Danish tax authorities view your holdings as speculative and hence subject to taxes.

If you have any doubts regarding whether your assets are speculative or not, you can get your holdings audited by them.

The Danish tax authorities differentiate between Bitcoin, altcoins, and stablecoins. If you happen to be involved in transactions with Bitcoin and altcoins, chances are that you’ll attract income tax liabilities. However, if you’ve been trading and investing in stablecoins, the gains, if any, will be considered capital gains and taxed accordingly.

‍

Capital Gains Tax Rate

‍

Denmark doesn’t have separate tax rates for short-term and long-term capital gains. The tax on capital gains in Denmark is 42%.

‍

How to Calculate Crypto Gains and Losses

‍

The first step in determining your gains or losses involves calculating the cost basis for each asset within your portfolio. Your cost basis represents the amount you paid to acquire the asset, including any associated fees like gas fees or transaction fees.

Once you have the cost basis, you can simply subtract it from the disposal amount to ascertain your gain or loss. If it’s a gain, you will be required to pay a flat income tax on that amount. Conversely, if it results in a loss, you are not obligated to pay any taxes. However, it's important to note that you may be able to offset these losses against certain gains if specific criteria are met, as discussed in the preceding sections.

Here’s an example to better understand how capital gains are taxed.

‍

Consider the following transactions:

‍

2024/01/19 - Emma buys 2 BTC for 1,00,000 DKK in Binance Wallet

2024/03/12 - Emma buys 3 ETH for 11,000 DKK in Binance Wallet

2024/04/11 - Emma buys 1 BTC for 1,10,000 DKK in Binance Wallet

2024/06/14 - Emma sells 1 BTC for 1,40,000 DKK from Binance Wallet

2024/08/10 - Emma sells 2 BTC for 1,50,000 DKK from Binance Wallet

2024/10/14 - Emma sells 2 ETH for 15,000 DKK from Binance Wallet

As seen in the above ledger of transactions, three disposals were made. We will calculate the gains for each disposal one at a time.

‍

1st Disposal

‍

1 BTC sold for 1,40,000 DKK

This BTC is the same one acquired on 2024/01/19 for 1,00,000 DKK

Cost Basis = 1,00,000 DKK

Disposal Amount = 1,40,000 DKK

Capital Gain/loss = Disposal Amount - Cost Basis = 1,40,000 - 1,00,000 = 40,000 DKK

‍

2nd Disposal

‍

2 BTC sold for 1,50,000 DKK each

There are two different types of tokens in this bunch.

BTC-1 from 2024/01/19 was acquired for 1,00,000 DKK, and BTC-2 was acquired on 2024/04/11 for 1,10,000 DKK.

So for disposal of BTC-1:

Cost basis = 1,00,000 DKK

Disposal Amount = 1,50,000 DKK

Capital Gain = 1,50,000 - 1,00,000 = 50,000 DKK

And for disposal of BTC-2:

Cost Basis = 1,10,000 DKK

Disposal Amount = 1,50,000 DKK

Capital Gain = 1,50,000 - 1,10,000 = 40,000 DKK

Total Gain = 50,000 + 40,000 = 90,000 DKK

‍

3rd Disposal

‍

2 ETH sold for 15,000 DKK each

These tokens were acquired on 2024/03/12 for 11,000 DKK

Cost Basis = 11,000 DKK

Disposal Amount = 15,000 DKK

Capital Gain = 15,000 - 11,000 DKK = 4,000 DKK (for 1 ETH)

Gain from 2 ETH tokens = 2*4000 = 8,000 DKK

Collective Gain from 3 Disposals = 40,000 + 80,000 + 8,000 = 1,28,000 DKK

‍

Decoding Crypto Income Tax in Denmark

‍

Transactions that result in a gain may attract income tax or capital gains tax, depending on the nature of those gains. If you trade or invest in crypto assets, the gains you make would be treated as income. If you hold stablecoins and use them as an investment instrument, then the gains will attract CGT.

‍

Income Tax Rate Denmark

‍

The personal income tax rate in Denmark constitutes four discrete tax brackets:

‍

1. Bottom-Bracket Tax

All income earners pay a flat 12.11% bottom-bracket tax. The income is taxed after deducting the personal allowance and the 8% labour market tax.

2. Top-Bracket Tax

Individuals earning above 588,900 DKK in Denmark are liable to pay the top tax bracket, which is an extra levy of 15% on their income. It is worth noting that this tax is calculated after accounting for labour market contributions.

3. Municipal and Labour Market Tax

In Denmark, all taxpayers are required to pay the labour market tax and municipal tax. The labour market tax is fixed at 8%, whereas the municipal tax varies, with the mean rate being  25%. Although crypto assets are exempt from the 8% market tax, understanding this tax is important for effective tax planning.

‍

Note that a regulation in Denmark limits the total amount of an individual's bottom-bracket tax, top-bracket tax, and municipal taxes. According to this regulation, these taxes combined must not exceed 52.06% of the individual's income. This serves as a threshold to ensure that the tax burden remains within a limit for taxpayers in Denmark.

‍

How to Calculate Crypto Income

‍

If you have a crypto income, let’s say from ICOs, crypto-to-crypto trades, or as salary, you need to be able to calculate your net income and report it to the tax authorities on your tax return. To calculate your crypto income, you should keep track of the fair market value of the tokens in DKK on the day of receipt and add them all together to calculate your net income.

‍

What Happens When You Don’t Report Crypto Transactions in Denmark?

‍

It might get you into a lot of trouble, as the Skattestyrelsen can trace your crypto transactions from as far back as 2019. The Danish tax agency collaborated with major crypto exchanges operating within Denmark, gaining access to the KYC details of investors. Moreover, the tax agency has sent letters to cryptocurrency investors who are suspected of evading taxes.

So you should dismiss any ideas of underreporting your crypto income on your tax return immediately because such actions could lead to severe consequences and legal trouble. It is highly recommended to comply with the tax regulations and accurately report crypto income to avoid any potential repercussions.

‍

Made a Loss? Here’s How to Use It to Your Advantage

‍

Crypto losses are a complicated piece of the Danish crypto tax puzzle. Generally, you’re not supposed to write off any of your losses against your gains, but there are certain circumstances under which you can do that.

If you have bought or sold the same assets over a financial year while simultaneously making gains or losses, you can write these losses off against your gains, given that you haven’t purchased new assets in that span.

For instance, if you have bought 20 ETH tokens and then sold 5 tokens twice within the financial year, making a gain in one and a loss in another. Then, you can offset your loss against these gains. However, if you sold 5 tokens twice and bought 3 new tokens after that, then you cannot write off your losses.

Also, it’s important to note that you cannot offset the losses from one token against the gains made from another token.

‍

Lost or Stolen Crypto

‍

Based on previous rulings by the Danish Tax Agency, the loss of access to cryptocurrency does not constitute a disposal event and, therefore, cannot be claimed as a tax deduction. However, if you can substantiate the permanent loss of access to your cryptocurrency, you may request a binding ruling and write them off as a special case.

However, you might need assistance from tax experts and legal consultants to make the binding case strong enough to be considered by the tax authorities.

‍

Tax Credits/Incentives Denmark

‍

Although there is no dedicated tax break program in Denmark, there are some existing laws that allow you to reduce your tax bill to some extent.

‍

1. Personal Tax Allowance: Individual taxpayers in Denmark have a tax-free personal allowance of 49,700 DKK that they can deduct from their gains. Moreover, if your spouse has some unused personal tax-free allowance, they can transfer it to you.

2. HODLing Crypto for Non-Speculative Purposes: Note that one only pays taxes on gains if they arise from speculative assets, and there are certain scenarios where crypto investments aren’t considered speculative by the authorities. If you want to know whether or not your investments fall under this category, you can request a personal assessment of your assets from the Danish Tax Agency.

3. Gifting Crypto: According to a previous ruling dated 13 Feb 2019, which sets the precedent for crypto gifts to be completely tax-free if they’re non-speculative and low value, you can gift up to DKK 74,100 for 2024 tax-free, but it will only be considered tax-free when you gift the assets to the following people:

• Offsprings, step-children and their kids
• Parents
• The surviving spouse of a deceased child or a stepchild
• Foster children who have lived with you for more than 5 years
• Step Parents and grandchildren
• Someone you’re living with for more than 2 years

4. Donating Crypto: Donations to charities approved by the tax agency may qualify for a tax deduction. Individuals can deduct up to DKK 18,300 worth of donations, as the deduction rate is set at 26%. Note that for a donation to be deductible, the charity must report your donations to the tax authority along with your civil registration number (CPR-nr).

‍

Some Tax-Free Crypto Transactions

‍

Although most crypto transactions attract tax liabilities in Denmark, the Danish tax authority considers some transactions to be tax-free:

‍

• Buying crypto assets with Danish krone or any other fiat currency
• HODLing crypto
• Transferring crypto between your wallets
• Donating crypto

‍

Taxed Crypto Transactions

‍

All cryptocurrency transactions that involve exchanging crypto for fiat currency or other assets or that generate income are considered taxable in Denmark. Listed below are some of these transactions:

‍

• Buying and selling cryptocurrencies for speculative purposes is considered taxable in Denmark. This includes both short-term and long-term trades.

• Income generated from cryptocurrency mining is also considered taxable. If you receive cryptocurrency as a reward for mining, the value of the cryptocurrency received will be taxed as income.

• Staking cryptocurrency involves holding cryptocurrency in a wallet to support the network and earn rewards. Therefore, staking is also a taxable transaction in Denmark.

• If you receive cryptocurrency as payment for goods or services, the value of the cryptocurrency received will be taxed as income.

• If you receive cryptocurrency as a donation, the value of the cryptocurrency received will be taxed as income.

‍

Mining Crypto in Denmark? Here’s How the Taxes Work

‍

According to a recent notification published by the Danish tax authorities, crypto mining is considered a hobby business from a tax perspective, and the tokens received as mining rewards are subject to income tax.

Upon receipt, these tokens will be subject to income tax based on their fair market value at that time. Apart from that, any subsequent disposition will also attract income tax liabilities.

‍

Understanding Crypto Staking Tax in Denmark

‍

Staking rewards are considered to be personal income from a tax perspective and hence, attract income tax. However, according to a recent notification issued by the tax authority, your gains are only taxed when you can finally transact with them. This is particularly useful for those involved in ETH staking because users receive ETH staking regards much later.

Note that any gains you make by selling the staking rewards later will be taxed as capital gains.

‍

How are Airdrops and Forks Taxed in Denmark?

‍

Forks

‍

According to the latest ruling by the tax authorities, soft forks are non-taxable since no new tokens are created, while tokens received from hard forks attract income tax liabilities at the time of disposal. However, it’s important to note that these tokens inherit a cost basis equal to 0 DKK.

‍

Airdrops

‍

The tax authorities have yet to issue clear guidelines on the taxation of airdrops. However, we can infer from the existing guidelines that the tax treatment of tokens received as airdrops will be similar to that of gifts.

‍

Gifting or Donating Crypto in <Country>? Here’s Some Good News For You

‍

Based on the latest ruling published by the Skattestyrelsen, crypto gifts can be tax-exempt if they are considered speculative by the tax authorities.

In Denmark, gifts are typically tax-free up to a maximum threshold of 74,100 DKK. However, this exemption is applicable only if you’re gifting your assets to your child, stepchild, grandchild, parent, stepparent, or an individual with whom you’re sharing your living space for at least 2 years.

In cases where the value of the gift exceeds this threshold, a gift tax rate of 15% will be levied.

Crypto donations are tax-deductible in Denmark as long as you’re donating to a registered charity. When you donate to a registered charity, you automatically receive your tax deduction because the charity will report the donation to the tax authorities against your civil registration number. 

‍

What About Crypto Margin Trades, Futures, and CFDs?

‍

In a decision dated 3rd April 2018, tax authorities clarified that margin trades are to be treated as future contracts since they are speculative in nature based on the guidelines covered in section 29(1) of the capital gains act.

Note that the gains and losses incurred will be taxed separately for every contract, and the capital gains and losses will be calculated on a rolling basis. Therefore, regardless of whether you realise your gains or losses at the end of the tax year, you will have to report these gains or losses in the contract and pay your taxes.

In Denmark, only losses within the same investment class can offset gains. Losses from one type of investment cannot be used to offset gains from another type. For example, losses from margin trades cannot be used to offset gains from CFDs. To qualify as a write-off pair, the losses and gains must belong to the same investment class.

‍

Participating in ICOs? Here’s What You Owe to the Skattestyrelsen

‍

Based on a previous ruling, the tax authorities have specified that any new tokens received through ICOs should be treated as assets. This means that ICO gains are subject to taxation under the State Tax Act.

The State Tax Act states that speculative assets must be treated as taxable income. Therefore, individuals are required to report their ICO gains/losses and pay income tax on the gains, exempt from labour market contributions, while any losses incurred can be deducted.

ICO taxation is similar to that of crypto-to-crypto trades, where one exchanges tokens, and the valuation is based on local currency.

‍

NFT and DAO Taxes in Denmark

‍

NFTs

‍

In Denmark, NFTs are generally taxed in the same way as other cryptocurrencies, such as Bitcoin, altcoins, and stablecoins. The tax treatment of NFTs depends on the purpose for which they are acquired and whether they are held as an investment or used for business purposes.

If you acquire NFTs as an investment, any profits made from the sale or exchange of the NFTs are considered taxable and subject to capital gains tax.

If you use NFTs for business purposes, such as in the creation and sale of digital art, the income generated from the sale of the NFTs is considered taxable and subject to income tax.

‍

DAOs

‍

The Danish tax authority has yet to release concrete guidelines on the taxation of income from DAOs. We are constantly on the lookout for new guidelines on the same and will add all relevant details here as soon as new guidelines hit our radar.

Meanwhile, we suggest seeking guidance from experienced tax professionals on how such transactions are taxed to avoid legal complications in the future.

‍

Decoding Defi Taxes in Denmark

‍

The Danish tax authorities have not yet provided clear guidelines on how to tax income from Defi transactions. However, we can infer from existing policies and taxation trends that the tax treatment of Defi transactions will likely resemble that of Bitcoin, altcoins, NFTs, and stablecoins.

Existing guidelines clarify the taxation of income from crypto staking. They classify staking rewards as personal income, subjecting them to income tax. However, there is a condition: Staking income is taxable only when you receive the tokens and can dispose of them as part of your portfolio. If you do not have the rewards in your wallet or portfolio, no taxes need to be paid on them.

‍

When to Report Crypto Taxes in Denmark?

‍

In Denmark, the tax year runs from 1st January to 31st December, and taxpayers must pay their taxes by 1st of May every year. For individuals with non-Danish income, the deadline extends to the 1st of July. Note that starting mid-March 2023, individuals can use the online portal E-tax to fulfil their tax reporting requirements.

‍

How to File Crypto Taxes in Denmark?

‍

You can report your crypto taxes through Skattestyrelsen’s E-tax portal from the comfort of your home. Here’s a stepwise tutorial on how to do that:

‍

Step 1- Log in to the E-Tax Portal

‍

Go to the E-tax portal and log in with your Civil Registration Number and E-tax password. If you don't have it, you can apply for one on the portal.

‍

Step 2- Select the Tax Return

‍

On the main page of the E-tax portal, select "Indkomst" (Income) and then "Forskudsopgørelse og årsopgørelse" (Advance assessment and annual statement). Then, select the year for which you want to file the tax return.

‍

Step 3- Check Your Pre-Filled Information

‍

The E-tax portal will pre-fill your information from previous years, such as your name, address, and personal information. Check to make sure that this information is correct.

‍

Step 4- Report your Crypto Income

‍

On the "Indkomst" (Income) page, you will see a section for "Andre indtægter og fradrag" (Other income and deductions). Here, you can report your crypto income by selecting "Anden idioms" (Other income) and entering the amount of your crypto income.

You need to report income from multiple sources in different sections. Here’s a section-wise breakdown:

• Gains from Bitcoin & altcoins-Box 20.
• Losses from Bitcoin & altcoins-Box 58.
• Gains from stablecoins-Box 346
• Losses from stablecoins-Box 85
• Airdrops-Box 20
• Staking rewards (but only at the point you receive them in your portfolio)-Box 20
• Mining rewards-Box 20
• Other income as interest from crypto-Box 20.

‍

Step 5- Report your Crypto Capital Gains

‍

If you have made any capital gains from the sale of cryptocurrencies, you will need to report these on the "Kapitalindkomst" (Capital income) page. Select "Aktier mv." (Shares, etc.) and then "Aktieavance og anden kapitalindkomst" (Share gains and other capital income). Enter the amount of capital gains from the sale of cryptocurrencies.

‍

Step 6- Check your Tax Calculation

‍

The E-tax portal will calculate your tax liability after reporting your crypto income and capital gains. Check to make sure that the calculation is correct.

‍

Step 7- Submit your Tax Return

‍

If you agree with the tax calculation, submit your tax return by clicking "Godkend" (Approve). You will receive a receipt and confirmation of your submission.

Note that these steps are to be followed after you’ve completed all your tax calculations so that you can accurately co-relate all the tax calculations done by the E-tax software and identify any discrepancies to avoid overpaying.

If you find tax calculations intimidating(like most investors do), you can use online tax software like  that can easily generate legally compliant tax reports in a matter of minutes by auto-fetching all your details from across your investment pool.

‍

What Records Will the Skattestyrelsen Want?

‍

The Danish Tax Agency has conducted audits of Danish taxpayers' cryptocurrency transactions in the past. Therefore, it is crucial to keep accurate records of your cryptocurrency transactions to calculate profits and losses for reporting in your annual tax return and in case of an audit.

‍

Therefore, it’s advisable to keep the following records:

‍

• Detailed records of buy/sell transactions
• E-mails with details of the trade sent by the exchanges
• Details of your service providers(exchanges, wallets, blockchains)
• Public keys of your wallets
• Details on your existing portfolio
• Bank statements to correlate with your buy/sell transactions
• Receipts to prove expenses
• Additional documentation of your purchases and sales is required to verify ownership.

‍

How to File Crypto Taxes Using Kryptos?

‍

Now that you’re aware of how your crypto transactions are taxed and what forms you need to fill out to complete your tax report, here’s a step-by-step breakdown of how Kryptos can make this task easier for you:

1. Visit Kryptos.io and sign up using your email or Google/Apple Account
2. Choose your country, currency, time zone, and accounting method
3. Import all your transactions from wallets and crypto exchanges
4. Choose your preferred report and click on the generate report option on the left side of your screen and let Kryptos do all the accounting.
5. Once your Tax report is ready, you can download it in PDF format.

‍

If you still need clarification regarding the integrations or generating your tax reports, you can refer to our video guide here.

‍

How to Avoid Tax on Cryptocurrency in Denmark?

‍

There’s no way to legally avoid paying crypto taxes in Denmark. However, there are some strategies you can use to reduce your tax bill. Here are some of the most commonly used ones.

1. HODL: If you are a long-term investor, you can hold your cryptocurrency for more than three years before selling it. In Denmark, capital gains from the sale of cryptocurrency held for more than three years are tax-exempt. So, if you hold your cryptocurrency for the long term, you can avoid paying taxes on capital gains.

2. Use Tax Deductions: In Denmark, you can deduct expenses related to cryptocurrency transactions, such as transaction fees and exchange fees. Keeping track of these expenses can reduce your taxable income.

3. Take advantage of losses: If you sell cryptocurrency at a loss, you can use that loss to offset capital gains from other investments. This can reduce your tax liability.

‍

You can refer to the section titled “Tax Credits/Incentives” for more details on this.

‍

Frequently Asked Questions(FAQs)

‍

1. Is Crypto legal in Denmark?

‍

Yes, cryptocurrencies are legal in Denmark. The Danish Financial Supervisory Authority (FSA) has issued guidelines on how cryptocurrencies are regulated and treated under Danish law. Cryptocurrency exchanges and trading platforms are required to register with the FSA and comply with anti-money laundering (AML) and know-your-customer (KYC) regulations. Additionally, income and gains from cryptocurrency investments are subject to taxation.

‍

2. How is crypto taxed in Denmark?

‍

In Denmark, cryptocurrencies are treated as assets for tax purposes. The tax treatment of cryptocurrencies depends on the purpose for which they are acquired and whether they are held as an investment or used for business purposes.

If you acquire cryptocurrencies as an investment, any profits made from the sale or exchange of the cryptocurrencies are considered taxable income and subject to capital gains tax. The capital gains tax rate in Denmark varies depending on the size of the gain, the duration of the investment, and other factors.

However, if you use cryptocurrencies for business purposes, such as in the creation and sale of digital products or services, the income generated from the sale of the cryptocurrencies is considered taxable income and is subject to income tax. You may also be able to deduct expenses related to the creation and sale of digital products or services, such as software or platform fees, to reduce your taxable income.

‍

3. When do you need to report your crypto taxes?

‍

The Danish tax year spans from January 1st to December 31st annually. To file and submit your tax return, you have until May 1st each year (or July 1st if you have non-Danish income). For the 2024 financial year, the reporting deadline is May 1st, 2025, and the E-tax online portal for tax reporting opens in mid-March 2025.

‍

4. What do assets with speculative purposes mean?

‍

Any assets that you buy, hold or collect in an attempt to make a profit at some later date can be considered speculative assets. The Danish Tax Agency regards crypto assets as speculative investments, which means that any gains or losses are subject to taxation.

‍

All content on Kryptos serves general informational purposes only. It's not intended to replace any professional advice from licensed accountants, attorneys, or certified financial and tax professionals. The information is completed to the best of our knowledge, and we at Kryptos do not claim either correctness or accuracy of the same. Before taking any tax position/stance, you should always consider seeking independent legal, financial, taxation or other advice from the professionals. Kryptos is not liable for any loss caused from the use of, or by placing reliance on, the information on this website. Kryptos disclaims any responsibility for the accuracy or adequacy of any positions taken by you in your tax returns. Thank you for being part of our community, and we're excited to continue guiding you on your crypto journey!

Whether you invest in tokens, stake them, mine them, or use them as a currency, the DGFiP (Direction Générale des Finances Publiques) would require some answers from you along with the taxes. France took a positive stance on crypto assets to transform the country into a European crypto hub, but owing to the inherent volatility of the unregulated market, the tax authorities had to come up with an intelligent tax structure to avoid its misuse.

If you are a French resident, you will have to pay taxes on your crypto investments and while the subject of crypto taxes is an intimidating one, we have curated an east-to-read and easier-to-digest crypto tax guide for you, so that when you’re done reading this guide, you can easily file crypto taxes yourself.

‍

Can the DGFiP Track Crypto?

‍

People often mistake the decentralised nature of blockchains and dependent cryptocurrencies for anonymity, which is not accurate. Your crypto transactions can be tracked using decentralised tools and your KYC details that you might’ve shared with your crypto exchange when you started using it.

France being a member EU state comes under the jurisdiction of regulatory guidelines and directives like the European Union's Sixth Anti-Money Laundering Directive (AMLD 6), which calls for stricter KYC regulations for companies offering crypto-related financial services in the region.

A new EU directive called Dac8 is expected to come into force later this year. It would give DGFiP the power to verify crypto ownership and access the accounts of crypto businesses to examine their digital assets.

So we suggest reporting all your transactions on your tax return and paying your crypto taxes on time because tax evasion can result in a penalty of 80% of the taxes owed, along with a maximum fine of €500,000 and a prison sentence of up to 5 years in France.

‍

How is Crypto Taxed in France?

‍

The legal definition of Bitcoin and other crypto assets came into the picture as late as May 9, 2019, under PACTE (Action Plan for Business Growth and Transformation law). The definition constitutes:

‍

“Any digital representation of a security which is not issued or guaranteed by a central bank or by a public authority, which is not necessarily attached to a currency having legal tender and which does not have the legal status of a currency, but which is accepted by natural or legal persons as a medium of exchange and which can be transferred, stored or exchanged electronically.”

‍

Crypto is taxed as an immovable property or asset in France and its disposal constitutes a capital gains event. The gains are subjected to capital gains tax and mining rewards that are subjected to BMC in France.

According to Art. 150 VH of the French General Tax Code, the taxation of crypto capital gains depends on whether the cryptocurrency was acquired from investments or other activities such as mining.

The amount of taxes you pay depends on how you’re viewed from a tax perspective. Investors are usually considered occasional traders and are required to pay the PFU (Prélèvement Forfaitaire Unique) at a flat tax rate of 30% which constitutes a 12.8% Income Tax plus a 17.2% social security contribution.

However, you can opt to waive the 12.8% income tax and choose a progressive tax under the new guidance.

Any income made by professional traders was considered commercial income (BIC (Bénéfices Industriels et Commerciaux) under the previous guidelines, however, things have changed owing to the new guidelines. Income made by professional traders is now viewed as a non-commercial income (Bénéfices non-Commerciaux) and is subjected to a non-commercial profits tax of up to 45%.

‍

Crypto Capital Gains

‍

Since the taxation of your gains depends heavily on how you’re viewed by the DGFiP, we will look at how the tax authority differentiates between the two and the tax implications for both.

‍

Professional Traders vs Occasional Traders

‍

The classification used to be on whether you engage in transactions frequently or not. If you were engaged in frequent transactions you were considered a professional trader attracting a progressive commercial profit tax varying between 0-45% and if you weren’t so active and engaged in just frequent transactions, you were considered an occasional trader and attracted a flat PFU tax of 30%.

However, under the new tax reform, the frequency or volume of your transactions has nothing to do with how you’re viewed from a tax perspective. If you buy and sell your crypto assets under your management, then you’ll automatically be considered an occasional trader regardless of the frequency or volume of your transactions.

A person executing sophisticated transactions using specialised tools in a professional setting is more likely to be categorised as a professional trader. Their gains will be taxed as non-commercial profits, the same as mining rewards.

‍

Capital Gains Tax Rate

‍

Since most investors will be taxed as occasional traders under the new guidelines. Most of your gains will be taxed at a flat 30% rate called PFU taxes. Here’s a breakdown of PFU rated for occasional traders:

‍

‍

‍As previously mentioned, you can choose to waive off the income tax (12.8%) of your gains under the new guidelines and choose to be taxed under a progressive income tax framework instead. While it may not be a beneficial opt-in for most investors, it does stand to benefit some of the low-income investors who fall in the lower tax brackets.

‍

Example

‍

Let’s take the example of Jade who has been investing in crypto for the past 2 years. Below is a list of all transactions from the past two years:

2023/06/04 - Bought 1 BTC for €5,000 in Binance Wallet

2023/07/23- Exchanged 1 BTC for 7 ETH Tokens in Binance Wallet

2023/11/29- Exchanged 5 BTC for 20 LTC tokens in Binance Wallet

2024/ 02/14- Sold 1 BTC for €20,000 from Binance Wallet

2024/04/11- Sold 5 Eth for €5,000 from Binance Wallet

‍

Let’s convert these transactions into a tabular format for a better understanding of these transactions:

‍

‍

The DGFiP mandates the use of the PCVT method for cost-basis calculations that rely on the formula given below:

Cost Basis (EUR)= Sale price – (total acquisition costs x [sale price/total portfolio value])

We will revisit this formula soon in the later sections. For now, let’s make the calculations and complete the table.

Right before Jade Sold 1 BTC for €20,000, Jade had 2 BTC, 7 ETH, and 20 LTC, let’s assume that their value at the time of sale was €50,000. The cost of acquisition can be fetched directly from the table and it’s €5,000, and the price of disposal is €20,000.

When you put these numbers in the formula, you end up with the following:

Cost Basis(EUR) = 5,000 * (20,000/50,000) = 2,000

Capital Gain(EUR) = 20,000 - 2,000 =  18,000

Similarly, we can calculate the cost basis and capital gain for the second sell transaction:

Cost Basis(EUR) = 3,000* (5,000/25,000) = 600

Capital Gain(EUR) = 5,000-600 = 4,400

So the modified table now looks like this:

‍

‍

Now these gains will be subjected to either the BNC or BIC tax structure depending on whether you are viewed as an occasional trader or a professional one. Although most investors would fall into the category of occasional traders and hence will be taxed under the BIC regime.

‍

Capital Losses

‍

Crypto losses are a fairly simple proposition for investors in France. You can offset your capital losses to lower your tax bill. However, the DGFiP is quite strict when it comes to offsetting your losses against your gains as it only allows capital losses made in the same financial year as the gains to be used as a deductible, while the rules are different for other securities, whereas you’re allowed to carry forward your losses to the subsequent financial year.

‍

How to Calculate Crypto Gains and Losses?

‍

Calculating your gains and losses is the penultimate step to filing your crypto taxes. It is a fairly simple process, all you need to do is calculate your cost basis first. Your cost basis is simply the amount you paid to acquire a certain asset.

Let’s say you bought 5 Eth tokens for €2,000 each and you had to pay an additional €50 as gas fees to the exchange in the process. Your cost basis per token would then be €2,010 (Price of Each Token + Amortized Gas Fees).

Once you have your cost basis, calculating your gains or losses is a breeze. Just subtract your cost base from the price of disposal and the difference is your gains or loss.

If it’s a gain, it will be subjected to a flat 30% PFU tax, while a loss can be used to offset your gains and reduce your tax bill.

‍

Crypto Tax Breaks France

‍

Although avoiding crypto taxes entirely is not an option in France, you can legally reduce your tax liabilities.

‍

1. HODL Your Crypto

Holding your crypto isn’t a taxable event in France, you can hold your assets from a long-term perspective and pay no taxes on them while they appreciate in value. Although you will have to pay taxes upon conversion to fiat currency.

‍

2. Convert Your Assets to Stable Coins

Since your crypto transactions are only taxable when you convert them to fiat currency in France, you can simply swap your assets for stablecoins and not pay any tax on them. Stablecoins are as stable as fiat currency and eliminate volatility from your portfolio. It’s the perfect way to realise a capital gain and not pay tax on it.

‍

3. Crypto Loss Harvesting

Although losses aren’t convenient for an investor, they’re not always bad for you. You can use your losses as an offset against gains and reduce your tax liability. However, you can only use losses from the same year as an offset against the gains unlike those in the securities market.

‍

4. Trading Fees

Almost every exchange charges you a trading fee for buying/selling or trading crypto from their exchange, and since trading fees are a deductible expense, you can reduce the trading fee from your acquisition cost and lower your taxable gains.

Moreover, you can also use trading fees from interim crypto swaps to significantly reduce your investment acquisition cost.

This is good news for you if you have multiple transactions within a financial year and it can have a huge impact on your tax bill.

‍

Crypto Cost Basis Method France

‍

We used a rather simplistic example to explain to you how you can calculate your crypto gains or losses. In reality, crypto gain calculations are more complicated, because people own multiple assets of the same kind, acquired through different transactions.

Consider this, for instance, you buy 100 Sol tokens across three transactions, the split being 30 in one transaction, 30 in the second one, and 40 in the last at €10, €15, and €20 a token respectively. And then you decided to sell 50 Sol tokens for €25 each 6 months later.

How will you calculate the cost basis for this transaction?

In France, you need to use the PCVT (plus values de cessions d'actifs numériques) for all your cost basis calculations as proposed by the DGFiP. The PCVT method relies on a predetermined formula for calculating your cost base.

Capital Gain/Loss (EUR)= Sale price – (total acquisition costs x [sale price/total portfolio value])

Sale Price(EUR): The amount you receive upon disposal

Total Acquisition Cost(EUR): The price you paid to acquire the asset including extra fees

Total Portfolio Value(EUR): The total value of your portfolio inclusive of all assets

Let's say, you bought a BTC for €15,000. So your Total Acquisition Cost is €15,000.

And you sell it for €20,000. That’s your Sale price.

Your total portfolio value including the BTC token mentioned earlier is €40,000. That’s your Total Portfolio value.

Now all you need to do is insert these values into the formula and you’ll have your gain/loss for this transaction.

When you do that, you’ll get this:

Capital Gain/Loss(EUR) = {20,000 - (15,000 * (20,000 / 40,000)}

You can use a calculator for this, or you could just divide 20,000 by 40,000 which will give you a factor of 0.5, which when multiplied by 15,000 reduces it to 7,500. Now all that’s left is to subtract it from 20,000 which essentially leaves you with a capital gain of 12,500.

‍

Crypto Income Tax France

‍

If you’re an occasional trader and opt-in for the progressive tax regime under the PFU tax structure, you’ll be taxed according to the progressive income tax rates. The same rates apply if you’re considered a professional trader by DGFiP or if you’re seen to be making an income from crypto mining.

‍

Crypto Income Tax Rates

‍

The following rates shall apply to your crypto income:

‍

‍

‍Note that for professional traders and miners being taxed under the BNC tax regime, there’s something called the micro-BNC tax regime for traders and miners who are making less than €77,700 in 2024.

The micro-BNC scheme essentially allows you to have a 34% tax-free allowance on your annual turnover. So you pay taxes on only 66% of your annual turnover contingent that you make less than €77,700. You can find out more about it here.

‍

How to Calculate Crypto Income

‍

Calculating your crypto income is a fairly simple task, if you’re running mining activities in a business setting, the turnover of your business is considered your income. Similarly, any income incurred in a professional setting is considered turnover and is taxed under the BNC regime as discussed earlier.

‍

Tax-Free Crypto Transactions

‍

Not all crypto transactions are taxed. Here’s a list of tax-free transactions in France:

‍

• Buying crypto with EUR
• Swapping one crypto asset for another
• Transferring crypto between wallets
• HODLing your crypto assets

‍

Taxed Crypto Transactions

‍

These transactions will attract tax liabilities in France:

‍

• Converting crypto to fiat
• Receiving mining rewards

‍

There are some common transactions like spending, staking, and DeFi transactions like liquidity mining. The only reason why you can’t find details about these transactions in this guide is that the DGFiP hasn’t released any guidelines on their taxation yet.

‍

Tax on Mining Crypto France

‍

Regardless of whether you mine tokens as a hobby or as a business, all mining rewards are considered non-commercial profits and are taxed up to 45% under the BNC tax regime.

‍

Tax on Staking Crypto

‍

Crypto staking is still a grey area when it comes to crypto taxation in France. The DGFiP is yet to release any guidelines on how such transactions are taxed. There’s a fair chance that staking rewards will be considered non-commercial income and will be taxed in the same way as mining rewards.

Yet many European offices argue why the acquisition cost of staking rewards isn’t €0 or equal to the fair market value of tokens upon receipt. We recommend seeking advice from an experienced tax accountant for transactions concerning crypto staking.

‍

‍Crypto Gifts and Donations Taxes

‍

Most European countries offer tax exemptions on Crypto Gifts and Donations, however, there are no clear guidelines regarding their taxation in France. More details will be added here as soon as the DGFiP releases new guidelines.

‍

Crypto Margin Trading, Futures and CFDs

‍

The DGFiP is yet to release any guidelines on the taxation of gains derived from margin/future trades and derivatives like CFDs. However, we will be looking out for any new guidelines regarding the same and will add relevant details here when it’s available.

‍

Crypto ICO Taxes

‍

ICOs represent ownership in newly incubated crypto projects and the nature of tokens received from ICOs is similar to those received as staking/mining rewards, and hence there’s a high chance that these transactions will follow a similar tax route.

‍

NFT Taxes France

‍

The DGFiP is yet to release any guidelines on the taxation of NFTs in France. We add all relevant details as soon as we get access to them.

‍

DAO Taxes

‍

Income from DAOs can be from various avenues like bounties, contribution rewards paid to contributors, and redistributed profits. The DGFiP is yet to release any guidelines on DAO taxation, we will surely be on the lookout for new guidelines and will update them here as soon as we get access to them.

‍

DeFi Crypto Taxes France

‍

The current guidelines from the DGFiP consider disposal to be the act of exchanging your cryptocurrency for traditional currency. Consequently, certain DeFi transactions could be interpreted as not subject to taxation, such as trading capital for liquidity pool tokens.

However, it’s impossible to be sure regarding their taxation without explicit guidance. We suggest talking to an experienced tax accountant if you’re deep into the DeFi territory.

‍

How are Airdrops and Forks Taxed in France

‍

The DGFiP is yet to release guidelines on the taxation of income from airdrops and forks. We will be adding it here as soon as new guidelines hit the public view.

‍

What Crypto Records Will the DGFiP Want?

‍

‍The DGFiP expects you to keep detailed records of your crypto transactions from the past 5 years just like all other European tax offices. Here’s a list of documents you might need when filing your crypto taxes:

‍

• A list of all crypto transactions with their dates
• The purpose of the transaction and the parties involved
• The market value of the asset (EUR) at the time of the transaction

‍

You can opt for a smarter way of record-keeping instead of maintaining these records in the form of a manual ledger. You can simply import all your transactions to Kryptos and let Kryptos maintain the ledger for you.

‍

When to Report Crypto Taxes in France?

‍

The tax year in France runs from January 1st to December 31st and your tax deadline depends on what department (region) you reside in. Here are some key dates for all the regions in France:

‍

‍

How to Report Crypto Taxes in France

‍

There are two ways you can report your crypto taxes to DGFiP:

‍

1. Online using your FranceConnect Account
2. Offline using paper forms

‍

However, the tax authorities have mandated the use of the online portal for all, unless there’s some special circumstance and you can’t access the online portal. You can use the physical forms in that case.

When it comes to filing your crypto taxes you need to complete multiple forms depending on the nature of your transactions:

‍

1. Formulaire 2042: This is the primary tax document mandatory for anyone filing their tax return with DGFiP. You can either file this individually or jointly with a spouse.

2. Formulaire 2086: This is a peripheral form attached to Formulaire 2042. Any gains/losses you’ve incurred while converting your crypto to fiat should be mentioned in this form.

3. Formulaire 2042C: You’ll have to list all transactions that are considered to be BNC income (i.e. income from mining, professional trading)

4. Formulaire 3916-bis: For transactions in crypto accounts set up outside France

‍

Note that Form 2086 only allows 20 disposals, so if you’ve made more than 20 disposals in a financial year, do seek help from an experienced tax accountant.

‍

How to File Crypto Taxes Using Kryptos?

‍

Now that you’re aware of how your crypto transactions are taxed and what forms you need to fill out to complete your tax report, here’s a step-wise breakdown of how Kryptos can make this task easier for you:

‍

1. Visit Kryptos and sign up using your email or Google/Apple Account
2. Choose your country, currency, time zone, and accounting method
3. Import all your transactions from wallets and crypto exchanges
4. Select your desired report and click the "Generate Report" option on the left side of your screen. Let Kryptos handle all your accounting needs seamlessly.
5. Once your Tax report is ready, you can download it in PDF format.

‍

If you still need clarification regarding the integrations or generating your tax reports, you refer to our video guide here.

‍

How to avoid crypto taxes in France?

‍

You’re legally required to pay your crypto taxes in France, and not doing so can lead to a lot of trouble. However, you can reduce your tax liabilities by using the following strategies:

‍

1. Track your losses and use tax loss harvesting to reduce your tax bill
2. Convert your assets into stablecoins instead of fiat
3. Take advantage of lower tax bands

‍

We’ve discussed the above-mentioned strategies in detail in the section titled “Crypto Tax Breaks”.

‍

FAQs

‍

1. Is Crypto Legal in France?

‍

Although it is legal to own and trade crypto in France. The government doesn’t consider crypto to be legal tender and instead classifies it as an immovable property or asset. In 2014, France introduced a legal framework for digital currencies, making it one of the first countries to do so. Cryptocurrency exchanges and service providers are required to comply with anti-money laundering (AML) and know-your-customer (KYC) regulations. Moreover, France has taken steps to promote blockchain technology and innovation through various initiatives and projects.

‍

2. What happens if you don’t pay taxes on Crypto?

‍

In France, tax evasion can result in a penalty of 80% of the taxes owed, along with a maximum fine of €500,000 and a prison sentence of up to 5 years.

‍

3. How is Crypto Taxed in France?

‍

In France, cryptocurrency is taxed as an immovable property or asset. When you sell or dispose of crypto assets, it triggers a capital gains event. Capital gains tax applies to any profits resulting from the sale, except for mining rewards, which are subject to a separate tax called BMC.

The taxation of crypto capital gains is determined based on how the cryptocurrency was acquired. If it was obtained through investments or other activities like mining, different tax rules apply.

For investors considered occasional traders, are required to pay the PFU (Prélèvement Forfaitaire Unique) at a flat tax rate of 30%. This includes a 12.8% income tax and a 17.2% social security contribution. However, under the new guidance, there is an option to choose a progressive tax rate instead of the 12.8% income tax.

Professional traders' income was previously classified as commercial income (BIC) but now falls under the category of non-commercial income (Bénéfices non-Commerciaux) as per the new guidelines. Such income is subject to non-commercial profits tax. The specific tax amount depends on your tax situation.

‍

4. How can Kryptos help you in filing your crypto taxes?

‍

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 Kryptos.

All you need to do is log in on the platform, add all your trading accounts, wallets, and DeFi accounts and sip coffee while Kryptos does all the heavy lifting. The platform can auto-fetch all your transactions 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.

‍

5. How to Avoid Crypto Taxes in France?

‍

Although avoiding taxes entirely isn’t an option in France, you can use the below-mentioned strategies to reduce your crypto taxes legally:

‍

1. Keeping track of your losses and using tax loss harvesting
2. Converting your assets into stablecoins instead of fiat currency
3. Using the lower tax brackets to your advantage
4. HODLing crypto for the long term

‍

All content on Kryptos serves general informational purposes only. It's not intended to replace any professional advice from licensed accountants, attorneys, or certified financial and tax professionals. The information is completed to the best of our knowledge and we at Kryptos do not claim either correctness or accuracy of the same. Before taking any tax position/stance, you should always consider seeking independent legal, financial, taxation or other advice from professionals. Kryptos is not liable for any loss caused by the use of, or by placing reliance on, the information on this website. Kryptos disclaims any responsibility for the accuracy or adequacy of any positions taken by you in your tax returns. Thank you for being part of our community, and we're excited to continue guiding you on your crypto journey!

Are you still trying to figure out how much you owe in crypto taxes in Ireland? Then this guide is for you. Because our guide answers important questions like how is crypto taxed in Ireland, how to file your crypto taxes, what documents you will need, and what is the tax deadline. Moreover, it covers tax-saving strategies and exemptions that you can use to reduce your tax bill and it also tells you how Kryptos can make tax filing easier for you.

Note that this guide will be updated regularly to accommodate any new rules or guidelines around crypto taxation. Therefore, we suggest you keep revisiting it from time to time to stay updated.

‍

‍Key Data Points

‍

‍

How is Crypto Taxed in Ireland?

‍

The Revenue considers all cryptocurrencies, tokens, and digital assets to be capital assets just like real estate, equities, or shares. And since all crypto assets are categorized under one term, this means that all digital assets are treated the same for tax purposes, regardless of whether they’re native to a blockchain, or a DeFi protocol.

Any transaction that is seen to be an act of disposal by the Revenue is subjected to capital gains tax. Here’s what the Revenue had to say about the disposal of crypto assets in their latest e-brief:

“The sale, transfer, or redemption of crypto-assets is most likely to be a disposal for CGT purposes unless, based on the facts and circumstances, there is a trade of dealing in crypto-assets being carried on.”

The following transactions are considered as disposal of crypto assets:

• Selling cryptocurrency
• Using cryptocurrency to make a purchase
• Trading cryptocurrency for other cryptocurrencies
• Gifting cryptocurrency

A flat 33% CGT is levied on all transactions with a capital gain. Calculating your gains is a pretty straightforward task, it is simply the difference between the sale piece and acquisition price inclusive of any exchange or network fees.

‍Crypto transactions are also subjected to income tax if you appear to be making an income. Here’s what the Revenue had to say about income-bearing transactions:

“Where a non-incorporated business makes a trading profit or loss on crypto-asset transactions this must be reflected in their accounts and will be taxable by normal IT rules.”

A corporate tax is levied on corporations deriving an income from crypto transactions, but since we’re covering individual taxes here, it goes beyond the scope of this guide.

The following transactions are considered income-bearing transactions:

• Trading crypto as a business
• Earning crypto in exchange for labour
• Airdrops
• Mining cryptocurrency
• Staking cryptocurrency

‍

Can the Revenue Track Crypto?

‍

The simple answer to this is yes. The Revenue can track your crypto transactions. Under the Anti Money Laundering Directives of the EU, all businesses offering crypto-related financial services in the region are required to maintain KYC details of their customers and share them with all member EU states in an attempt to stop money laundering using crypto assets.

Moreover, all crypto exchanges operating in Ireland are expected to be registered as VASPs (Virtual Asset Service Providers) with the Irish Central Bank. This compels exchanges to collect customer data and report it to authorities on request.

Transactions involving blockchain-based applications and tokens are registered on public ledgers and can be tracked easily using tools. Revenue can simply correlate these transactions with the details shared by your exchange to unearth any discrepancies.

‍

Crypto Capital Gains Tax

‍

Since crypto is categorized as a capital asset by Revenue and you’ll have to pay a capital gains tax whenever you’re seen to be making a gain from the disposal of such assets. Anytime an asset exchanges hands, it is counted as a disposal for tax purposes.

The following transactions will be considered as a disposal of assets:

• Selling crypto for fiat
• Swapping one crypto for another
• Buying a product or service using crypto
• Gifting crypto (except to your spouse or civil partner)
• Receiving compensation or insurance returns on crypto assets

‍

Capital Gains Tax Rate

‍

Ireland doesn’t have a progressive CGT tax and instead levies a flat 33% tax on all transactions resulting in a capital gain above the personal exemption limit. Ireland offers a €1,270 personal exemption limit to both residents and non-residents such that the first €1,270 of their gains in a financial year are non-taxable.

‍

How to Calculate Your Crypto Gains and Losses?

‍

Calculating your crypto gains/losses is a pretty straightforward task. All you need to do is subtract your cost basis from the disposal amount.

But what is the cost basis?

The Cost basis is simply the price (EUR) you paid to acquire the asset inclusive of any additional fees paid to the exchange or network. If you’ve acquired the asset via other sources such as an airdrop, the cost basis will be simply equal to the fair market value of your assets at the time of receipt.

Once you have your cost basis, just subtract it from the disposal amount. If it’s positive, it’s a gain, otherwise, it’s a loss.

‍

Example:

‍

Consider the following transactions:

‍

05/01/2024 - Sarah Bough 2 BTC at €15,000 each in Binance Wallet

12/03/2024 - Sarah Sold 1 BTC for €20,000 from Binance Wallet

15/05/2024 - Sarah bought a watch worth €22,000 with 1 BTC in Binance Wallet.

So the gain from the first disposal i.e. selling the 1st Bitcoin would be €5,000 (€20,000 - €15,000).

And the gain from the second disposal i.e. buying the watch would be €7,000 since the watch is worth €22,000 therefore the disposal amount comes out to be the same as the price of the watch.

Therefore, the total gain = €5,000 + €7,000 = €12,000

But since the Irish authorities offer an exemption of €1,270 on your gains, you can reduce it from your total gains to finally get your taxable base.

Taxable base =  €12,000 - €1,270 = €10,730

So your total tax liability comes out to be €3,540.9 (33% of €10,730).

‍

Crypto Losses

‍

Losses are inevitable as an investor, and although they might not seem like the best thing, you can use them to lower your tax bill. In Ireland, if you’ve made a capital loss i.e. your disposal amount is lower than your cost basis, you can use it as an offset against gains. These losses are categorized as allowable losses and you can even carry them forward to subsequent tax years if you don’t have enough gains in a tax year.

You can even choose to transfer these losses to your spouse or civil partner to be used as an offset against their personal capital gains.

However, Short-term assets, acquired and sold within four weeks, have a distinct rule. Normally, losses from these assets cannot be used to offset gains, except when the gains are derived from a similar short-term asset acquired and sold within the same four-week period.

‍

Lost or Stolen Crypto

‍

Crypto thefts and frauds are more common than ever and investors keep losing a lot of money to such fraudulent events. If you’re one such investor, you might be wondering whether tax authorities in Ireland allow for these losses to be claimed as capital losses.

The Revenue is yet to release any guidance on the tax treatment of lost or stolen crypto. However, they do have guidance that covers the tax treatment of lost or destroyed assets, or those of negligible value which states that for lost assets or assets that have lost their value and the holder has no other way of disposing them of, there might be a capital loss consideration equal to the market value of the asset.

All claims for lost or stolen crypto are settled on a case-per-case basis by a revenue inspector, therefore it would be best if you consult an experienced tax accountant for such claims.

‍

Crypto Tax Breaks

‍

Although there is no legal way to avoid crypto taxes entirely, you can use some of the tax-saving strategies mentioned below to lower your tax bill.

1. HODL Your Crypto: Your assets attract tax when you dispose of them, there’s no tax for holding crypto.

2. Offset Your Losses: The Revenue allows you to offset your capital losses against gains and carry them forward to subsequent tax years as well. Use your losses and lower your tax bill.

3. Borrow Against Crypto: Instead of disposing of crypto to realise your gains, you can use it as collateral to borrow money, this way you can liquidate your gains without triggering a taxable event.

‍

Crypto Cost Basis Method Ireland

‍

The examples we have used so far are primitive and barely represent real-world transactions in terms of complexity. Any investor would agree that calculating the cost basis is far more complicated when multiple assets of the same kind are involved. That’s why you need a cost-basis method to help simplify your cost-basis transactions.

The Revenue is yet to offer any guidance on the specific cost basis method to be used by investors when calculating the cost basis for crypto transactions. However, there is some existing guidance on CGT for shares and securities and since crypto falls in the same category as shares, it’s safe to assume that the same guidance applies to digital assets too.

For the same class of cryptocurrencies acquired on different dates, the FIFO (First-In-First-Out) accounting method is recommended which simply suggests that the first asset you bought will be the first asset you sell.

Consider the following transactions for instance:

Jan 2024 - Bought 1 BTC for €15,000

Feb 2024 - Bought 2 BTC for an average price of €17,000

Mar 2024 - Sold 1 BTC for €20,000

So according to the FIFO accounting method, the first BTC you bought will be the first Bitcoin you sell. So the 1 BTC sold in March 2024 is the same one that was bought in January 2024.

So your cost basis for CGT calculations will be €15,000.

Note that there is one exception to this guideline which states that any asset bought and disposed of within 4 weeks is simply the most recently acquired one. This prevents investors from manufacturing artificial losses.

Losses made from assets acquired and disposed of within four weeks can only be used as an offset against those assets of the same kind that have been acquired and disposed of within the same four-week period.

‍

Crypto Income Tax

‍

As previously mentioned, some transactions are viewed as income-bearing transactions by the Revenue and attract income tax. Although there’s no clear guidance on what kind of transactions are considered to be income-bearing transactions by the Revenue, here are some transactions that will most probably be viewed as the same:

• Receiving crypto as compensation
• Mining and staking rewards
• Tokens received from airdrops
• Awards received from interact-to-earn DeFi platforms
• Creating and selling NFTs as an artist

‍

Income Tax Rates Ireland

‍

Ireland has two income tax slabs based on how much your earn and your individual circumstances as an investor.

‍

‍

‍Note that there are multiple credits, and allowances offered by the Revenue to lower your tax bill. You can visit Revenue. ie to know more or visit

https://www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/tax-relief-charts/index.aspx

‍

How to Calculate Crypto Income

‍

Calculating your crypto income is a pretty straightforward process. All you need to do is identify the fair market value of your assets at the time of receipt and add them to get your total income. You’ll pay 20 or 40% tax on your total income based on which tax slab you fall in.

Consider the following series of transactions:

01/01/2024 - Sheila received 5 ETH tokens in an airdrop (worth €1,200 each)

03/04/2024 - Sheila received 6.25 BTC as a mining reward (worth €15,000 each)

05/05/2024 - Sheila received 3 ETH tokens as a staking reward (worth €1,500)

Now the total income on receipt would be = €(1,200*5 + 15,000* 6.25 + 1,500*3)

= €(6,000 + 93,750 + 4,500)

= €1,04,250

Assuming that you’re an individual with no dependent children, you would fall into the 40% tax bracket.

So your total tax liability would come out to be €41,700.

‍

Tax-Free Crypto Transactions

‍

Here are some tax-free transactions in Ireland:

• Buying crypto with fiat
• Holding cryptocurrency
• Moving cryptocurrency between wallets you own
• Taking out a cryptocurrency loan

‍

Taxed Crypto Transactions

‍

Here are some of the taxed crypto transactions:

• Selling crypto
• Staking and mining crypto
• Receiving airdrops
• Swapping one token for another
• Engaging with interact-to-earn DeFi platforms
• Buying a product or service using crypto
• Gifting crypto

‍

Tax on Mining Crypto Ireland

‍

Mining rewards are subjected to income tax in Ireland upon receipt if you’re an individual investor and may be further subjected to CGT when you dispose of them by selling, swapping, or gifting them. If you’re involved in mining activities as a business, your income will be subjected to corporation tax instead.

There are some allowable expenses linked to mining like electricity bills, equipment costs, and operational expenses that you can use to write off your tax bills.

‍

Tax on Staking Crypto

‍

There is no specific tax guidance in Ireland regarding staking as of now. However, staking rewards are expected to be treated the same way as mining rewards from a tax perspective. Consequently, staking rewards will be taxed as income when received, and if the crypto is sold later, the proceeds will be subject to capital gains tax, with the cost base equal to its original value upon receipt.

‍

How are Airdrops and Forks Taxed in Ireland

‍

Airdrops, regardless of whether you receive them for participation in project promotion or for completing a task, will most likely be subjected to income tax on receipt, the cost basis of tokens received from airdrops would be equal to the fair market value of the tokens upon receipt.

There is no specific guidance on how forks are treated for tax purposes. However, it can be extrapolated from the existing guidelines that their tax treatment will be no different than airdrops. Soft forks aren’t a taxable event because no new tokens are generated in the process. Hard forks on the other hand may attract income tax as new tokens are created and redistributed among blockchain participants.

‍

Capital Acquisition Tax Crypto

‍

Revenue released a new set of guidelines covering the capital acquisition tax on crypto gifts and inheritance. The guidance states that a CAT might apply to crypto assets received as gifts or inheritances.

The general CAT guidelines state that the CAT will apply to the market value of the assets on receipt. However, there are certain lifetime exemption limits offered by the Revenue, and if you’re below a certain threshold then these assets are non-taxable.

There are multiple CAT groups with different exemption limits. Group A is gifts from parents, Group B is from immediate family members, and Group C is from anyone not covered in Group A or Group B.

‍

‍

‍If the total value of gifts from any group exceeds the lifetime exemption amount, any assets received as gifts and donations will be subjected to a flat 33% CAT. Note that assets received from your spouse or civil partner are not subjected to CAT.

Also, gifts valued below €3,000 from a single person in a fiscal year are exempt from (CAT).

‍

Crypto Margin Trades, Futures, and CFDs

‍

There is no guidance on how income from margin trades, crypto futures, and CFDs is taxed so we recommend seeking guidance from an experienced tax accountant for income from such sources.

However, you must know how margin and future trades differ to better understand their tax implications. In margin trades, you borrow funds (leverage) to take capital-intensive positions, and future trades are speculative trades where you predict the price movements of a certain asset over a fixed-time contract.

The best way to steer clear of any future tax complications would be to treat any profits from such trades as a capital gain and pay CGT on them.

‍

Crypto ICO Taxes

‍

There is no specific guidance on how ICOs are treated for tax purposes. Although it would be safe to assume that any income from ICOs would be subjected to income tax just like mining and staking rewards in light of the existing guidelines. However, we are constantly on the lookout for new guidelines and new details will be added here as soon as we get access to them.

‍

NFT Taxes Ireland

‍

Although the scope and utility of NFTs differ from that of crypto assets, they’re treated the same for tax purposes. So if you dispose of an NFT by selling, swapping, or gifting them, any gains would be subjected to CGT. While, if you’re an artist creating your NFTs and selling them at a marketplace, that may be viewed as an additional income and would therefore attract income tax liabilities.

Artists do enjoy an Income Tax Exemption on NFTs however whether this guidance applies here or not is yet to be declared. We suggest contacting an experienced tax advisor for more details on the same.

‍

DAO Taxes

‍

There is no specific guidance on how income from DAOs is taxed in Ireland. We are constantly on the lookout for any new guidance on this and relevant details will be added here as soon as we get access to them.

‍

DeFi Taxes

‍

The Revenue is yet to declare any guidance on how DeFi transactions are viewed from a tax perspective. However, that does not mean all DeFi transactions are exempt from taxes. You have to consider the existing guidelines to extrapolate the tax treatment of your DeFi transactions.

The best approach would be to contact an experienced tax advisor to seek guidance on the taxation of such transactions.

Here’s what we could infer from the existing Revenue guidelines about the taxation of some DeFi transactions.

DeFi protocols use liquidity pools, such as dex, lending, or staking protocols. The tax treatment depends on how the pool operates. For instance, trading on a dex like Uniswap involves calculating capital gains or losses when disposing of a crypto asset. Adding capital to liquidity pools to earn rewards can be more complex. Often, adding capital results in receiving a liquidity pool token, which is considered a crypto-to-crypto trade and requires recognizing a capital gain or loss.

The way rewards are paid out also affects taxation. If rewards are earned through a token that increases in value, no gain is realized until the capital is withdrawn. This is similar to a disposal and requires calculating capital gains or losses. However, not all rewards are distributed this way. Some DeFi protocols provide new tokens as rewards, sometimes using both liquidity pool tokens and new tokens. Earning new tokens can be treated as additional income, requiring identification of the fair market value in EUR on the day received and payment of income tax on that amount.

‍

When to Report Crypto Taxes in Ireland

‍

Here are the important tax deadlines in Ireland related to crypto taxes:

• The financial year in Ireland is from January 1st to December 31st.

• Capital Gains Tax (CGT) has two distinct periods:

• The first period is from January 1st to November 30th. If you earned a profit from selling crypto assets, you must pay the applicable tax by December 15th of the same year.

• The second period is from December 1st to December 31st. If you earned a profit from selling crypto assets during this period, the tax must be paid before January 31st of the following year.

• The deadline for submitting the tax return, which includes reporting all your crypto gains and income for the financial year, is October 31st of the subsequent year.
• Currently, you are reporting on the 2024 financial year. The CGT tax payments for the 2024 financial year are due on November 30th, 2024, and January 31st, 2025. However, you must declare your gains or losses to Revenue by October 31st, 2025.

‍

How to File Crypto Taxes in Ireland

‍

You can file your crypto taxes in Ireland using the Revenue Online Services or MyAccount portal. You can register on these portals online if you haven’t already used them on Revenue. ie.  

You can also file your taxes using paper forms based on whether you’re self-employed or a PAYE worker.

If you’re a PAYE worker, you should use Form CG1 meant for self-assessment and filing capital gains tax returns.

If you’re self-employed or a chargeable person, you should use Form 11 meant for self-assessment and filing income tax returns.

A chargeable person is an individual who meets either of the following criteria in a year:

• They have net assessable non-PAYE income equal to or exceeding €5,000.
• They have total gross income from non-PAYE sources equal to or exceeding €30,000.

‍

What Record Will the Revenue Want

‍

The Revenue has clear guidelines on record keeping, unlike most tax authorities across the globe. Here are the documents you should maintain according to the guidelines:

• Dates of all transactions
• Details of the kind of assets held
• The fair market value of the asset at the time of the transaction
• Details of all parties involved in the transaction and the specific reason for the transaction

It is crucial to maintain proper records as the tax authorities emphasize the requirement to provide records to Revenue upon request. Additionally, you must retain your records in compliance with legislation, keeping them for six years.

‍

How Can Kryptos Help in Filing Crypto Taxes

‍

Now that you’re aware of how your crypto transactions are taxed and what forms you need to fill out to complete your tax report, here’s a step-wise breakdown of how Kryptos can make this task easier for you:

1. Visit Kryptos and sign up using your email or Google/Apple Account
2. Choose your country, currency, time zone, and accounting method
3. Import all your transactions from wallets and crypto exchanges
4. Choose your preferred report and click on the generate report option on the left side of your screen and let Kryptos do all the accounting.
5. Once your Tax report is ready, you can download it in PDF format.

If you still need clarification regarding the integrations or generating your tax reports, you refer to our video guide here.

‍

How to Avoid Crypto Taxes In Ireland

‍

There’s no legal way to avoid crypto taxes entirely and doing so might attract legal trouble. However here are some strategies you can employ to lower your tax bill.

1. Use Personal tax credits, allowances and reliefs
2. Utilise the personal exemption amount
3. Track your allowable expenses and deduct them to lower your tax bill
4. Use tax loss harvesting to lower your tax bill by offsetting unrealised losses against gains

‍

FAQs

‍

1. Is Crypto Legal in Ireland?

‍

Yes, cryptocurrency is legal in Ireland. The Central Bank of Ireland (CBI) has issued several warnings about the risks associated with cryptocurrency investment, but there is no blanket ban on the use or ownership of cryptocurrencies.

In 2020, the CBI published a statement on its website clarifying that cryptocurrency is not legal tender in Ireland and is not regulated by the CBI. The statement also warned that cryptocurrency investment is high-risk and investors should be aware of the potential for fraud and loss.

Despite the CBI's warnings, several cryptocurrency companies are operating in Ireland. These companies are not regulated by the CBI, but they are subject to the same laws and regulations as any other business in Ireland. For example, they must comply with anti-money laundering (AML) and counter-terrorism financing (CTF) regulations.

‍

2. What happens if you don’t pay taxes on Crypto?

‍

Failure to pay taxes on cryptocurrency in Ireland can result in penalties, fines, and potential imprisonment. The Irish Revenue may impose fines based on the specific circumstances, with a maximum fine equivalent to 100% of the tax evaded, effectively doubling the original tax liability. Additionally, overdue taxes are subject to a daily interest of 0.0219%.

If convicted of tax evasion, individuals can face imprisonment for a maximum of 12 months. In more severe cases, if indicted or found guilty, the penalty can extend up to five years of imprisonment.

‍

3. How is Crypto Taxed in Ireland?

‍

In Ireland, cryptocurrencies are considered capital assets, similar to real estate or equities. All digital assets, including cryptocurrencies, tokens, and digital assets on blockchains or DeFi protocols, are treated equally for tax purposes.

The following transactions are considered as disposing of crypto assets:

1. Selling cryptocurrency
2. Using cryptocurrency to make a purchase
3. Trading cryptocurrency for other cryptocurrencies
4. Gifting cryptocurrency

A flat 33% Capital Gains Tax (CGT) is applied to all transactions that result in a capital gain. Calculating the gain is straightforward, as it is the difference between the sale price and the acquisition price, including any fees incurred during the exchange or network transfer.

For corporations earning income from crypto transactions, corporate tax applies, but that is beyond the scope of this guide, which focuses on individual taxes.

The following transactions are considered income-bearing transactions:

1. Trading cryptocurrency as a business
2. Earning cryptocurrency in exchange for labour
3. Airdrops
4. Mining cryptocurrency
5. Staking cryptocurrency

‍

4. How can Kryptos help you in filing your crypto taxes?

‍

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 Kryptos.

All you need to do is log in on the platform, add all your trading accounts, wallets, and DeFi accounts and sip coffee while Kryptos does all the heavy lifting. The platform can auto-fetch all your transactions 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.

‍

All content on Kryptos serves general informational purposes only. It's not intended to replace any professional advice from licensed accountants, attorneys, or certified financial and tax professionals. The information is completed to the best of our knowledge and we at Kryptos do not claim either correctness or accuracy of the same. Before taking any tax position / stance, you should always consider seeking independent legal, financial, taxation or other advice from the professionals. Kryptos is not liable for any loss caused from the use of, or by placing reliance on, the information on this website. Kryptos disclaims any responsibility for the accuracy or adequacy of any positions taken by you in your tax returns. Thank you for being part of our community, and we're excited to continue guiding you on your crypto journey!

Portugal has been a cradle for crypto investors ever since Bitcoin blew up and people started making astronomical gains on their investments. This compelled authorities in Portugal to moderate the space with taxes. Portugal has often been referred to as El Dorado for such investors.

In October 2022, the OECD published its final guidance on the Crypto-Asset Reporting Framework and Amendments to the Common Reporting Standard, which was set forth to announce compliance with the international crypto transparency standards. The Portuguese State Budget for 2023 modified the definition of crypto assets to accommodate crypto taxation and eliminate the existing tax loopholes that prevented crypto taxation.

If you’re curious about what has changed and how that will affect you, you’ve landed right where you should because we will tell you everything you need to know to conveniently file your crypto taxes at the end of this financial year.

‍

How is Crypto Taxed in Portugal?

‍

According to the changes proposed by the new budget, crypto assets are now defined as "any digital representation of value or rights that can be transferred or stored electronically using distributed ledger technology or similar". Which considers every class of crypto asset except single crypto and non-fungible tokens.

This definition complies with the agreement reached within the Regulation of the European Parliament, the Council on Markets in Crypto-assets and Amending Directive (EU) 2019/1937. Crypto assets are taxable in Portugal starting 2023, and any gains made from the disposal of such assets will be subjected to capital gains tax. Any income generated from these assets is considered business income and taxed accordingly.

‍

In Portugal, there are three categories for crypto transactions:

‍

1. PIT Category E (Capital Income): A Tax rate of 28% applies.
2. PIT Category G (Capital Gains Income): The Tax rate ranges from 14% to 53% based on the duration of holding the assets.
3. PIT Category B (Self Employment Income): Income derived from personal involvement in crypto issuance events like mining, staking, and ICOs

These categories are discussed in further detail later in the blog. The income generated from crypto transactions is subject to a progressive tax rate that varies from 14% to 53% based on your total income.

‍

Example:

‍

Consider the following transactions:

‍

You bought 1 BTC for €12,000 in March 2024, and you later disposed of that BTC in July 2024 for €16,000.

Now capital gain/loss is simply the difference between the disposal amount and the cost basis (the amount paid for acquiring the asset).

Capital Gain/Loss =  €16,000 -  €12,000 =  €4,000

A flat rate of 28% is charged on this €4,000 gain. If your taxable income, including aggregate gains and losses, reaches or exceeds €78,834, progressive tax rates ranging from 14.5% to 53% will be applied to those gains based on your income level.

Moreover, for any gains incurred from transactions that are not mining profits, not airdrops, not NFTs, not PoS newly minted tokens and not capital gains, 15% of the income is taxable under the regular income tax brackets, and 85% is pure profit.

For instance, if you make a €100 gain, then €15 will be taxable under existing income tax brackets and the rest €85 will be profit.

‍

Crypto Capital Gains Tax

‍

Since crypto assets now have a new definition which allows for their taxation, any gains incurred from the disposal of crypto assets will be subjected to a capital gains tax. Unlike most European countries, Portugal doesn't have a progressive tax system and levies a flat tax rate across all capital gains transactions, irrespective of income group, demographic, or any other categorisation. A flat rate will apply to a positive balance of capital gains and losses arising from the disposal of said assets unless they are held for more than 365 days, in which case the transactions will be tax exempt. Although such transactions need to be reported on the tax return.

‍

Capital Gains Tax Rate Portugal

‍

There are three categories your transaction might fall into for tax purposes. Of which two categories attract capital gains tax.

PIT Category E(Capital Income): When you receive compensation in fiat currency as a result of your passive crypto investments, without involving any crypto transactions, it falls under this classification. The tax rate applied to such income is a fixed 28%. This category applies if your crypto income doesn't fall under any other classification.

PIT Category G(Capital Gains Income): In Portugal, the taxation of crypto assets entails several factors to consider. If you’ve held crypto for less than one year, any capital gains made with fiat currency will be subject to a 28% tax rate. On the other hand, gains accumulated over a year are tax exempt.

Security tokens are classified as securities and are taxed accordingly. Moreover, capital gains and losses from the sale of shares and other securities must be aggregated if they are held for less than 365 days and the total tax base in a year exceeds EUR 78,834.

The 365-day rule does not apply to individuals or entities outside the European Economic Area or jurisdictions without a Double Tax Agreement. If a person stops being a tax resident of Portugal, an Exit Tax of 28% will be imposed on all crypto assets held at the time, based on the difference between their market value and acquisition value determined through the FIFO accounting method.

PIT Category B(Independent Worker, Contractor):

Transactions involving the issuance of crypto assets, such as mining or validating crypto asset transactions through consensus mechanisms, are considered commercial and industrial activities and are taxed at a progressive rate ranging between 14.5 to 53% depending on the total income.

Income derived from the aforementioned transactions is considered realized at the moment of transferring the crypto assets in exchange for consideration. Termination of the activity or loss of Portuguese residency is treated as equivalent to transfers for consideration.

‍

How to Calculate Crypto Gains and Losses

‍

In Portugal, capital gains are taxable, and losses can be deducted from taxes. Therefore, it is important to understand how to calculate your crypto gains and losses accurately. The process involves two steps when dealing with a tax system that imposes capital gains tax on crypto disposals.

Firstly, you need to calculate the cost basis for each asset that you have sold, gifted, or exchanged during the tax year. This includes adding up the acquisition cost and any associated fees such as transaction fees and gas fees. You can deduct the following expenses during cost basis calculations:

Blockchain transaction fees, Centralized Exchange transaction fees, Professional costs to draw up a contract for the acquisition or disposal of the tokens, Costs of making a valuation or apportionment to be able to calculate gains or losses

You can use the FIFO accounting method to calculate the cost basis and once the cost basis is determined, you can calculate your capital gains or losses by subtracting the cost basis from the disposal amount. If the result is positive, it represents a gain and is subject to capital gains tax. Conversely, if the result is negative, it indicates a loss. Although losses do not incur tax liabilities, it is essential to track them as they can be deducted from your taxes in Portugal.

‍

Example:

‍

Consider the following set of transactions:

13/01/24 - Kevin bought 12 BTC for €12,000 each12/02/24 - Kevin bought 10 ETH tokens for €1,400 each15/03/24 - Kevin sells 12 BTC for €20,000 each 17/04/24 - Kevin sells 10 ETH for €1,800 each

As evident from the above ledger, Kevin made 2 disposals, so let’s calculate the collective gain from both disposals.

‍

1st Disposal

12 BTC sold for €20,000 each

Note that we will use the FIFO accounting method, as recommended by the tax authorities, to calculate individual gains. With FIFO, you sell the first asset you bought as an investor.

These BTC tokens are the same ones acquired on 13/01/24 for €12,000 each

Cost basis = €12,000

Disposal Amount = €20,000

Capital Gains/loss = Disposal Amount - Cost Basis = €20,000 - €12,000 = €8,000 (For 1 BTC)

Gain from 12 BTC = 12*8,000 = €96,000

‍

2nd Disposal

10 ETH sold for €1,800 each

These ETH tokens are the same ones acquired on 12/02/24 for €1,400 each

Cost Basis = €1,400

Disposal Amount = €1,800

Capital Gain = Disposal Amount - Cost basis = €1,800 - €1,400 = €400(for 1 ETH)

Gain from 10 ETH = 10*400 = €4,000

Total Gain from both disposals = €96,000 + €4,000 = €1,00,000

The gains will be taxed at a flat 28% tax rate since the disposal was made within a year.

‍

Crypto Losses

‍

According to the new tax regime, losses incurred via the disposal of crypto assets can be treated as tax-deductible in Portugal, given that losses are reported on the tax return in the same year they occur.

‍
Lost or Stolen Crypto

‍

In Portugal, lost or stolen crypto is not considered a tax-deductible expense. This means you cannot claim a deduction for any losses incurred due to theft, loss, or other similar circumstances. However, if you have suffered a loss due to theft or another crime, you may be able to claim compensation or insurance benefits, which could help to offset your losses.

‍

Crypto Tax Breaks Portugal

‍

Although the crypto tax regime in Portugal is new and barely talked about, we were able to extract a few strategies that may help you lower your tax bill. However, note that this is purely subject to the assumption that no new additions will be made to the new tax regime this year.

‍

Long-Term Capital Gains Tax

‍

As previously mentioned in the blog, if you’ve held your crypto for more than a year, you don’t need to pay any taxes on your gains unless the assets in your portfolio are categorised as securities.

‍

Gift Crypto to Your Friends and Family

‍

If you donate to a family member or friend, it may be subject to the gift tax. The gift tax rate in Portugal varies depending on the value of the gift and the relationship between the donor and the recipient.

For example, if you give a gift to a spouse, descendant, or ascendant, the gift tax rate is 0.8% for gifts up to €1,000,000 and 1.2% for gifts over €1,000,000. For gifts to other individuals, the gift tax rate is 10%.

‍

Convert Crypto to Stablecoins

‍

Crypto-to-crypto trades are tax-free in Portugal and investors can couple this with the 365 day rule to pay zero taxes on their gains. So, instead of converting crypto assets to fiat, investors can convert them to stablecoins to avoid immediate taxation.

This has two direct benefits-

Investors can escape market volatility, keeping their gains safe. The stablecoins, once held for 365 days or more, become tax free.

Here’s an example-

Let’s say Lisbon buys 20 ETH for €40,000 in June 2024 and her investment grows to €65,000 in January 2025. Now, Lisbon wants to keep her gains safe from market volatility, but at the same time doesn’t want to pay capital gains tax.

She can do this by simply converting her ETH tokens to USDT and since crypto-to-crypto trades (or Crypto Swaps) are tax-free in Portugal, the event doesn’t trigger any tax liabilities. Now, all Lisbon needs to do is hold these stablecoins for over a year and then convert them to fiat to enjoy her tax-free gains.

‍

Donate Your Crypto

‍

In Portugal, individuals who donate to registered nonprofit organisations can qualify for tax exemptions on their income tax returns. The tax exemption is calculated at 25% of the donated value, with a maximum limit of 15% of the donor's taxable income.

This means that individuals can donate up to 15% of their taxable income and receive a tax deduction equivalent to 25% of the donation amount. To be eligible for the tax exemption, the nonprofit organisation must be registered with the Portuguese Tax and Customs Authority and meet specific criteria. The donation must be made by a Portuguese resident or a non-resident who receives income from Portuguese sources.

‍

Crypto Cost Basis Method Portugal

‍

The most commonly used method is FIFO (First-In, First-Out) accounting, which assumes that the first items purchased are the first items sold or used. While businesses in Portugal are not prohibited from using LIFO or HIFO accounting, they may need to justify their use of these methods and demonstrate that they are consistent with GAAP and accurately reflect the company's financial position.

Here’s an example that explains how FIFO accounting works:

Let's say you bought 1 Bitcoin (BTC) for €5,000 on January 1st, another 2 BTC for €7,000(each) on March 1st, and 3 BTC for €8,000(each) on May 1st. On June 1st, you decide to sell 1 BTC for €12,000.

Based on the FIFO accounting method, the BTC you sold would be the first one you bought in January, with a cost basis of €5,000. You sold it for €12,000, resulting in a capital gain of €7,000.

‍

Crypto Income Tax Portugal

‍

Under Portugal's tax laws, income from transactions involving crypto-assets is considered professional or commercial. If the taxpayer's gross business income in the previous fiscal year is below €200,000, it will be taxed as business income.

For income generated from crypto-asset operations conducted as a business, 15% of the gross income will be subject to progressive tax rates without considering other deductions or costs. The effective tax rate should not exceed 8% of the gross proceeds in such cases. In the case of mining activities, 95% of the gross income will be taxable at progressive rates.

‍

Income Tax Rate Portugal

‍

Income derived from crypto transactions is taxed at a progressive tax rate ranging between 14-48%. Non-residents pay a flat tax rate of 25% on any Portuguese-sourced income.

‍

‍

How to Calculate Crypto Income

‍

Calculating your crypto income is a fairly straightforward process, you just need to add all the individual gains and any additional income incurred from activities like staking and mining. The value of the assets received as mining and staking rewards is simply taken to be the fair market value of the assets upon disposal.

‍

Tax-Free Crypto Transactions

‍

Under the new tax regime in Portugal, most crypto transactions are now taxable. However, there are still some transactions that remain tax-free:

‍

• Buying crypto with fiat
• Buying/selling/trading NFTs
• Holding crypto for over a year
• Trading one crypto for another
• Inheriting crypto assets
• Transferring crypto assets between wallets

‍

Taxed Crypto Transactions

‍

Here are taxable crypto transactions in Portugal:

‍

• Selling cryptocurrency for fiat currency
• Receiving cryptocurrency as payment for goods or services rendered
• Mining cryptocurrency
• Using cryptocurrency to purchase goods or services (may be subject to VAT)
• Gifting crypto
• Donating crypto

‍

Tax on Mining Crypto

‍

In Portugal, income derived from mining activities related to cryptocurrencies is considered a professional or commercial activity and is subject to taxation under the country's tax laws.

The Portuguese Tax Authority applies progressive tax rates to mining activities, where 95% of the gross income is subject to taxation. This means that as the income amount increases, the tax rate also increases progressively.

The remaining 5% is presumed to be a fixed expense while carrying out the mining activities. Alternatively, if the mining activity is ceased, 85% of the sale price is considered taxable income. For instance, if a taxpayer earns €1,000 from mining, they will only be taxed on €950 in the former scenario, or €150 in the latter.

Taxpayers with income not exceeding €200,000 ($210,000) of gross business income in the previous fiscal year will be subject to a special tax regime. Under this regime, 15% of the gross income from the majority of cryptocurrency operations carried out under a business activity will be taxable at progressive rates, with the effective tax rate capped at 8% of gross proceeds.

‍

Tax on Staking Crypto

‍

Staking and mining are two different ways of adding and validating transactions on a blockchain. Proof-of-Work networks support mining and Proof-of-Stake networks support staking.

The Portuguese Tax Authority (AT) has not provided specific guidance on the taxation of staking rewards. However, it is generally understood that tax authorities consider staking and mining rewards as similar. Therefore, it can be reasonably assumed that staking rewards would be subject to the same tax liabilities as mining rewards in Portugal.

In the same vein, we suggest seeking guidance from an experienced tax professional to avoid complications.

‍

Crypto Margin Trades, Futures, and CFDs

‍

In Portugal, income derived from crypto margin trades, futures, and Contracts for Difference (CFDs) is subject to taxation as capital gains. The capital gains tax applies to the difference between the purchase price and the sale price of the asset, and the applicable rate varies depending on the capital gains earned by the taxpayer.

‍

Crypto Gifts and Donation Taxes

‍

When donating to a family member or friend in Portugal, the gift tax rate depends on the value of the gift and the relationship between the donor and recipient. Rates range from 0.8% to 10%. Free transfers of crypto assets are subject to Stamp Tax at a rate of 10%. This applies when the crypto assets are deposited in institutions located in Portugal. Moreover, the tax is applicable if the author of the transfer has their domicile in Portugal in the case of inheritance, or if the beneficiary has their domicile in Portugal in the case of other free transfers.

For donations to nonprofits, the tax exemption is calculated at 25% of the donation's value, up to a maximum of 15% of the donor's total taxable income. The nonprofit organization must be registered with the Portuguese Tax and Customs Authority, and the donor must be a Portuguese resident or receive income from Portuguese sources to qualify for the tax exemption.

‍

ICO Taxes

‍

The AT is yet to release any concrete guidance on the taxation of income from ICOs. The Portuguese Securities Market Commission (CMVM) is closely monitoring the launch of tokens through Initial Coin Offerings (ICO). In a press release dated July 23, 2018, CMVM advised that anyone planning to launch a cryptocurrency should first contact them. CMVM emphasised the need to evaluate each case individually due to the complexity of cryptocurrencies.

However, we’re still awaiting fresh guidance regarding their taxation and will update relevant details here as soon as the guidelines are released.

‍

DAO Taxes

‍

The AT is yet to release any guidelines on income received from DAOs. We are constantly looking for new guidelines, and all relevant details will be added here as soon as they hit our radar.

‍

NFT Taxes Portugal

‍

The new tax regime doesn’t have any guidance concerning the taxation of NFT-related transactions since the revised definition of digital assets doesn’t have any mention of NFTs, therefore, it can be assumed that NFT transactions are exempt from personal income tax laws.

‍

DeFi Crypto Taxes Portugal

‍

There is no specific guidance on how DeFi transactions will be taxed in the new tax regime. However, a few details can be inferred from the existing guidelines and looking at how other European countries with similar tax laws view DeFi transactions.

Drawing from the current tax legislation, it appears that any income made from lending activities will be categorised as capital income and subjected to taxation. Moreover, if an investor earns a reward from a DeFi platform based outside of Portugal for staking, or offering liquidity, such earnings may be exempted from taxation if they have already been taxed in the source state given that a double tax agreement exists between that state and Portugal.

‍

How are Airdrops and Forks Taxed in Portugal?

‍

Airdrops

‍

In Portugal, if an individual receives free cryptocurrency through an airdrop, it is taxed under stamp duty laws. The value of the tokens received would be determined based on their market value at the time of conversion of the airdrop to fiat. The applicable tax rate ranges from 4% to 10%.

‍

Forks

‍

In Portugal, in the event of a fork where a new cryptocurrency is created from an existing one, the new tokens may be viewed as taxable income. However, whether it is taxable or not would depend on the specific circumstances of the fork and whether it meets the criteria set by the tax authorities for taxable income.

‍

When to Report Crypto Taxes in Portugal?

‍

The tax year in Portugal runs from January 1st to December 31st. Tax returns must be filed by April 30th of the following year, unless the taxpayer has a certified tax representative or has opted for an extension to file the return, in which case the deadline is extended to May 31st.

It's important to note that taxpayers who fail to submit their tax returns on time may be subject to penalties and fines. Moreover, if a taxpayer's tax situation changes during the year, they may need to report and pay taxes quarterly or monthly.

‍

How to File Crypto Taxes in Portugal

‍

In Portugal, taxpayers can file their tax returns online through the Tax Authority's website or the eFatura platform. Here’s a stepwise tutorial on how you can file your crypto taxes online using the eFatura portal:

‍

1. First, gather all necessary details and documentation related to crypto transactions, such as the date of purchase, the amount purchased, the purchase price, and the sale price. You must also have a valid Portuguese tax identification number (NIF).

2. Log in to the eFatura portal using your NIF and password. If you don't have an account, you can register for one on the portal's website.

3. Once you are logged in, navigate to the section for "Atividades Económicas" or "Economic Activities."

4. Under "Atividades Económicas," select the option for "IRS" or "Imposto sobre o Rendimento das Pessoas Singulares," which is the personal income tax.

5. Next, select the option for "Rendimentos Empresariais e Profissionais" or "Business and Professional Income."

6. In the section for "Rendimentos Empresariais e profissionais," select the option for "Regimes Especiais de Tributação" or "Special Taxation Regimes."

7. Under "Regimes Especiais de Tributação," select the option for "Criptomoedas" or "Cryptocurrencies."

8. Once you have selected "Criptomoedas," you will be prompted to enter the details of your crypto transactions, including the date, amount, purchase price, and sale price.

9. After you have entered all the necessary information, review your submission and make sure all details are correct.

10. Finally, submit your crypto tax report through the eFatura portal. The Tax Authority will review your submission and send you a confirmation of receipt.

‍

How to File Crypto Taxes Using Kryptos?

‍

Now that you’re aware of how your crypto transactions are taxed and what forms you need to fill out to complete your tax report, here’s a step-wise breakdown of how Kryptos can make this task easier for you:

‍

1. Visit Kryptos.io and sign up using your email or Google/Apple Account
2. Choose your country, currency, time zone, and accounting method
3. Import all your transactions from wallets and crypto exchanges
4. Choose your preferred report and click on the generate report option on the left side of your screen and let Kryptos do all the accounting.
5. Once your Tax report is ready, you can download it in PDF format.

If you need more details regarding the integrations or generating your tax reports, you can refer to our video guide here.

‍

What Records will the Autoridade Tributária e Aduaneira want?

‍

When filing taxes in Portugal, the Autoridade Tributária e Aduaneira (AT) may require individuals to provide various records and documents related to their crypto activities. Some of the records that may be requested by the AT include:

‍

• Records of all crypto transactions made during the tax year, including the date, amount, and value of each transaction.

• Proof of ownership and transfer of any cryptocurrencies, such as digital wallet addresses and private keys.

• Records of any earnings or gains from crypto activities, such as mining, trading, or staking.

• Expense documentation related to crypto activities, such as fees for trading or mining equipment.

• Records of any losses from crypto activities, including documentation of the loss amount and evidence of the transaction that resulted in the loss.

‍

How to Avoid Crypto Taxes in Portugal?

‍

Although there’s no legal way to avoid paying crypto taxes entirely, you can use some of the strategies given below to lower your tax bill:

‍

1. HODL Your Crypto Assets: Holding your crypto assets for over a year is tax-free in Portugal unless your assets are classified as securities
2. Gift Crypto to Your Friends and Family: Gifting crypto to your friends and family attracts a nominal tax rate of 0.8% in Portugal.
3. Donate Crypto to a Registered Charity: In Portugal, when you donate to a nonprofit organisation, you may be eligible for tax exemptions on your income tax return.
4. Crypto to Crypto or Crypto Into Stablecoins: Since exchanging crypto is now tax exempt in Portugal, you can convert your crypto into stablecoins to avoid immediate tax obligations.

These strategies have been discussed in detail above under the section titled “Crypto Tax Breaks Portugal”.

‍

Frequently Asked Questions(FAQs)

‍

1. Is Crypto Legal in Portugal?

‍

Yes, cryptocurrency is legal in Portugal. In 2021, the Portuguese Parliament passed legislation offering a legal framework for the issuance and use of cryptocurrencies, blockchain technology, and related services.

‍

2. Is any Crypto tax-free in Portugal?

‍

No, no cryptocurrency is inherently tax-free in Portugal. The Portuguese tax system requires individuals to report any income or gains earned from cryptocurrency transactions and pay taxes accordingly.

‍

3. How to file crypto taxes using Kryptos?

‍

We’ve already discussed how to file your crypto taxes in the above sections of the guide, offering a step-wise breakdown of the entire process. However, we agree that it is unreasonably complicated even for someone with a fair amount of prior knowledge. Although there’s an easy way to file your crypto taxes using a crypto tax software called Kryptos

All you need to do is log in on the platform, add all your trading accounts, wallets, and DeFi accounts and sip coffee while Kryptos does all the heavy lifting for you. The platform can auto-fetch all your transactions 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.

‍

4. How is Crypto as Wages Taxed in Portugal?

‍

In Portugal, the tax treatment of cryptocurrency wages depends on the nature of the income received. If cryptocurrency wages are classified as salary (Category A under the PIT Code), they will be subject to capital income tax. On the other hand, if cryptocurrency is classified as self-employment income (Category B under the PIT Code), it will be taxed as self-employment income.

‍

All content on Kryptos serves general informational purposes only. It's not intended to replace any professional advice from licensed accountants, attorneys, or certified financial and tax professionals. The information is completed to the best of our knowledge and we at Kryptos do not claim either correctness or accuracy of the same. Before taking any tax position/stance, you should always consider seeking independent legal, financial, taxation or other advice from the professionals. Kryptos is not liable for any loss caused from the use of, or by placing reliance on, the information on this website. Kryptos disclaims any responsibility for the accuracy or adequacy of any positions taken by you in your tax returns. Thank you for being part of our community, and we're excited to continue guiding you on your crypto journey!

Thailand has long been hailed as a crypto-friendly nation with lenient tax regulations for resident investors and traders. According to a report published by Statista in 2022, 12% of the Thai population owns or uses crypto, which is the highest in the world when expressed as a proportion of the population.

However, Thai authorities started tightening their grip on crypto investors by the end of 2022, when the Revenue Department released a 32-page detailed guideline outlining the nuances of crypto taxation in Thailand. This comes at a time when Thailand’s global allies are collectively pushing for crypto regulation and investor protection, in the wake of the recent black swan events.

The guidelines offered by the authorities cover everything from personal income taxes and capital gains to mining taxes. This article offers a comprehensive summary of these guidelines to help Thai crypto enthusiasts understand the tax implications of their involvement with the asset.

Is Crypto Legal in Thailand?

Although crypto is not a legal tender in Thailand, investing, holding, mining, or trading cryptocurrencies in Thailand are considered legal activities. Before 2022 resident traders and investors paid zero taxes and the government recognised the potential of crypto in developing the financial infrastructure of the nation.

Thailand is a crypto-friendly nation and although the Thai government has implemented some regulations to oversee cryptocurrency activities, and the Securities and Exchange Commission (SEC) of Thailand played a role in supervising digital asset businesses, the tax rates are fairly reasonable when compared to other countries like Portugal, where taxes on crypto climb as high as 53%.

Can Authorities Track Crypto?

The simple answer would be ‘Yes’. Tax authorities in many jurisdictions, including Thailand, are increasingly focusing on regulating crypto transactions to ensure compliance with tax regulations.

In Thailand, the Revenue Department has taken steps to regulate crypto transactions. They have mandated crypto exchanges to register with the authorities and adhere to certain reporting obligations.

If investors fail to report their crypto transactions accurately on their tax returns, it is possible for tax authorities to detect discrepancies through various means:

• While cryptocurrencies offer a degree of privacy, transactions are recorded on public blockchains. Authorities may use blockchain analysis tools to trace transactions and identify individuals involved.

• Cryptocurrency exchanges often implement Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures. If an individual exchanges cryptocurrency for fiat currency on a regulated platform, authorities may have access to their identity and transaction history.

• Tax authorities may cross-reference information from various sources, such as bank records, exchange data, and other financial records, to identify discrepancies in reported income.

• Tax authorities can conduct audits or investigations if they suspect non-compliance. This may involve reviewing financial records, conducting interviews, and seeking additional information.

Therefore, if you have plans to hide your crypto transactions from authorities by not reporting them, you might end up in serious trouble.

How is Crypto Taxed in Thailand?

In Thailand, the taxation of crypto, collectively referred to as digital assets, is overseen by the Thai Revenue Department, offering a clear framework for crypto taxation. Authorities define digital assets as “electronic data or instruments with intrinsic value”, and profits derived from these assets are subject to progressive Personal Income Tax (PIT) rates, with the maximum rate reaching 35%.

The following Income tax rates apply based on total income in Thailand:

‍

The tax structure is organised into five categories of transactions: trading, mining, remuneration, gifts, and return on investment. Individual taxpayers are obligated to report their digital asset income in their annual returns (PND90, PND91) and can utilise withheld tax (WHT) as a credit against their PIT obligations.

Traders/Investors in Thailand can calculate their cost basis using the First In First Out (FIFO) or Moving Average Cost (MAC) accounting methods. Mining, on the other hand, necessitates the use of the FIFO method, with associated costs, such as bills and wages, considered deductible expenses.

When it comes to the sale, transfer, or exchange of cryptocurrencies, any value exceeding the cost of investment is deemed assessable income. The cost of cryptocurrencies can be calculated using standard accounting methods like FIFO or moving average cost, with valuations based on the acquisition time or average price at acquisition.

Losses incurred from one type of cryptocurrency can be offset against profits from others, but this is applicable only for transactions conducted through digital asset operators under the supervision of the Securities and Exchange Commission (SEC). The cost value of cryptocurrencies held at the end of the year is not considered assessable income and can be carried forward to the next tax year.

Furthermore, withholding tax deducted during the tax year can be used as a tax credit when filing personal income tax returns, offering a mechanism for individuals to offset their tax liabilities. In the realm of crypto mining, receipts from mining activities are not considered assessable income at the time of receipt. However, the subsequent sale, payment, transfer, or exchange of mined cryptocurrencies is taxable.

Note that the Royal Thai Government Gazette has introduced an exemption for the transfer of digital assets traded on SEC-approved platforms and digital currencies launched by the Bank of Thailand. This VAT exemption is in effect from April 1, 2022.

‍

Future of Crypto Taxation in Thailand

The future of crypto taxation in Thailand appears to be heading towards a more regulated and structured environment, evident from recent guidelines and tightening measures by authorities. The emphasis on tracking crypto transactions, mandatory registration for exchanges, and a comprehensive tax structure indicate a commitment to transparency and compliance. The temporary VAT exemption for specific digital asset transactions suggests a willingness to explore targeted incentives. Thailand's historical crypto-friendly stance aligns with the global trend of formalising tax structures for digital assets, with potential future refinements to address evolving challenges and ensure the responsible use of cryptocurrencies.

Singapore has long been hailed as a haven for both crypto investors and businesses alike owing to its lenient tax regulations and the government’s crypto-friendly approach. It is one of the reasons why major crypto companies like Crypto.com are based out of Singapore. Crypto investors in Singapore enjoy zero taxes on capital gains and long-term investments, and while some clear guidelines and regulations govern the taxation of crypto assets in Singapore, the impetus for interpreting these regulations lies with the investors themselves, which can be overwhelming at times depending on the nature of transactions.

That’s why we have curated this detailed tax guide covering all the crucial aspects of crypto taxation in Singapore. We have answered pivotal questions like “How is crypto taxed in Singapore?” “How to file crypto taxes in Singapore?” “How to avoid paying crypto taxes in Singapore?” “How are Airdrops, ICOs, and forks taxed?”. The objective of this guide is to educate investors on the subject of crypto taxes and help them file their crypto taxes conveniently.

Note that this guide is quite comprehensive and will be updated regularly to accommodate new guidelines and regulations. We suggest revisiting this guide regularly to stay updated on the new tax trends.

‍

How is Crypto Taxed in Singapore?

‍

In Singapore, cryptocurrency taxation varies depending on the nature of your activities involving digital tokens. When trading cryptocurrencies as a business, gains and losses are considered regular income and are subject to income tax, requiring them to be reported on your annual tax return. However, capital gains from long-term investments in cryptocurrencies are not taxed, setting Singapore apart from countries imposing capital gains tax. Using cryptocurrencies for payments is treated as barter trade, with businesses taxed on the value of goods or services provided in the transaction.

An 8% GST is chargeable on the fees pertaining to crypto transactions in Singapore. Profits gained from professional trading and crypto-related business activities are treated as regular income and subjected to income tax. Short-term and long-term trades, on the other hand, do not trigger immediate tax obligations, given Singapore's lack of capital gains tax.

For regulatory compliance, businesses offering digital payment tokens falling outside the securities token category must disclose non-approval by the Monetary Authority of Singapore (MAS) and outline associated risks. In a cryptocurrency landscape marked by diverse activities, Singapore's taxation approach remains nuanced, favouring long-term investors through its absence of capital gains tax while accounting for income tax implications related to trading and business activities.

‍

Can the MAS Track Crypto?

‍

Yes, the MAS can track the crypto transactions of investors in Singapore, particularly when these transactions involve digital payment tokens and fall under the regulatory framework set by the MAS. As part of its regulatory efforts to combat money laundering and ensure compliance with anti-money laundering (AML) and counter-terrorism financing (CTF) regulations, MAS requires licensed digital payment token service providers to implement customer due diligence measures and monitor transactions.

MAS expects crypto service licensees to conduct proper customer due diligence for all digital payment transactions. This includes assessing customer risk levels and taking enhanced due diligence measures for customers with higher money laundering risks. Additionally, licensees are required to monitor their business relationships with customers on an ongoing basis and ensure that transactions align with customer profiles and risk assessments.

Furthermore, per the value transfer rules, digital or crypto service providers are expected to transmit originator and beneficiary information securely and promptly to beneficiary service providers.

Through these regulatory requirements and measures, MAS can obtain insights into crypto transactions taking place within Singapore's jurisdiction. Therefore, we suggest reporting all your transactions to the MAS judiciously to avoid legal and tax trouble.

‍

Capital Gains Tax

‍

There is no dedicated capital gains tax structure in Singapore as such. Capital gains from crypto transactions are not subject to taxation in Singapore. Unlike some other countries, Singapore does not impose taxes on capital gains. Therefore, any profits made from buying and selling cryptocurrencies, when intended as long-term investments, are exempt from taxation.

This policy encourages individuals to engage in the long-term holding of cryptocurrencies without incurring capital gains tax obligations. However, it's important to note that capital gains taxation exemption applies to long-term investments specifically, and other activities involving cryptocurrencies, such as trading as a regular business activity, may still be subject to income tax.

In business settings, the tax treatment of gains and losses depends on the nature of the transaction and the individual's intention at the point of purchase. If the cryptocurrencies were held for trading purposes as part of a business or trade, any gains or losses from their disposal are treated as taxable income or allowed as deductions.

If the cryptocurrencies were not held for trading purposes (e.g., held as personal investments), resulting gains or losses from disposal are generally not taxable or allowed as deductions.

Determining whether gains/losses are considered part of a business or trade involves evaluating factors such as the purpose of holding, frequency of transactions, and holding periods. These factors help determine whether the gains are subject to income tax or treated differently.

‍

Capital Gains Tax Rate

‍

As previously mentioned, there is no capital gains tax in Singapore and income from crypto transactions is either exempt from taxation or is taxed as income (when categorised as part of a business or trade). The taxes that do apply to capital gains in Singapore are equal to the income tax rates as mentioned in the later sections of the guide.

‍

How to Calculate Capital Gains and Losses

‍

Capital gains calculations don’t make much sense for individuals with a long-term investment strategy as they are non-taxable. However, it’s a different story for investors/traders operating in a business or trade setting. Calculating your capital gains or losses is a pretty straightforward process, you can use this formula to do so:

‍

‍

For those who are not aware of the term cost basis, it is simply the price you pay to acquire a certain asset, including any fees paid in the process. Here’s an example:

Suppose you bought 1 BTC for 30,000 SGD and you paid 200 SGD in transaction fees in the process, then your cost basis would then be equal to 30,200 SGD.

Let’s say you decide to sell this BTC for 40,000 SGD and you incur a transaction fee of 200 SGD again. Then your cost basis would change to 30,400 SGD.

For calculating the capital gain, we will use the above-listed formula:

Capital Gain/Loss = Disposal Amount - Cost Basis = 40,000 SGD - 30,400 SGD = 9,600 SGD

‍

Crypto Losses

‍

Crypto losses can be tax deductible in Singapore under certain circumstances. If an individual engages in buying and selling crypto as part of a business or trade and incurs losses, these losses can be deducted from their overall income for tax purposes.

However, if the losses stem from cryptocurrencies held for investment purposes (e.g., personal investments), they may not be eligible for deduction.

‍

Lost or Stolen Crypto

‍

Unfortunately, the MAS is yet to release specific guidance on how lost or stolen crypto is viewed from a tax perspective. However, you can seek legal remedies if you've lost your assets in a crypto scam or rug pull.

Investors who fall victim to crypto scams and frauds in Singapore have recourse to legal remedies for seeking redress within the existing legal framework. Despite the absence of specific legislation directly addressing crypto-related fraud, several potential avenues exist for pursuing justice.

Civil claims based on fraud and misrepresentation are among the primary remedies available. Investors can bring legal action if they can demonstrate intentional deception or false information that led to their investment losses. Similarly, breach of trust and claims of deceit can be explored, especially if the fraudulent scheme involves entrusting wrongdoers with investors' funds.

To safeguard their interests and assets, victims can seek urgent and interim relief from the court. Freezing injunctions can prevent wrongdoers from diminishing the value of stolen crypto-assets, given the swift movement of digital assets. Moreover, proprietary injunctions that directly target the property itself, and Mareva injunctions that prevent the disposal of assets, offer legal tools to preserve the value of stolen crypto-assets during legal proceedings.

Once frozen crypto assets are identified, victims can proceed with the main legal action. This involves seeking proprietary declarations or vesting orders to officially establish ownership and potentially reclaim stolen assets. Victims must collaborate with experienced legal professionals well-versed in handling crypto-related cases, as enforcement can pose challenges, particularly when wrongdoers are situated in different jurisdictions.

‍

Crypto Tax Breaks Singapore

‍

There isn’t much you can do to lower your crypto tax bill besides offsetting your gains using your losses. Because the Singaporean authorities don’t offer much when it comes to tax credits and deductions on crypto investments.

‍

Crypto Cost Basis Method Singapore

‍

The examples we have used so far are fairly simplistic and do not represent real-world transactions. Investors usually buy multiple assets of the same kind at different prices, and that makes cost basis and capital gain calculations very complicated. That’s why one needs to rely on specialised accounting methods to simplify these calculations. Tax authorities in most jurisdictions have clear rules and guidelines regarding the use of specific cost-basis methods.

However, the MAS has yet to declare clear guidelines on which one to use in Singapore. You can likely use one of the mainstream accounting methods that most countries rely on for cost-basis calculations in Singapore.

Listed below are the top 4 most popular accounting methods:

‍

‍

1. LIFO

LIFO or Last-In-First-Out accounting method states that the acquisition price of the most recent asset you buy is to be used as the cost basis for capital gains calculations upon disposal.

‍

2. FIFO

FIFO or First-In-First-Out accounting method states that the acquisition price of the earliest asset you buy is to be used as the cost basis for capital gains calculations upon disposal.

‍

3. HIFO

HIFO or Highest-In-First-Out accounting method simply states that the highest acquisition price for an asset across all acquisition instances is to be used as the cost basis for capital gains calculations upon disposal.

‍

4. Average Cost Basis Method

The average cost basis method simply states that the cost basis for an asset is simply equal to the average acquisition price of all tokens that you currently have in your portfolio.

Note that your capital gains change when you use different accounting methods. Here’s an example:

13/01/24- Lucas bought 1 ETH for 3,500 SGD

17/03/24- Lucas bought 1 ETH for 3,800 SGD

21/05/24- Lucas bought 1 ETH for 3,200 SGD

28/06/24- Lucas sold 1 ETH for 4,000 SGD

‍

We shall use each one of the above-mentioned accounting methods to observe how capital gains change when using a specific accounting method:

‍

1. Using LIFO

According to LIFO, the acquisition price of the last asset you buy is the cost basis.

Cost Basis = 3,200 SGD

Disposal Amount = 4,000 SGD

Capital Gain = 4,000 SGD - 3,200 SGD = 800 SGD

‍

2. Using FIFO

According to FIFO, the acquisition price of the first asset you buy is the cost basis.

Cost Basis = 3,500 SGD

Disposal Amount = 4,000 SGD

Capital Gain = 4,000 SGD - 3,500 SGD = 500 SGD

‍

3. Using HIFO

According to HIFO, the highest acquisition price is the cost basis

Cost Basis = 3,800 SGD

Disposal Amount = 4,000 SGD

Capital Gain = 4,000 SGD - 3,800 SGD = 200 SGD

‍

4. Average Acquisition Price Method

The cost basis is the average of all acquisition prices

Cost Basis = 3,200 SGD + 3,500 SGD +3,800 SGD/3 = 3,500 SGD

Disposal Amount = 4,000 SGD - 3,500 SGD = 500 SGD

‍

Crypto Income Tax

‍

Income tax in Singapore applies to specific instances of crypto transactions, primarily on trading conducted as a regular business activity. When individuals engage in trading crypto as part of their business operations, any profits and losses derived from these trades are subject to income tax. Such gains are treated as ordinary income and must be included in the annual tax return. The requirement to record gains and losses from crypto trading on the tax return is stipulated by the Monetary Authority of Singapore (MAS) to ensure accurate income reporting.

Note that capital gains resulting from long-term investments in cryptocurrencies are exempt from taxation. However, for transactions not falling under the category, any gains realised are subject to income tax if the intention is not primarily for long-term investment purposes.

While the use of cryptocurrencies for payments does not directly trigger income tax for the user, businesses accepting crypto payments are taxed based on the transaction value. Individuals engaged in crypto trading should maintain precise records and comply with tax regulations to meet reporting requirements and avoid potential legal issues.

‍

Income Tax Rate

‍

Income tax varies for residents and non-residents in Singapore.

‍

Tax Rates for Residents

‍

‍

Non-Resident Tax Rates

‍

Employment income for non-residents is either taxed at a flat rate of 15% or a progressive resident income tax rate. Income from other sources is taxed at a flat rate of 22%.

‍

Tax-Free Crypto Transactions

‍

Listed below are some of the tax-free crypto transactions:

‍

1. Investing in crypto with a long-term perspective
2. Making a capital gain on crypto transactions in an individual capacity
3. Buying crypto with fiat
4. Buying a product or service with crypto
5. Moving crypto between personal wallets
6. Mining crypto as a hobby

‍

Taxed Crypto Transactions

‍

Listed below are some of the taxed crypto transactions:

‍

1. Selling crypto as a business or trade
2. Accepting payment in crypto
3. Mining crypto in a professional business setting

‍

Tax On Mining Crypto

‍

In Singapore, crypto mining is categorised as a hobby or a business pursuit and is taxed based on the level of effort and intent behind the mining activities.

For individuals who engage in crypto mining as a hobby, and without a systematic and habitual focus on profit, the gains from selling the mined tokens are considered capital gains. Such capital gains are exempt from taxation. However, it's important to note that mining expenses are non-deductible.

If an individual undertakes crypto mining with a systematic and habitual intention to derive profits, this activity may be categorised as a business pursuit.

Therefore, the gains made from the mining operations are treated as taxable income. Individuals who engage in mining as a business must declare the resulting income as "business income" on their annual tax declarations. These gains are then subject to the applicable income tax rates.

Moreover, companies registered with the Accounting and Corporate Regulatory Authority in Singapore that partake in crypto mining fall under the purview of corporate income tax rates for the profits generated through mining activities.

It's imperative for individuals and businesses involved in crypto mining to identify which category they fall into.

‍

Tax on Staking Crypto

‍

In Singapore, the taxation of crypto staking depends on the income earned from the staking activity. Individuals who stake crypto and generate a yearly income of 300 SGD or more will likely be subject to income tax on their staking gains.

Individuals are responsible for declaring taxes related to their cryptocurrency staking earnings, similar to other types of income tax in Singapore.

The process of crypto staking taxation in Singapore is straightforward. Individuals incorporate their staking income into their total earnings. The combined income, inclusive of staking profits, is then subject to taxation at the applicable marginal tax rate based on their overall income level.

‍

How are Airdrops and Forks Taxed in Singapore?

‍

Although there is no clear guidance on how airdrops and forks are viewed from a tax perspective, the income from airdrops and forks will likely be non-taxable similar to the tokens received through mining in an individual capacity.

However, we do suggest seeking guidance from an experienced tax professional to better understand the tax implications of such transactions.

‍

Crypto Gifts and Donation Taxes

‍

There is no clear guidance regarding crypto gifts and donations and their taxation in Singapore. However, if we consider crypto donations to be the same as cash donations, we can infer a few things about their taxation from existing guidelines.

According to the IRAS website:

“Cash and non-cash gifts relating to festive and special occasions which do not exceed the exemption threshold of $200 are considered to be not substantial in value and are not taxable due to an administrative concession granted. If a gift exceeds the exemption threshold, the full value of the gift is taxable. For example, if the baby gift set is worth $250, the taxable value is $250”

Here’s a summary of gift taxation and exemption.

‍

‍

However, we do suggest seeking guidance from an experienced tax professional to better understand how such transactions are taxed.

‍

Crypto Margin Trades, Futures, and CFDs

‍

The MAS doesn’t differentiate between normal trades and leverage or margin trades. Therefore, the taxation of any income derived from such trades will follow the same trend as regular trades.

‍

Crypto ICO Taxes

‍

ICOs are special events that allow investors to own native tokens from unreleased projects in exchange for mainstream tokens like Bitcoin and Ethereum. They are similar to IPOs in the regular securities market.

Tokens received from ICOs are not clearly defined as income in Singapore's tax rules. The government hasn't given specific instructions on how to tax these tokens yet.

ICOs create tokens that are different from regular money, and they usually don't mean you're buying a share in a company. Saying ICO tokens are like buying shares could cause problems with securities laws.

Right now, we don't know for sure how ICO tokens are taxed in Singapore. The government hasn't explained it yet. So, if you're involved in ICOs, it's important to keep an eye out for any new rules or guidance from the government.

We suggest seeking guidance from an experienced tax accountant to better understand the tax implications of such transactions.

‍

NFT Taxes

‍

There is no specific guidance on how NFT transactions are taxed in Singapore. However, income from NFTs will likely be non-taxable for individual investors with a long-term investment strategy.

We do suggest seeking guidance from an experienced tax professional to better understand how such transactions are taxed.

‍

DAO Taxes

‍

DAOs are member-owned communities with a shared vision. All the decisions in a DAO are made by the members in the absence of central leadership. They are new-age institutions that aim to democratise decision-making and allow people to have a say in decisions that directly affect them. DAOs are often called the soul of Web3 and allow members to earn rewards in multiple ways. DAO contributors are rewarded for their contributions to the organization, similar to how centralized organizations pay salaries to their employees. They also pay out bounties for one-time projects and redistribute any profits generated through operations.

Although there is no specific guidance on the taxation of income received from DAOs, it is likely non-taxable. It is advisable to seek guidance from an experienced tax professional or directly contact the MAS to better understand the tax implications of such transactions.

‍

DeFi Taxes

‍

The subject of DeFi transactions is rarely discussed and is a potential grey area in the Singaporean tax framework. We do know that any income from lending or staking on DeFi protocols is taxable and is added to the overall income of an individual and is later taxed at a progressive tax rate based on the tax bracket one falls into.

Other than this, not much is known about DeFi taxation in Singapore. We suggest contacting the MAS directly or seeking the guidance of a tax professional to better understand the taxation of such transactions.

‍

When to Report Crypto Taxes in Singapore?

‍

In Singapore, individuals are required to report their crypto taxes based on the calendar year.

Taxpayers must report their taxable income, including any gains from cryptocurrency trading, by April 15 for paper filing and April 18 for e-filing. It's essential to adhere to these deadlines to ensure compliance with Singapore's tax regulations regarding cryptocurrency transactions.

‍

How to File Crypto Taxes in Singapore?

‍

Filing crypto taxes in Singapore is a straightforward process that follows guidelines from the IRAS. Here's how you can do it step by step:

‍

First, gather all the info about your crypto transactions, like buying, selling, and exchanges. Then, sort them into two main groups: ones where you used crypto for money, goods, or services, and those that are investment gains.

Next, you'll need to fill out the right tax forms from IRAS. These forms ask for your personal and financial details, like where your income comes from and the types of digital assets you deal with.

If you made profits by selling cryptocurrencies, it's essential to tell IRAS about it on the forms. This step is really important to make sure everything is correct.

Make sure to send in your tax forms by April 15th. If you're filing online, you have until April 18th. This deadline is important to remember to stay on track.

You can find more information about the tax forms here. It's a good resource to help you get everything right.

‍

What Crypto Records Will the Tax Agency Want?

‍

Although the MAS has no official record-keeping list, you should maintain the following documents as a precautionary measure to avoid complications while filing crypto taxes:

‍

1. List of all transactions with dates and time
2. A detailed record of the acquisition and disposal amount
3. Details about the type of asset and the parties involved in the transaction
4. A list of the cost basis for each asset
5. A detailed record of all assets held in digital wallets you have private keys for

‍

How to File Crypto Taxes Using Kryptos?

‍

Now that you’re aware of how your crypto transactions are taxed and what forms you need to fill out to complete your tax report, here’s a step-wise breakdown of how Kryptos can make this task easier for you:

Visit kryptos.io and sign up using your email or Google/Apple Account

Choose your country, currency, time zone, and accounting method

Import all your transactions from wallets and crypto exchanges

Choose your preferred report and click on the generate report option on the left side of your screen, and let Kryptos do all the accounting.

Once your Tax report is ready, you can download it in PDF format.

If you still need clarification regarding the integrations or generating your tax reports, you can refer to our video guide here.

‍

How to Avoid Crypto Taxes in Singapore

‍

As previously mentioned, Singapore doesn’t levy many taxes on gains from crypto transactions nor does it offer many exemptions or tax credits for such transactions. Crypto losses are non-deductible in Singapore and there’s not much you can do to lower your tax bill.

‍

Frequently Asked Questions (FAQs)
‍

1. Is Crypto Legal in Singapore?

‍

A better way to ask this question would be “Are crypto investments legal in Singapore?” and the answer is yes. The country has a clear regulatory framework for digital assets, which includes guidelines and regulations for various crypto-related activities. The Monetary Authority of Singapore (MAS) oversees the regulatory aspects of crypto and has categorised different types of tokens to differentiate their treatment. Utility tokens and payment tokens have specific definitions and regulations, while security tokens are subject to securities laws.

Singapore has been proactive in embracing blockchain and crypto technologies while also focusing on investor protection and preventing illicit activities. As long as individuals and businesses comply with the relevant regulations and tax obligations, investing in crypto within the legal framework of Singapore is permissible.

‍

2. How is Crypto Taxed in Singapore?

‍

In Singapore, the taxation of crypto depends on the nature of activities. Trading crypto as a business incurs income tax, while long-term investments are generally not subject to taxation due to the absence of capital gains tax. Using crypto for payments is considered barter trade, and businesses providing goods/services in exchange for crypto are taxed based on the value. Fees in crypto transactions are subject to an 8% goods and services tax.

Mining is assessed based on whether it's a hobby or business activity, with business income being taxable. Staking and lending crypto may lead to income tax if earnings exceed a certain threshold. Reporting accurate crypto-related income is crucial to avoid legal issues.

‍

3. Does Singapore have a capital gains tax?

‍

No, Singapore does not have a capital gains tax. This means that capital gains from investments, including those made in cryptocurrencies, are not subject to taxation in the country. As a result, individuals and businesses can realise profits from their investments without incurring capital gains tax liabilities. However, it's important to note that while capital gains are generally not taxable, other forms of taxation, such as income tax, may apply to specific crypto-related activities based on their nature and purpose.

‍

4. How can Kryptos simplify crypto taxes for you?

‍

We’ve already discussed how to file your crypto taxes in the above sections of the guide, offering a stepwise breakdown of the entire process. However, we agree that it is unreasonably complicated 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 Kryptos.

All you need to do is log in on the platform, add all your trading accounts, wallets, and Defi accounts and sip coffee while Kryptos does all the heavy lifting for you. The platform auto-fetches all your transactions from the tax year and generates a legally compliant tax report within a matter of minutes while also suggesting ways to lower your tax bill. It works like magic, all you need to do is try it once.

‍

All content on Kryptos serves general informational purposes only. It's not intended to replace any professional advice from licensed accountants, attorneys, or certified financial and tax professionals. The information is completed to the best of our knowledge and we at Kryptos do not claim either correctness or accuracy of the same. Before taking any tax position/stance, you should always consider seeking independent legal, financial, taxation or other advice from professionals. Kryptos is not liable for any loss caused by the use of, or by placing reliance on, the information on this website. Kryptos disclaims any responsibility for the accuracy or adequacy of any positions taken by you in your tax returns. Thank you for being part of our community, and we're excited to continue guiding you on your crypto journey!

Estonia is one of few countries that has released clear guidelines on the categorisation of crypto and its taxation despite not having a dedicated tax regime. Back in 2021, Crypto adoption in Estonia was at 2.4% and this number has only risen in the past few years. This is one of the reasons why Estonian authorities are constantly searching for innovative ways to manage crypto taxes.

The impetus for compliance with the evolving tax structure lies with investors, which is not as easy as it sounds. That’s why we created this detailed tax guide on crypto taxation that addresses key pointers like “How is Crypto Taxed in Estonia?” “What are the tax rates?” “How to file crypto taxes in Estonia?” “How are De-Fi and NFT transactions taxed?” “How to calculate crypto gains and losses?” and more.

This guide will be updated regularly to accommodate any new rules and guidelines. It would be prudent to keep revisiting this guide just to stay updated on new trends and guidelines.

‍

How is Crypto Taxed in Estonia?

‍

Crypto is taxed in Estonia (for regular taxpayers like us) based on income from various cryptocurrency activities. Taxable transactions include trading, converting cryptocurrency into fiat or other cryptocurrencies, and using cryptocurrency to pay for goods or services. Income from cryptocurrency mining is considered business income. Moreover, taxable income received in cryptocurrency, like rent, interest, and business income, is subject to income tax.

The Court of Justice of the European Union ruled that exchanging virtual currency for traditional currency and vice versa is considered the provision of services for consideration and is exempt from VAT. However, transactions involving non-traditional currencies are treated as financial transactions if parties accept them as alternatives to legal tender.

Income can be generated through price changes during sales or exchanges, paying with crypto, mining, and computer data rental. Non-taxable activities include donating, buying a cryptocurrency with fiat, transferring between wallets, and giving cryptocurrency as a gift.

Gains from cryptocurrency transfers, including exchanges, are subject to income tax and are taxed at a flat rate of 20%. The gain is calculated based on the difference between selling and purchase prices or the price of the received property and the purchase price of the cryptocurrency. Losses from cryptocurrency exchange cannot be deducted for tax purposes.

Cryptocurrency is considered property, and taxable income should be declared in the income tax return. Each transfer transaction, including exchange, is treated as a separate object of taxation.

Cryptocurrency exchanges with traditional currency must be converted to euros at the market rate on the date of receipt.

‍

Can the MTA Track Crypto?

‍

Estonia being an EU member state has access to KYC details and transaction records from all exchanges and companies offering crypto-related services in the region, all thanks to regulations like AMLD-6 and DAC-8. These regulations ensure better compliance and reporting on the part of crypto companies for investor protection and to subdue money laundering efforts in the region.

Recent efforts to boost transparency in the crypto space have been fruitful as Estonia has signed up to the international Crypto Asset Reporting Framework allowing for exchange with tax related information between tax jurisdictions to prevent cross border tax evasion and money laundering.

Moreover, if you’re using an account from a regional bank, funds used to acquire crypto assets and funds received from their disposal, are all accessible from your bank statement. This information can be correlated from public ledgers to identify any discrepancies in tax reports. So it’s safe to say that the MTA is aware of all your crypto transactions and can easily identify if you’re underreporting your gains. So make sure you report all your transactions to the MTA and pay your taxes judiciously to avoid getting in trouble with the tax authority.

‍

Capital Gains Tax Estonia

‍

There’s no dedicated capital gains tax in Estonia and all transactions that result in a gain are taxed as regular income. When you engage in activities like trading cryptocurrency, converting it into regular fiat currency, or exchanging one cryptocurrency for another, the gains you incur are taxable.

‍

The following transactions constitute a capital gain:

‍

• If you buy crypto and later sell it at a higher price, the difference between the selling price and the purchase price is considered a gain, and you'll have to pay income tax on that gain.

• When you convert your cryptocurrency into regular fiat currency (like euros) and make a profit on that exchange, the profit amount is treated as a gain and becomes taxable.

• If you exchange one cryptocurrency for another and end up with more value in the new cryptocurrency, the difference in value is seen as a gain and is subject to income tax.

• In Estonia, if you mine cryptocurrency and make money from it, that income is considered business income and is taxable as well.

Moreover, it's not just the act of earning crypto that's taxable; even income received in cryptocurrency, such as rent, interest, and business income, is subject to income tax.

‍

Capital Gain Tax Rate

‍

As mentioned earlier, there is no dedicated capital gains tax in Estonia.

‍

How to Calculate Crypto Gains and Losses?

‍

Calculating your crypto gains and losses is a pretty straightforward process. You can use the following formula for that:

‍

‍

For those who are unaware of what cost basis means, it is simply the price you paid to acquire the asset.

‍

Consider the following examples:

‍

Example 1

‍

Let’s say you buy 2 BTC for €15,000 each, and you decide to sell 1 BTC 6 months later for €20,000. Since the token has been appreciated since the acquisition, the transaction constitutes a gain. You can calculate the gain by reducing the cost basis from the disposal amount i.e., Gain = €20,000 - €15,000 = €5,000

‍

Example 2

‍

A person buys 5 Ethereum for 1,000 euros each, spending 5,000 euros. Later, they exchange 3 Ethereum for 0.3 Bitcoin worth €4,500 making the value of each ETH token €1,500. The value of each ETH token has gone up by €500, so the transaction constitutes a gain of €1,500 (for 3 ETH tokens).

‍

Crypto Losses

‍

In Estonia, losses incurred from cryptocurrency transactions are treated differently from gains. Unlike gains, losses from crypto exchanges cannot be used to reduce your tax liability.

If you make a loss on a cryptocurrency transaction, you won't be able to offset that loss against your taxable income. This means that you cannot deduct your crypto losses from your overall income to lower the amount of income tax you owe.

For example, if you bought 1 Bitcoin for €18,000 and later sold it for €12,000, resulting in a loss of €6,000, you won't be able to use that €6,000 loss to reduce the income tax you owe on your other sources of income.

‍

Lost or Stolen Crypto

‍

There are no current guidelines on how lost or stolen crypto assets are viewed from a tax perspective. However, the MTA will likely make a case-by-case analysis of individual claims and then decide how such transactions will be treated. So we suggest contacting the MTA directly for more information on the subject.

‍

Crypto Tax Breaks

‍

Since losses are not tax deductible in Estonia, taxpayers cannot use tax-loss harvesting to lower their tax bill. However, the Estonian government does offer a basic exemption for all taxpayers. In 2024, the basic exemption limit for Estonian taxpayers remains €654 per month, which totals €7,848 per year for individuals earning up to €14,400 annually

For those who are of pensionable age or attain it, the basic exemption rises discreetly to €704 per month, resulting in €8,448 per year.

‍

Crypto Cost Basis Method Estonia

‍

The examples we have used so far to explain capital gain calculations are fairly simplistic and do not represent real-world transactions. An investor buys multiple assets of the same kind at different prices and that makes capital gain calculations a bit complicated because how does one decide which acquisition price to use as the  cost basis?

That’s exactly why one must use a specialised accounting method for cost-basis calculations to avoid discrepancies. The MTA allows the use of FIFO and Weighted Average Accounting methods for cost-basis calculation in Estonia. Let’s look at how both of them work.

‍

1. FIFO

‍

The FIFO or First-In-First-Out accounting method states that the acquisition price of the first asset you buy is to be used as the cost basis for the latest disposal. In simpler terms, the first asset you buy is the first one you sell.

‍

2. Weighted Average Method

‍

The weighted average method states that the cost basis for disposal is equal to the average acquisition price of all assets in inventory at the time of disposal.

These accounting methods can be better understood using an example.

Consider the following ledger of transactions:

13/01/24 - Mark buys 1 ETH for  €1,400

26/03/24 - Mark buys 1 ETH for  €1,200

18/05/24 - Mark buys 1 ETH for  €1,800

17/07/24 - Mark sells 1 ETH for  €2,200

‍

We will use both accounting methods to calculate the gain on the disposal to understand how they work and the effect they have on your gains.

‍

1. Gain calculations using FIFO

‍

If we use FIFO, then the cost basis would be equal to the acquisition price of the ETH tokens acquired first.

Cost Basis =  €1,400

Disposal Amount =  €2.200

Using the formula:

Capital Gain = Disposal Amount - Cost Basis =  €2,200 -  €1,400 =  €800

‍

2. Gain Calculations using the Weighted Average Method

‍

According to the weighted average method, the cost basis is simply the average of the acquisition price of all assets in inventory.

Cost Basis = (€1,400 + €1,200 + €1,800)/3 = €1,467

Disposal Amount = €2,200

Using the formula = Disposal Amount - Cost Basis = €2,200 - €1,467 = €733

Notice how your gains are lower when you use the weighted average method instead of FIFO for capital gains calculations.

‍

Crypto Income Tax Estonia

‍

According to the Income Tax Act, cryptocurrencies are categorised as property. Gains from cryptocurrency transfers, including exchanges, are subject to income tax under subsections 15(1) and 37(1) of the Act.

Private individuals who receive income from trading, buying, selling, or exchanging cryptocurrency must declare this income as gains from the transfer of other property in their income tax return (tables 6.3 or 8.3).

The gain is calculated as the difference between the selling price and the purchase price, or in the case of an exchange, between the value of the received property and the purchase price of the cryptocurrency.

Only transactions that generate income need to be declared, and each transfer transaction, including exchanges, is treated as a separate object of taxation.

Losses incurred from exchanging cryptocurrency cannot be taken into account for taxation purposes unless the exchange involves securities under § 39 of the Income Tax Act. Such losses cannot be used as a deductible cost because crypto is not considered a security.

‍

Income Tax Rate

‍

Unlike its neighbours, Estonia doesn’t have a progressive income tax rate.

Any gains incurred from crypto transactions are taxed at a flat rate of 20% regardless of the source.

Income tax on all transactions is expected to increase from 20% to 22% from January 1 2025.

‍

Taxed Crypto Transactions

‍

The following transactions are taxed in Estonia:

‍

• Selling crypto for Fiat
• Exchanging one crypto for another
• Buying a product or service with crypto
• Mining and staking crypto
• Earning crypto as an income

‍

Tax-Free Crypto Transactions

‍

The following transactions do not attract tax liabilities in Estonia:

‍

• Donating crypto
• Buying cryptocurrency for a regular currency (euro, US dollar etc.)
• Transferring cryptocurrencies between your electronic wallets
• Giving cryptocurrency as a gift

‍

Tax in Mining Crypto

‍

In Estonia, crypto mining is considered a business activity and is taxed accordingly. Mined cryptocurrency is subject to taxation upon transfer, which includes converting it into regular currency, exchanging it for another cryptocurrency, or using it for purchases of goods or services. The income derived from mining must be declared in the income tax return Form E.

If an individual privately engages in cryptocurrency mining or data processing, income tax is not withheld, and they must declare this income as business income. However, private individuals cannot deduct expenses, such as equipment and electricity costs, incurred for mining.

Individuals involved in permanent cryptocurrency mining must register as a sole proprietor or a legal entity (company) in the Business register. Registered businesses can declare business-related expenses and deduct them from their business income. Income tax, social tax, and a contribution to a mandatory funded pension are levied based on the net income from the business, following the income tax return.

‍

‍

Tax on Staking Crypto

‍

In Estonia, crypto staking is treated as lending cryptocurrency. When a natural person lends cryptocurrency for staking, it is not considered a taxable event. However, if the person earns interest income from the lending of cryptocurrency through staking, they must declare the interest received in Part II of Table 5.1 or Table 8.1 of their income tax return. The interest income should be reported in the income tax return corresponding to the year in which the interest was received.

‍

How are Airdrops and Forks taxed in Estonia?

‍

There is no current guidance on how airdrops and forks are taxed in Estonia. However, tokens received through airdrops and hard forks will likely be taxed as income. Soft forks are non-taxable in most jurisdictions because no new tokens are created and redistributed among the chain participants.

Note that this is a speculation, and the MTA might hold a different view. Therefore, it would be prudent to consult a tax professional to understand the tax implications of such transactions.

‍

Crypto Gifts and Donation Taxes

‍

The taxation of gifts and donations is governed by several distinct sections of the Income Tax Act and the tax implications are different for a legal person and a natural person.

A legal person is someone in public law, political parties, non-profit associations, foundations, etc. Regular investors are usually referred to as natural persons.

If we consider crypto donations to be the same as fiat donations, we can infer details about how such transactions are taxed. Crypto gifts made by a natural person to another natural person or a registered entity are tax-free.

In Estonia, donations made by private individuals to listed non-profit associations and foundations are eligible for tax deductions up to €1200, which includes interest on housing loans and training expenses. Recipients must submit a "Declaration of gifts and donations received" (Form INF 4) to the Tax and Customs Board, and this information is pre-filled in donors' income tax returns. Donations made by calling or messaging require donors to provide their details and the donated amount to the NGO in January, along with a phone bill as proof. Donors can review and amend the pre-filled information in their income tax returns if needed. Donating income tax refunds to eligible associations is possible. However, tax incentives do not apply when donating directly to certain Ukrainian entities. Overall, donors can support non-profits and benefit from tax deductions through this system.

‍

Crypto Margin Trades, Futures, and CFDs

‍

The MTA views margin and leverage trades to be the same as regular trades. Any gains incurred from margin or leverage trades are taxed as income and subjected to a flat 20% income tax.

‍

Crypto ICO Taxes

‍

ICOs are special events that allow investors to own project native tokens from unreleased projects in exchange for mainstream tokens like BTC and ETH. They are similar to IPOs in traditional securities markets.

Although there is no clear guidance on how tokens received through ICOs are taxed, these transactions are likely viewed as crypto-to-crypto trades and any gains incurred from such transactions will be taxed as income.

We do suggest seeking guidance from experienced tax professionals to better understand how such transactions are taxed.

‍

NFT Taxes Estonia

‍

In Estonia, the taxation of NFTs varies based on the transaction's content from the perspectives of both the NFT creator and purchaser. If the NFT creator receives a resale fee, it is considered a royalty and must be declared as a licence fee in the income tax return.

For natural persons who buy and sell NFTs to earn income, the profits obtained from these transactions are subject to taxation. All profitable NFT transfers must be declared in Table 6.3 or 8.3 of the income tax return.

‍

DAO Taxes

‍

DAOs are member-owned communities with a shared vision. All the decisions in a DAO are made by the members in the absence of central leadership. DAOs are new-age institutions that aim to democratise decision-making and allow people to have a say in decisions that directly affect them. DAOs are often called the soul of Web3 and enable members to earn rewards in multiple ways. DAO contributors are rewarded for their contributions to the organization, similar to how centralized organizations pay salaries to their employees. They also pay out bounties for one-time projects and redistribute any profits generated through operations.

The MTA is yet to release specific guidelines on how income from DAOs is to be taxed. Compensation for work received in crypto is usually non-taxable in Estonia because the taxation is accounted for by the employer. However, this is not the case with DAOs since they’re autonomous organisations with no specific guidelines or structure for taxation. Therefore, it would be prudent to consult a tax professional to better understand how income from DAOs is taxed.

‍

DeFi Crypto Taxes Estonia

‍

In Estonia, crypto lending is generally not taxable for the lender. When a natural person lends cryptocurrency to another individual or a company (or a DeFi protocol), the act of lending itself is not considered a taxable event. However, if the lender receives interest on the loan, whether, in the form of cryptocurrency or any other form, the interest income is subject to income tax.

Interest income must be declared in the income tax return corresponding to the year of receipt. It's important to note that the taxation of crypto lending on decentralised platforms follows general tax principles, and the specific nature of the transactions on these platforms should be taken into account. Overall, while the act of lending crypto is not taxed, interest income from crypto lending is subject to income tax and should be declared accordingly.

‍

When to Report Crypto Taxes in Estonia

‍

In Estonia, residents are required to submit their tax returns by 30th April of the following year. Electronic filing of tax returns is accessible from 15th February.

Self-employed individuals are required to make advance tax payments. The deadlines for advance payments of social security contributions are as follows: 15th March (for Quarter 1), 15th June (for Quarter 2), 15th September (for Quarter 3), and 15th December (for Quarter 4)

‍

How to File Crypto Taxes in Estonia

‍

There are three ways you can file your taxes in Estonia:

‍

1. Using the e-MTA portal to file your taxes electronically. However, you will need a government-authorised ID card, a Mobile-ID, a smart ID, or an e-ID of an EU country
2. By sending a post to the Tax and Customs Board’s Service Bureau
3. Using paper forms

Here’s a video tutorial on how you can navigate the e-MTA dashboard once you have signed into the portal.

‍

When reporting gains from cryptocurrency transactions on your tax return, use either table 6.3 or 8.3, titled "Transfer of other property."

‍

• If the platform through which you made crypto transactions is registered in Estonia, indicate the transactions in Table 6.3.
• If the platform is registered abroad, indicate the transactions in Table 8.3.
• In the table, select "cryptocurrency" as the type of property.
• Enter the acquisition cost and expenses related to the transfer and the sales price/market price.
• The acquisition cost is the value of the purchased cryptocurrency in euros at the time of purchase.
• Sales price/market price is the value of cryptocurrency in euros at the time of sale or exchange.

‍

What Records will the MTA want?

‍

You should maintain the following records to have a seamless tax filing experience:

‍

1. A detailed record of all transactions made in a tax year (with date and time)
2. A detailed record of the acquisition price for every token
3. A list of all disposals made within a tax year
4. The fair market value of tokens on receipt
5. Details of the type of asset bought, sold, exchanged, or traded

‍

How to File Crypto Taxes Using Kryptos?

‍

Now that you’re aware of how your crypto transactions are taxed and what forms you need to fill out to complete your tax report, here’s a step-wise breakdown of how Kryptos can make this task easier for you:

‍

1. Visit Kryptos and sign up using your email or Google/Apple Account
2. Choose your country, currency, time zone, and accounting method
3. Import all your transactions from wallets and crypto exchanges
4. Choose your preferred report and click on generate report option on the left side of your screen and let Kryptos do all the accounting.
5. Once your Tax report is ready, you can download it in PDF format.

If you need clarification regarding the integrations or generating your tax reports, you refer to our video guide here.

‍

How to Avoid Crypto Taxes in Estonia

‍

Unfortunately, there are not a lot of ways you can avoid paying crypto taxes in Estonia since crypto losses aren’t tax deductible. However, there are exemptions and other strategies you can employ to lower your tax bill.

‍

1. General Income Tax Allowance: In 2024, the basic exemption ranges from 654 euros per month to 7,848 euros per year based on income. For those of pensionable age, it's a fixed 704 euros per month or 8,448 euros per year.

2. Gifting Crypto: Gifting crypto is tax-free in Estonia‍
3. Donating Crypto: In Estonia, donations made by private individuals to listed non-profit associations and foundations are eligible for tax deductions up to €1200

‍

FAQs

‍

1. Is Crypto legal in Estonia?

‍

This question is better phrased as “Are crypto investments legal in Estonia?” because just like most other countries crypto isn’t considered a legal tender, however, that doesn’t imply that investments in crypto assets are illegal as such. The government has specific regulations and guidelines for taxing crypto-related activities, such as trading, mining, staking, and lending. The Estonian Tax and Customs Board treats cryptocurrency as property, and gains from crypto transactions are subject to income tax. Additionally, crypto donations, crypto lending, and crypto staking are all addressed in the Estonian tax system.

‍

2. Are cryptocurrency transactions visible in the investment account statement?

‍

An investment account with a European bank displays all transactions, including contributions, withdrawals, purchases, and sales of financial assets. If you buy cryptocurrencies through an investment account, the transactions will be visible in the account statement. However, note that cryptocurrency is not considered a financial asset under the Income Tax Act, and gains cannot be tax-deferred. When reporting crypto transactions, purchases are declared as withdrawals in Table 6.5, and sales are declared as contributions in the income tax return. Moreover, gains from crypto transactions should be declared in Table 6.3 or 8.3.

‍

3. Do you pay tax on crypto in Estonia?

‍

Crypto in Estonia is taxed based on income from various cryptocurrency activities, including trading, converting to fiat or other cryptos, and using it for goods/services. Mining income is considered business income and taxable income in crypto is subject to income tax.

The Court of Justice ruled that crypto-to-fiat exchanges are exempt from VAT, while non-traditional currency transactions are treated as financial if accepted as legal tender alternatives. Income can come from price changes, mining, and more, while non-taxable activities include donating and transferring between wallets. Gains from crypto transfers are subject to a 20% income tax, calculated based on price differences. Cryptocurrency is considered property, and each transfer is a separate taxable object.

‍

4. How can Kryptos simplify crypto taxes for you?

‍

We’ve already discussed how to file your crypto taxes in the above sections of the guide offering a stepwise breakdown of the entire process. However, we agree that it is unreasonably complicated 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 Kryptos.

Where all you need to do is log in on the platform, add all your trading accounts, wallets, and DeFi accounts and sip coffee while Kryptos does all the heavy lifting for you. The platform can auto-fetch all your transactions from the tax year and generate a legally compliant tax report within a matter of minutes while also suggesting ways to lower your tax bill. It works like magic, all you need to do is try it once.

‍

All content on Kryptos serves general informational purposes only. It's not intended to replace any professional advice from licensed accountants, attorneys, or certified financial and tax professionals. The information is completed to the best of our knowledge and we at Kryptos do not claim either correctness or accuracy of the same. Before taking any tax position / stance, you should always consider seeking independent legal, financial, taxation or other advice from the professionals. Kryptos is not liable for any loss caused from the use of, or by placing reliance on, the information on this website. Kryptos disclaims any responsibility for the accuracy or adequacy of any positions taken by you in your tax returns. Thank you for being part of our community, and we're excited to continue guiding you on your crypto journey!

Poland has long been one of the most prominent destinations for crypto-based startups, owing to its lenient crypto regulations and comparatively softer stance on crypto as an industry. Crypto investors have enjoyed a similar environment as well. According to a report by Triple A, more than 900,000 people owned crypto in Poland. Moreover, Poland was the first country ever to integrate blockchain for the provisioning of emergency services. In November 2020, Olsztyn completed a successful trial run of Smart Key, a bridging technology that connects blockchain with physical assets, to aid in police, fire and ambulance services.

Global crypto adoption has soared in the past 3 years, and Poland has followed suit. That is part of the reason why Polish authorities have been actively publishing new guidelines regarding crypto taxation. They have also released a new tax form called PIT-38 to help Polish taxpayers report crypto transactions conveniently. Although there are guidelines around crypto taxation in Poland, navigating those guidelines and interpreting them in the context of specific crypto investments is tedious. That’s why we created this comprehensive tax guide covering every aspect of crypto taxation.

Note that this guide will be updated regularly to accommodate any new guidelines. Therefore, we suggest you keep revisiting this guide regularly to keep up with the tax trends.

‍

How is Crypto Taxed in Poland?

‍

In Poland, the taxation of cryptocurrencies follows specific guidelines based on the country's tax laws. According to the Personal Income Tax Act, virtual currency is defined as a digital representation of value that can be exchanged for legal tender and accepted as a means of exchange. However, it's important to note that virtual currency excludes certain categories, such as legal tender issued by national banks, international units of accounts, electronic money, financial instruments, bills of exchange, and cheques.

When it comes to taxation, revenue generated from trading cryptocurrencies is considered revenue from monetary capital. Disposing of virtual currency in exchange for payment involves different scenarios:

‍

• Exchange of virtual currency for legal tender (e.g., selling cryptocurrency for fiat)

• Exchange of virtual currency for goods, services, or property rights

• Settlement of liabilities with virtual currency

‍

It's worth noting that not only the conversion of virtual currency into fiat currency triggers a tax liability but also exchanging it for goods, services, or property. However, exchanging one cryptocurrency for another or converting it into stablecoins does not result in a tax liability.

The taxation rate for cryptocurrencies in Poland is 19%. There is no specific tax threshold in this case, and all income derived from cryptocurrencies, regardless of the amount, is subject to the 19% tax rate. It's essential for investors to accurately report their income from virtual currencies and fulfil their tax obligations accordingly.

‍

Can the Tax Administration Chamber Track Crypto

‍

The answer is yes. Poland is a member of the EU and hence comes under provisions like DAC-8 that are meant for better compliance and investor protection in the space. DAC-8 mandates all crypto companies provisioning financial services in the region to collect and share investor data with all EU member states. Couple that with the AMLD-6 directive, which calls for stricter KYC norms for crypto service providers, and it's safe to assume that the TAC has access to your transaction details and can co-relate this information with data on public ledgers to identify any discrepancies in tax reports.

Therefore, we suggest reporting all your crypto transactions and paying your taxes judiciously to avoid legal complications.

‍

Capital Gains Tax

‍

In Poland, certain cryptocurrencies do qualify under the definition of securities and their disposal results in gain from monetary capital. However, this does not make much of a difference when it comes to their taxation. Because Poland does not have a dedicated capital gains tax, all crypto transactions are taxed at a flat rate of 19%.

‍

Capital Gains Tax Rate

‍

As mentioned earlier, there is no dedicated capital gains tax rate in Poland, and all crypto transactions are taxed at a flat rate of 19%.

‍

How to Calculate Capital Gains

‍

Calculating your income from the sale of crypto is fairly simple in Poland. You can use the formulae below to calculate -

Income from sale of crypto = Aggregate revenue from sale in the year - Tax deductible costs in the year

In Poland, crypto taxes are levied on the conversion of crypto into fiat or if you've spent your crypto in exchange for any goods or services. Accordingly, the method is straightforward, as explained below:

• Each buy generates "tax deductible costs", which are aggregated on an annual basis.
• Each sale generates "tax revenues", which are aggregated on an annual basis.

At the year's end, if tax deductible costs are more than tax revenues, then the loss will be reported and carried forward in the next year.

Here’s an example:

Let’s say Antony in his Binance Wallet bought 1 BTC and 1 ETH for 80,000 PLN  in January 2024 and decided to sell both these tokens later that year for 1,10,000 PLN.

Disposal Amount = 1,10,000 PLN

Cost Basis = 80,000 PLN

Let’s use the formula:

Capital Gains = (1,10,000 - 80,000) PLN = 30,000 PLN

A flat tax rate of 19% will be levied on the 30,000 PLN gain.

‍

Crypto Losses

‍

Crypto losses are tax deductible in Poland. If you’ve made losses that far exceed your gains, you can report them in the PIT-8 tax form, and any assets that you’ve bought and not sold in a financial year are to be reported as expenses to be accounted for in your tax return. Now, as long as you have losses in the current financial year and expenses to be accounted for in the subsequent financial year, you can carry your losses forward until the gains made from the disposal of crypto assets exceed these losses.

No provision states that capital losses aren’t tax deductible, therefore, one should report all losses to tax authorities and avail tax benefits.

‍

Lost Or Stolen Crypto

‍

There are no established provisions or guidelines that determine the tax treatment of lost or stolen crypto. Therefore, it is likely that the Resolution hinges on individual cases and subsequent tax relief offered.

Hence, we recommend reaching out to tax authorities directly to clarify how lost or stolen crypto is viewed from a tax perspective.

‍

Crypto Tax Breaks Poland

‍

There is no way to avoid crypto taxes entirely. However, tax authorities in Poland do offer some ways to reduce your tax bill:

‍

1. Offsetting Capital Losses

‍

Individual taxpayers can carry their capital losses forward as long as they have expenses to be accounted for in the subsequent tax year.

‍

2. HODL Your Assets

‍

• HODLing your assets is not a taxable event in Poland, and gains are only taxed when they’re realised.

Furthermore, authorities in Poland provide certain exemptions and tax benefits for residents. However, it's unclear if these apply to crypto investments. We advise consulting experienced tax professionals to confirm their applicability.

• Charitable Contributions- Donations to registered charities can be deducted from gross income, up to a limit of 6% of taxable income.
  
  
• Internet Connection Expenses- Individuals who qualify can claim a relief of 760 PLN for internet connection expenses. This relief can be claimed for up to two consecutive years.
  
  
• Free-of-Charge Blood Donation- Based on the amount of blood donated, individuals can deduct the money equivalent, up to 6% of their total income, subject to progressive taxation.
  
  
• Payments to Individual Insurance Security Account (IKZE)- Deductions can be made for payments to the non-obligatory IKZE, up to 4% of the pension insurance assessment basis for the individual in the previous year.
  
  
• Rehabilitation Expenses- Expenses related to rehabilitation and aiding life activities for disabled taxpayers or those supporting disabled individuals can be deducted. Proper documentation is required.
  
  
• Thermo-modernization Relief- Owners/co-owners of residential buildings can deduct expenses related to thermo-modernisation projects, up to a total of 53,000 PLN for all projects.

• Deduction of Social Security Contributions- An Employee's social security contributions can be deducted within specified limits. Deductions for contributions paid in another EU or EEA member state or Switzerland are also possible under certain conditions.
  
  
• Relief for Renovation of Monuments- Owners of properties listed in the Register of Cultural Property can deduct expenses for renovation and purchase of historic properties. 
• Standard Deduction for Employees- A standard deduction of 250 PLN per month is available for employees, with an annual limit of tax costs not exceeding 3,000 PLN. For multiple employment relationships, the upper limit is 4,500 PLN.

‍

Crypto Cost Basis Method Poland

‍

The examples we have used above to explain capital gains calculations are fairly simplistic and don’t reflect real-world transactions. Investors buy multiple assets of the same kind at different prices in the same tax year, and that makes capital gains calculations much more complicated. If you have multiple acquisition prices for the same asset, which one would you use to calculate the cost basis for such transactions? That’s exactly why investors should use specialised accounting methods as specified by their respective tax authorities for cost-basis calculations.

In general, there are the following cost basis methods that are used for calculating capital gains.

‍

1. LIFO

‍

LIFO or Last-In-First-Out accounting method states that the acquisition price of the most recent asset you buy is to be used as the cost basis for capital gains calculations upon disposal.

‍

2. FIFO

‍

FIFO or the First-In-First-Out accounting method states that the acquisition price of the earliest asset you buy is to be used as the cost basis for capital gains calculations upon disposal.

‍

3. HIFO

‍

HIFO, or the Highest-In-First-Out accounting method, simply states that the highest acquisition price for an asset across all acquisition instances is to be used as the cost basis for capital gains calculations upon disposal.

‍

4. Average Cost Basis Method

‍

The average cost basis method simply states that the cost basis for an asset is equal to the average acquisition price of all tokens that you currently have in your portfolio.

However, as mentioned above, Poland follows a simple method for calculating income from the sale of crypto assets, where buying crypto generated deductible costs and selling them leads to tax revenues both aggregated annually.

‍

Crypto Income Tax

‍

Income from crypto assets is simply taxed as regular income under the existing income tax rules. In Poland, income obtained from cryptocurrencies is categorised as income from monetary capital and is subject to taxation at a rate of 19%. This taxation applies to various crypto-related activities, including trading, mining, and participating in Initial Coin Offerings (ICOs).

When selling virtual currencies, the taxable amount is determined by the difference between the sale price and the purchase price. This difference is considered income and is subject to the 19% tax rate. This means that any profits made from cryptocurrency trading, as well as other transactions involving virtual currencies, are considered income.

Moreover, it's interesting to note that for goods and services tax (VAT) purposes, cryptocurrencies are considered means of payment rather than property. This classification by the Ministry of Finance influences their treatment under VAT regulations.

It's important to note that not all aspects of crypto transactions are covered by specific tax laws, which may cause ambiguity in some instances. As a result, seeking advice from an experienced tax advisor is recommended to ensure compliance and proper reporting.

‍

Crypto Income Tax Rates

‍

As mentioned previously, a blanket tax rate of 19% applies to income from crypto transactions in Poland.

‍

Tax-Free Crypto Transactions

‍

Listed below are some tax-free transactions in Poland:

‍

• Buying crypto with fiat like PLN
• Trading one cryptocurrency for another
• Transferring crypto between your wallets
• Holding crypto long-term
• And potentially crypto income upon receipt

‍

Taxed Crypto Transactions

‍

Listed below are some taxed crypto transactions:

‍

• Converting crypto to Fiat
• Selling crypto received through airdrops
• Selling crypto received through forks
• Selling crypto received through ICOs

‍

Tax on Mining Crypto

‍

Mining rewards are non-taxable at the point of receipt. The tokens received as a result of mining inherit the cost basis of 0 PLN, which essentially means that once you dispose of these assets and convert them to fiat, the entire amount will be taxed at a flat rate of 19%.

‍

Tax on Staking Crypto

‍

Although mining and staking are two separate ways of adding and validating new blocks of transactions on public ledgers, Polish authorities view them through the same lens when it comes to their taxation.

Staking rewards are taxed in the same way as mining rewards.

‍

How are Airdrops and Forks Taxed in Poland?

‍

Tokens received through airdrops and forks aren't taxed upon receipt. They can even be converted to other crypto without immediate tax implications. However, upon conversion to fiat, they inherit a cost basis of 0 PLN, triggering taxation.

Due to the zero-cost basis, the tax rate applies to the entire amount upon disposal.

‍

Crypto Gifts and Donations Taxes

‍

There are no guidelines that dictate the taxation of crypto gifts and donations in Poland. However, if we assume crypto gifts and donations to be the same as fiat donations, we can infer the tax implications of such transactions.

Just like with regular assets and property rights, the value of crypto assets and rights received through gifts, donations, or inheritance would be subject to Polish gift and inheritance tax. This tax would apply if the recipient of the assets is a Polish national, a Polish permanent resident or if the donation contract is concluded in Poland.

Non-residents might not have to pay gift and inheritance tax on movable crypto assets and rights inherited or donated within Poland as long as the donor is neither a Polish resident nor a Polish citizen.

The exemptions that apply to traditional assets and property rights, such as acquisition by close family members and certain types of property, could potentially also apply to crypto assets. However, it's important to note that the tax-free amounts and specific rules might vary depending on the personal relationship between the recipient and the donor or deceased person.

The tax calculation for crypto gifts, donations, and inheritance would be based on the fair market value of the crypto assets on the day when the tax event occurs (such as the acceptance of an inheritance or donation). The tax rate would be determined based on the relationship between the recipient and the donor or deceased, just like in the case of traditional assets.

Note that these guidelines are speculative. We suggest seeking guidance from an experienced tax professional to better understand how such transactions are taxed.

‍

Crypto Margin Trades, Futures, and CFDs

‍

Although there is no specific guidance on how income from margin trades, futures, and CFDs is taxed, income from margin or leverage trades would likely attract tax liabilities similar to that of regular trades.

This essentially means that any gains incurred from such trades would attract a flat tax rate of 19%. However, it would be prudent to seek guidance from tax professionals to understand how such transactions are taxed.

‍

Crypto ICO Taxes

‍

ICOs are special events that allow investors to own native tokens from unreleased projects in exchange for mainstream tokens like Bitcoin and Ethereum. They are similar to IPOs in the regular securities market.

Any tokens received from ICOs are not taxable at receipt. These tokens inherit the cost base equal to 0 NLP and are taxed when they’re disposed of, attracting a flat tax rate of 19%.

‍

NFT Taxes

‍

The Polish tax authorities have yet to release specific guidelines on NFT taxation. Any income from trading NFTs will likely be taxed as regular income. However, we do suggest seeking guidance from an experienced tax professional to better understand how NFTs are taxed.

‍

DAO Taxes

‍

DAOs are member-owned communities with a shared vision. All the decisions in a DAO are made by the members in the absence of central leadership. They are new-age institutions that aim to democratise decision-making and allow people to have a say in decisions that directly affect them. DAOs are often called the soul of Web3 and allow members to earn rewards in multiple ways. DAO contributors are rewarded for their contributions to the organization, similar to how centralized organizations pay salaries to their employees. It also pays out bounties for one-time projects and redistributes any profits generated through operations.

It is likely that any income from DAOs won’t be taxed at receipt and would simply be taxed at a flat tax rate of 19%. The cost basis for such transactions would be 0 NLP, as is the case with tokens received through airdrops and ICOs.

Since there is no clear guidance on the taxation of income from DAOs, this is mere speculation on our part. We suggest seeking the advice of tax experts to better understand how such transactions are taxed.

‍

DeFi Crypto Taxes

‍

The subject of DeFi taxation is barely touched upon by tax authorities in Poland and is therefore one possible grey area in the Polish tax regime. Any income from staking or lending on DeFi protocols would likely be treated the same way as income from ICOs, airdrops, or hard forks.

We suggest seeking guidance from an expert tax professional to better understand how such transactions are taxed.

‍

When to Report Crypto Taxes in Poland

‍

Crypto taxes in Poland should be reported between 15 February and 30 April of the year following the fiscal year in which the income was earned or losses were sustained. This reporting timeframe applies to various tax returns, including forms such as PIT-37, PIT-36, PIT-36S, PIT-36L, PIT-36LS, PIT-38, and PIT-39.

For the lump-sum tax on revenues, the tax return should be submitted between 15 February and the end of February of the year following the fiscal year. This timeline is specifically applicable to the PIT-28 and PIT-28S tax returns.

It's important to note that if 30 April falls on a Saturday or a holiday, the deadline for submitting tax returns would be the first working day following the holiday(s).

‍

How to File Crypto Taxes in Poland

‍

You can submit your crypto taxes in two ways primarily:

• Using paper forms
• Through the online portal or desktop application

If you choose the latter, you have three different avenues for submitting your tax return:

• An interactive PDF file,
• e-Deklaracje Desktop application,
• Twój e-PIT service.

The tax return prepared with taxpayer information gathered by the revenue authority can be accessed by the taxpayer through the e-Tax portal. The annually generated tax return is automatically considered submitted once the deadline has passed.

‍

What Records Will the Tax Administration Chamber Want

‍

There is no official list of documents that one needs to maintain as per the tax authorities. However, it would be best to maintain the following records for a smooth tax filing experience.

1. List of all transactions with dates and times from the exchange
2. A detailed record of the acquisition and disposal amount
3. Details about the type of asset and the parties involved in the transaction
4. A list of cost basis and disposal amount for each asset
5. A detailed record of all assets held in digital wallets you have private keys for

‍

How to File Crypto Taxes Using Kryptos?

‍

Now that you’re aware of how your crypto transactions are taxed and what forms you need to fill out to complete your tax report, here’s a step-by-step breakdown of how Kryptos can make this task easier for you:

• Visit Kryptos.io and sign up using your email or Google/Apple Account
• Choose your country, currency, time zone, and accounting method
• Import all your transactions from wallets and crypto exchanges
• Choose your preferred report. Click on the generate report option on the left side of your screen and let Kryptoskatt do all the accounting.
• Once your Tax report is ready, you can download it in PDF format.

‍

How to Avoid Crypto Taxes in Poland

‍

Avoiding crypto taxes can cause legal trouble in Poland. However, there are ways you can lower your tax bill legally:

1. Carry your losses forward and offset them against your gains
2. HODL your assets for the long term and convert them to stablecoins when you want to liquidate your positions since crypto gains are only taxable when they’re converted to fiat

‍

Frequently Asked Questions (FAQs)

‍

1. Is crypto legal in Poland?

‍

The question can be better framed as “Is investing in crypto legal in Poland?” and the answer to that would be yes. Although the Polish authorities do not consider crypto to be legal tender, investing in crypto is completely legal in Poland. Poland is the first country in the world that has integrated blockchain into its public welfare system. Poland is widely regarded as a crypto-friendly nation across the world.

‍

2. How is Crypto Taxed in Poland?

‍

In Poland, the taxation of cryptocurrencies follows a clear framework. Income generated from the sale of virtual currencies is considered income from monetary capital and is subject to a flat tax rate of 19%. This taxation encompasses various crypto activities such as trading, exchanging, mining, and participating in Initial Coin Offerings (ICOs). Tax liability arises when cryptocurrencies are sold based on the difference between the sale and purchase prices, resulting in either income or capital loss.

However, specific regulations for all crypto-related transactions aren't fully established, introducing some uncertainty. Seeking guidance from a specialist or experienced tax advisor is recommended to ensure accurate adherence to tax laws. Taxpayers are individually responsible for reporting their cryptocurrency-related income and transactions, and regulations concerning virtual currencies can change from one tax year to the next.

‍

3. Does Poland have a capital gains tax?

‍

No, Poland does not have a dedicated capital gains tax. The tax system in Poland treats income from the sale of assets, including investments like stocks and cryptocurrencies, as capital gains. When individuals sell cryptocurrencies at a profit, the resulting gain is considered a capital gain and is subject to taxation. The tax rate for capital gains in Poland is currently set at a flat rate of 19%.

‍

4. How can Kryptos simplify crypto taxes for you?

‍

We’ve already discussed how to file your crypto taxes in the above sections of the guide, offering a stepwise breakdown of the entire process. However, we agree that it is unreasonably complicated even for someone with a fair amount of prior knowledge. However, there’s an easy way to file your crypto taxes using crypto tax software called Kryptos.

All you need to do is log in on the platform, add all your trading accounts, wallets, and DeFi accounts and sip coffee while Kryptos does all the heavy lifting for you. The platform auto-fetches all your transactions from the tax year and generates a legally compliant tax report within minutes while also suggesting ways to lower your tax bill. It works like magic; all you need to do is try it once.

‍

‍All content on Kryptos serves general informational purposes only. It's not intended to replace any professional advice from licensed accountants, attorneys, or certified financial and tax professionals. The information is completed to the best of our knowledge, and we at Kryptos do not claim either correctness or accuracy of the same. Before taking any tax position/stance, you should always consider seeking independent legal, financial, taxation or other advice from the professionals. Kryptos is not liable for any loss caused from the use of, or by placing reliance on, the information on this website. Kryptos disclaims any responsibility for the accuracy or adequacy of any positions taken by you in your tax returns. Thank you for being part of our community, and we're excited to continue guiding you on your crypto journey!

As the global economy increasingly integrates digital assets, countries are adapting their tax policies to accommodate the growing popularity of cryptocurrencies and other virtual assets. The Czech Republic, known for its forward-thinking approach, has implemented significant changes in the taxation of virtual digital assets starting January 1, 2025. These changes aim to provide clarity, foster investment, and align with international standards.

‍

Key Tax Reforms for 2025

‍

The Czech government introduced a series of amendments to its tax laws, focusing on cryptocurrencies and digital assets. The reforms include the following notable provisions:

‍

1. Tax Exemption for Long-Term Holders

‍

Under the new legislation, individuals who hold cryptocurrencies or other virtual digital assets for more than three years are exempt from capital gains taxes upon selling these assets. This policy mirrors the tax treatment of traditional securities, encouraging long-term investment in the digital asset sector.

This "three-year rule" applies retroactively, meaning assets acquired before January 1, 2025, will also qualify for the exemption if held for the requisite period. For example, if an individual purchases Bitcoin in 2022 and sells it in 2025 or later, they can benefit from the tax exemption.

‍

2. Annual Income Threshold for Reporting

‍

Cryptocurrency transactions generating an annual income below 100,000 CZK (approximately $4,200) are not subject to tax reporting. This provision reduces the administrative burden on small-scale investors and those using digital assets for minor transactions.

‍

3. Tax-Free Everyday Transactions

‍

To simplify the use of cryptocurrencies as a medium of exchange, the government declared that everyday transactions, such as purchasing goods or services with Bitcoin or other cryptocurrencies, will not be considered taxable events. This reform supports the practical adoption of digital currencies in daily life.

‍

4. Regulatory Support for Crypto Businesses

‍

The Czech government also introduced measures to address challenges faced by crypto-related businesses. The new laws ensure that these businesses have fair access to banking services, reducing the risk of discrimination and fostering a supportive environment for the crypto industry.

‍

Compliance and Verification

‍

While the reforms significantly benefit digital asset holders, the government has outlined measures to ensure compliance. Key considerations include:

• Ownership Verification: Taxpayers must maintain accurate records of their cryptocurrency transactions to verify the duration of ownership. This includes timestamps of purchases, sales, and wallet transfers.
• Asset Coverage: The reforms apply to cryptocurrencies and other recognized digital assets. Non-fungible tokens (NFTs) and other blockchain-based assets may require additional classification guidelines.
• Professional Advice: Taxpayers are encouraged to consult with tax professionals or financial advisors to navigate the complexities of the new rules and ensure proper compliance.

‍

Implications for Investors and Businesses

‍

The tax reforms are expected to have a profound impact on the digital asset ecosystem in the Czech Republic:

1. Encouraging Long-Term Investment: By incentivizing long-term holding, the reforms aim to stabilize the cryptocurrency market and attract investors looking for tax-efficient opportunities.
2. Promoting Crypto Adoption: The elimination of taxes on everyday transactions removes barriers for businesses and individuals to integrate cryptocurrencies into their daily operations.
3. Fostering Innovation: With a supportive regulatory environment, the Czech Republic positions itself as a hub for blockchain innovation, attracting startups and entrepreneurs in the digital asset space.
4. Alignment with Global Trends: The Czech approach reflects a growing global trend toward recognizing and integrating digital assets within traditional financial systems.

‍

As the new regulations take effect, the Czech Republic’s proactive stance on digital asset taxation underscores its commitment to embracing technological advancements. These changes not only simplify the tax landscape for crypto investors but also set a benchmark for other countries seeking to navigate the complexities of digital asset regulation.

Taxpayers, investors, and businesses in the Czech Republic should closely monitor any additional guidance from tax authorities to ensure they fully understand their rights and responsibilities under the new framework. With its balanced approach, the Czech Republic is poised to become a leader in the global digital economy.

Malta is one of the friendliest countries in the world when it comes to crypto. It has enjoyed its presence on every crypto tax haven list on the internet, the reason being the lenient regulations and nominal taxes on crypto gains. Other countries have accepted crypto with open arms, but Malta has actively pursued the proliferation and large-scale adoption of crypto in the region with specialised legislation for defining and categorising crypto assets.

The primary roadblock to large-scale crypto adoption in most countries has been the uncertain crypto regulations. Malta realised this and has released multiple acts and legislations to nurture a thriving ecosystem for crypto enthusiasts. While the presence of such comprehensive regulations does remove confusion and chaos from the crypto scene, it also makes it a bit more complicated for investors to track these regulations and interpret them in the context of specific transactions. That’s why we created this detailed tax guide that explains the ins and outs of crypto taxation in Malta in a more digestible fashion.

Note that this guide is quite comprehensive and will be updated regularly to accommodate new guidelines. Therefore, we suggest revising this guide regularly to stay up to date with tax trends.

‍

How is Crypto Taxed in Malta

‍

In Malta, the taxation of cryptocurrencies is governed by a regulatory framework comprising three main acts: the Malta Digital Innovation Authority (MDIA) Act, the Innovative Technology Arrangements and Services (ITAS) Act, and the Virtual Financial Assets (VFA) Act. These acts collectively aim to safeguard consumers, promote innovation, and ensure integrity within the crypto industry.

‍

Under the Maltese regulatory structure, there are distinctions between trading, investing, and mining activities related to cryptocurrencies:

‍

• Trading: Individuals or entities engaged in frequent and short-term transactions to profit from price fluctuations are classified as traders. The tax and regulatory obligations for traders depend on the scale and frequency of their trading activities.

• Investing: Investors typically hold their cryptocurrency assets for extended periods. Investment activities may have different tax implications compared to trading and are subject to less frequent regulatory oversight.

• Mining: Mining is considered a legitimate activity in Malta and is subject to taxation and other regulatory requirements. The taxation and regulations depend on the scale and nature of the mining operations.

Capital gains on other assets, including cryptocurrencies and personal property, are generally not subject to specific capital gains tax in Malta. However, gains resulting from trading activities or frequent asset disposals may be treated as business income and subject to income tax.

The capital gains tax rates on cryptocurrencies and other assets in Malta range from 15% to 35%, depending on the individual's residential status. It's important for individuals engaged in cryptocurrency activities to consult with crypto-native tax consultants to navigate the complex realm of crypto taxation effectively and ensure compliance with relevant laws.

‍

Can the MFSA track crypto?

‍

The simple answer to this question would be yes. Since Malta is the jewel of the EU’s crown, it enjoys certain regulatory benefits. As a member of the EU, Malta comes under the regulatory jurisdiction of directives like DAC-8 that compel crypto companies offering financial services in the region to comply with harsher crypto reporting norms. In line with DAC-8, crypto service providers are required to collect and share user details and investment records with all member states.

Moreover, there are directives like AMLD-6 that call for stricter KYC norms for crypto service providers in the EU. This means that the MFSA has access to your KYC details and can easily identify any discrepancies in your tax report by correlating your details with transactions on public ledgers and that could get you into a lot of trouble.

Therefore it would be in your best interest to report all your crypto transactions on your tax report and pay your crypto taxes judiciously.

‍

Capital Gains Tax

‍

As previously mentioned, a specific capital gains tax on cryptocurrency holdings doesn't exist. The tax treatment hinges on your crypto activities and residential status.

Cryptocurrency Trading can lead to income tax if deemed part of an active trading business. Frequent short-term transactions may be classified as business income rather than capital gains.

Investment activities involving long-term crypto holdings usually escape capital gains tax when you eventually sell.

Malta recognizes cryptocurrency mining as legitimate but assesses tax based on the scale and nature of mining operations.

Residential Status influences your tax obligations. Residents and non-residents may face different tax rates on crypto gains.

Income tax rates, covering cryptocurrency gains, range from 15% to 35%, contingent on residential status. Consulting crypto-savvy tax advisors can help navigate complex tax rules and ensure compliance with local laws, providing tailored guidance to individual circumstances.

‍

Capital Gains Tax Rate

‍

In Malta, the capital gains tax rate can vary depending on several factors, including your residential status and the type of asset you're selling.

‍

‍

How to Calculate Crypto Gains and Losses

‍

Calculating your capital gains or losses is a pretty straightforward process. You can simply use this formula to calculate your capital gains/losses:

‍

‍

For those of you who are not aware of what cost basis means. It is simply the price you pay to acquire a certain asset inclusive of any additional costs like gas fees or transaction fees.

Here’s an example:

Mario decides to buy 2 BTC for €30,000 in Binance Wallet and pays a transaction fee of €150 in the process. After 6 months, Mario sells these 2 BTC for €50,000 from Binance Wallet and pays a transaction fee of €200 in the process.

Total Transaction fees paid = €150 +€200 = €350

Disposal Amount = €50,000

Cost Basis = Price of the asset + Additional Charges = €30,000 + €350 = €30,350

Capital gains = Disposal Amount - Cost Basis = €50,000 - €30,350 = €19,650

‍

Crypto Losses

‍

Although there are no clear guidelines that explicitly dictate the tax deductibility of capital losses in Malta, if we consider crypto trades to be the same as regular trades, we can predict how these losses are viewed from a tax perspective.

Malta's tax rules allow for the deduction of trading losses incurred in any trade, business, profession, or vocation. These losses can be used to reduce chargeable income or gains, potentially resulting in lower tax liabilities for the taxpayer. However, there may be specific regulations or limitations regarding the treatment of cryptocurrency losses, so it's advisable to consult with a tax professional or authority in Malta for precise guidance on cryptocurrency-related deductions.

‍

Lost or Stolen Crypto

‍

There are no clear guidelines on whether lost or stolen assets are considered for tax deductions. However, the authorities will likely analyse individual cases and offer some form of relief based on the total value of the loss and the circumstances that led to them.

Therefore, we suggest contacting the MFSA directly to report your lost or stolen assets and seek relief.

‍

Crypto Tax Breaks Malta

‍

As mentioned above, individuals can deduct their capital losses from their gains and reduce their tax liabilities in Malta. Moreover, Malta also offers some personal deductions and allowances to individual investors that can be utilised to lower tax liabilities.

‍

The most significant ones are mentioned below:

‍

• Investors can benefit from various investment deductions, such as the Business Promotion Act. Under this act, investors in qualifying industries, including manufacturing, information technology, and biotechnology, can benefit from tax credits and deductions on eligible expenditures. These deductions encourage investments in specific sectors of the Maltese economy.

• The country offers a favourable tax treatment to startups and early-stage companies. Qualified startups can benefit from a reduced corporate tax rate and additional deductions for eligible expenditures. These incentives are designed to foster entrepreneurship and innovation.

• Malta has a favourable tax regime for income derived from qualifying IP rights. Investors holding IP rights, such as patents, copyrights, and trademarks, can benefit from significant tax deductions on income generated from these assets. This regime encourages the development and exploitation of intellectual property within Malta.

• There’s an extensive network of double taxation treaties with numerous countries. Investors who are tax residents of Malta can benefit from relief mechanisms provided by these treaties, which help avoid double taxation on income earned abroad.

• Malta offers a participation exemption regime that allows companies to receive dividends and capital gains from qualifying shareholdings tax-free. This encourages investment in foreign subsidiaries and other companies, as the income is exempt from Maltese tax.

• Companies engaged in R&D activities can claim deductions on eligible R&D expenditures. These deductions promote innovation and technological advancements within Malta.

• Investments in renewable energy projects and energy-efficient technologies may qualify for deductions and incentives to promote environmental sustainability.

• Investors in real estate can benefit from deductions related to property investment, including deductions for expenses incurred in the maintenance and improvement of properties.

• Malta offers incentives to investors in the film industry, including deductions for eligible expenses related to film production and distribution.

‍

Crypto Cost Basis Method

‍

The examples we have used above are primitive and do not reflect the complexity of real-world capital gains taxations. When a person buys or sells crypto there are instances where he/she buys the same asset at different prices at different instances. And when that happens, it becomes very confusing for investors to identify their cost basis. That is why one should rely on specialised accounting methods as specified by tax authorities to avoid confusion and error in cost-basis calculations.

Malta follows the International Financial Reporting Standards (IFRS) put forth by the International Accounting Standards Board (IASB). The IFRS is a set of accounting standards put forth to specify how certain transactions are to be reported on financial statements. Since the IFRS specifies the use of FIFO and ACB as accepted accounting methods, the use of these accounting methods is likely permissible in Malta.

The MFSA does not specify explicitly which accounting method to use for cost-basis calculations in Malta. So we will discuss both accounting methods in detail.

‍

1. FIFO

‍

FIFO or the First-In-First-Out accounting method states that the acquisition price of the earliest asset you buy is to be used as the cost basis for capital gains calculations upon disposal.

‍

2. Average Cost Basis Method

‍

The average cost basis method simply states that the cost basis for an asset is simply equal to the average acquisition price of all tokens that you currently have in your portfolio.

‍

Here’s an example to understand how these methods work.

‍

Consider the following transactions:

17/01/24 - Jack bought 1 ETH for €1,400

19/02/24 - Jack bought 1 ETH for €1,800

28/05/24 - Jack bought 1 ETH for €1600

21/06/24 - Jack sold 1 ETH for €2,400

‍

1. Using FIFO

‍

According to FIFO, the first acquisition determines the cost basis.

Cost basis = €1,400

Disposal Amount = €2,400

Capital Gains = Disposal Amount - Cost Basis = €2,400 - €1,400 = €1,000

‍

2. Using ACB

‍

The ACB method considers the average acquisition price as the cost basis.

Cost Basis = (€1,400 + €1,600 + €1,800)/3 = €1,600

Disposal Amount = €2,400

Capital Gains = €2,400 - €1,600 = €800

Notice how the capital gain changes when you use different accounting methods.

‍

Crypto Income Tax

‍

As previously mentioned, all gains from crypto trades and income derived from income-bearing crypto transactions attract income tax in Malta. Revenue from mining, staking, yield farming, ICOs, Airdrops, or any other source attracts income tax in Malta.

‍

Crypto Income Tax Rate

‍

The income tax rates in Malta are as follows:

‍

‍

Source:- https://cfr.gov.mt/en/rates/Pages/TaxRates/Tax-Rates-2025.aspx 

‍

Tax-Free Crypto Transactions

‍

The following transactions are tax-free in Malta:

‍

• Buying crypto with fiat
• HOLDING crypto
• Transferring crypto between wallets

‍

Taxed Crypto Transactions

‍

The following transactions are taxed in Malta:

‍

• Selling crypto
• Staking crypto
• Receiving crypto through an airdrop, fork, or as staking and mining reward
• Yield farming
• Liquidity farming
• Receiving an interest income from crypto-related transactions

‍

Tax on Mining Crypto

‍

Crypto mining is subject to taxation, and the tax treatment depends on factors like the nature and scale of mining activities, individual or business tax status, and income derived from mining.

Income generated from cryptocurrency mining is generally considered taxable income, subject to personal or business income tax rates, depending on whether it's conducted as a personal activity or a business venture. Business income may be taxed differently from individual income.

Cryptocurrency miners may be eligible to deduct certain expenses associated with mining, such as electricity costs and hardware expenses, to reduce their taxable income.

Malta typically doesn't impose capital gains tax on cryptocurrency sales, but specific circumstances and the intent behind selling mined cryptocurrencies can impact tax liability.

Maintaining meticulous records of mining activities, expenses, and cryptocurrency sales or transfers is crucial for accurate tax reporting.

‍

Tax on Staking Crypto

‍

Although mining and staking are two very different ways of adding and validating new blocks of transaction on public ledgers (blockchain), most countries in the EU consider both mining and staking to be the same from a tax perspective, and Malta is no exception.

The taxation of staking rewards is the same as mining rewards.

‍

How are Airdrops and Forks Taxed

‍

Tokens received through Hardforks and Airdrops are taxed based on their utility as DLT assets. If you use the token as a means of payment, store of value, or a medium of exchange in the digital realm then these tokens would be categorised as a coin. However, if you use these tokens for buying a product or a service in the physical world, then these tokens are categorized as Utility tokens and taxed accordingly.

However since coins and utility tokens are not on the list of capital assets in the Income Tax Act, the capital gains on their disposal do not attract income tax. We suggest seeking the guidance of an experienced tax professional to gain some clarity on the subject.
Note that soft forks do not attract any taxes since no new tokens are generated and redistributed to the chain participants during the chain split.

‍

Crypto Gifts and Donation Taxes

‍

There is no clear guidance on how crypto gifts and donations are viewed from a tax perspective. However, if we consider crypto gifts and donations to be the same as fiat ones, we can infer the following:

There is no gift, inheritance, or estate tax in Malta and gifting crypto assets is likely tax-free. When it comes to donations there are no guidelines regarding the same. We do suggest seeking the guidance of an experienced tax professional to better understand their taxation.

‍

Crypto Margin Trades, Futures, and CFDs

‍

Any gains derived from margin or leverage trades are considered to be the same as the ones derived from regular trades. The MFSA doesn’t make any exceptions between the two trade types and the tax implications are the same even for Crypto Future and Derivatives.

‍

Crypto ICO Taxes

‍

ICOs are special events that allow investors to own native tokens from unreleased projects in exchange for mainstream tokens like Bitcoin and Ethereum. They are similar to IPOs in the regular securities market.

In Malta, ICOs are subject to varying tax implications based on factors such as token classification and the nature of the income generated. Firstly, income tax may apply if tokens from an ICO are considered revenue. The tax rate depends on whether the income is categorised as business income or capital gains.

Regarding VAT, ICOs are generally treated as taxable services, making VAT potentially applicable to the consideration received for the tokens. However, specific token types and transactions may have exceptions and unique VAT rules.

Capital Gains Tax could be relevant if ICO tokens are held as capital assets and later sold.

The tax rate depends on the holder's residency status and the duration of token ownership.

Moreover, if an ICO results in the formation of a corporate entity in Malta, any dividends or distributions made to token holders might be subject to taxation.

‍

NFT Taxes

‍

NFTs in Malta are categorized based on specific criteria outlined in the VFA-NFT guidelines. To qualify as an NFT, an asset must demonstrate both uniqueness and non-fungibility, applying to both the NFT itself and the assets, rights, or utilities it represents. If an NFT is part of a large series or collection, its fungibility may be affected, potentially leading to its disqualification as non-fungible. A unique identifier or label alone is insufficient to establish uniqueness. 

The taxation of NFTs depends heavily on whether they classify as DLT assets and we suggest seeking the advice of an experienced tax professional to have more clarity on the subject.

‍

DAO Taxes

‍

DAOs are member-owned communities with a shared vision. All the decisions in a DAO are made by the members in the absence of central leadership. They are new-age institutions that aim to democratise decision-making and allow people to have a say in decisions that directly affect them. DAOs are often called the soul of Web3 and allow members to earn rewards in multiple ways. DAO contributors are rewarded for their contributions to the organization, similar to how centralized organizations pay salaries to their employees. They also pay out bounties for one-time projects and redistribute any profits generated through operations.

Although there is no guidance on how income from DAOs is taxed, it will likely attract income tax in Malta. We do suggest seeking guidance from an experienced tax professional to gain some clarity on the taxation of such transactions.

‍

DeFi Taxes

‍

There are no guidelines that dictate the taxation of specific DeFi transactions in Malta. However, we do know that income from staking and lending on DeFi platforms attracts income tax in Malta.

We suggest seeking guidance from experienced tax professionals to gain more clarity on DeFi taxation.

‍

When to Report Crypto Taxes in Malta

‍

The deadline for filing your tax return in 2025 is June 30.

‍

How to File Crypto Taxes in Malta

‍

You can submit your income tax return online by logging into https://mytax.cfr.gov.mt using your e-id account. If you don’t already have your e-ID account yet, you can request your e-ID by calling 25904300 or sending a request by email to servizz@gov.mt.

‍

What Records will the MFSA want?

‍

There is no official list of documents released by the MFSA as of now. However, one should maintain the following documents as a precautionary measure to avoid complications when filing their tax returns.

‍

1. List of all transactions with dates and time
2. A detailed record of the acquisition and disposal amount
3. Details about the type of asset and the parties involved in the transaction
4. A list of cost basis for each asset
5. A detailed record of all assets held in digital wallets you have private keys for

‍

How to File Crypto Taxes Using Kryptos?

‍

Now that you’re aware of how your crypto transactions are taxed and what forms you need to fill out to complete your tax report, here’s a step-wise breakdown of how Kryptos can make this task easier for you:

Visit kryptos.io and sign up using your email or Google/Apple Account

Choose your country, currency, time zone, and accounting method

Import all your transactions from wallets and crypto exchanges

Choose your preferred report and click on the generate report option on the left side of your screen and let Kryptos do all the accounting.

Once your Tax report is ready, you can download it in PDF format.

If you still need clarification regarding the integrations or generating your tax reports, you refer to our video guide here.

‍

How to Avoid Crypto Taxes in Malta

‍

Although it's impossible to avoid crypto taxes entirely, there are exemptions and deductions offered by the tax authorities that you can use to lower your tax bill. Mentioned below are some of them:

‍

• Tax credits and deductions for investors in qualifying sectors.
• Reduced corporate tax rates and deductions for startups.
• Significant tax deductions on income from IP rights.
• Relief mechanisms for tax residents to avoid double taxation on foreign income.
• Tax-free dividends and capital gains from qualifying shareholdings.
• Deductions on eligible R&D expenditure.
• Deductions and incentives for investments in green energy.
• Deductions for property investment and maintenance expenses.
• Deductions for eligible film production and distribution expenses.

‍

Frequently Asked Questions (FAQs)

‍

1. Is Crypto Legal in Malta?

‍

Yes, investing in crypto is legal in Malta, as the country has established a regulatory framework to govern the cryptocurrency industry, ensuring legality and security for investors.

‍

2. How is Crypto Taxed in Malta?

‍

Cryptocurrency taxation in Malta involves capital gains tax on trading activities, subject to varying rates based on the taxpayer's residence status. Mining is considered a trade or business and is taxable. ICOs and airdrops are taxable when they generate income. The country offers deductions and incentives, such as those for startups, intellectual property, R&D, and renewable energy investments, helping to mitigate tax liabilities for investors. Additionally, Malta has double taxation treaties to avoid dual taxation on foreign income for its residents. These measures create a comprehensive framework for cryptocurrency taxation in Malta.

‍

3. Does Malta have a Capital Gains Tax?

‍

Yes, Malta has a capital gains tax. Capital gains tax in Malta applies to various assets, including real estate, securities, and specific business assets. The tax rate may vary based on factors like the type of asset, the holding period, and the taxpayer's residence status. However, Malta offers exemptions and deductions that can significantly reduce the capital gains tax liability in some instances, especially for residents and companies. It's advisable to consult with a tax expert or authority for specific details on capital gains tax rates and exemptions applicable to your situation in Malta.

‍

4. How can Kryptos simplify crypto taxes for you?

‍

We’ve already discussed how to file your crypto taxes in the above sections of the guide offering a stepwise breakdown of the entire process. However, we agree that it is unreasonably complicated 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 Kryptos.

All you need to do is log in on the platform, add all your trading accounts, wallets, and Defi accounts and sip coffee while Kryptos does all the heavy lifting for you. The platform auto-fetches all your transactions from the tax year and generates a legally compliant tax report within a matter of minutes while also suggesting ways to lower your tax bill. It works like magic, all you need to do is try it once.

‍

All content on Kryptos serves general informational purposes only. It's not intended to replace any professional advice from licensed accountants, attorneys, or certified financial and tax professionals. The information is completed to the best of our knowledge and we at Kryptos do not claim either correctness or accuracy of the same. Before taking any tax position/stance, you should always consider seeking independent legal, financial, taxation or other advice from professionals. Kryptos is not liable for any loss caused by the use of, or by placing reliance on, the information on this website. Kryptos disclaims any responsibility for the accuracy or adequacy of any positions taken by you in your tax returns. Thank you for being part of our community, and we're excited to continue guiding you on your crypto journey!

The Philippines is ranked second in the world in Chainalysis’s Global Crypto Adoption index, only behind its ASEAN neighbour Vietnam. There are two main reasons for this:

1. High remittance payments and the lack of an easily accessible financial infrastructure

2. A tech-savvy population and the government’s positive outlook on crypto

The Philippines President Ferdinand Marcos Jr. is an ardent crypto supporter and is a firm believer in the potential of crypto and the future of blockchain-based businesses in the region. A crypto-friendly leader at the helm with a vision of transforming the Philippines into the Asian crypto valley is one of the primary reasons why crypto adoption has seen a huge uptick towards the end of 2022 and the trend has continued ever since.

However, despite the mass adoption of crypto, the subject of crypto taxation is still a grey area in the Philippines as there’s no concrete regulatory framework in place. The authorities have released a few guidelines and rules dictating the tax implications of simple crypto transactions, but there are still no guidelines dictating the taxation of gains from complex transactions like ICOs, DeFi, and DAOs.

This article aims to summarise the current regulatory landscape while also offering a first-hand view of the future crypto regulations in the region.

‍

Is Crypto Legal in the Philippines?

‍

Cryptocurrency is not explicitly illegal in the Philippines. The country does not have specific laws that declare cryptocurrencies illegal. Instead, the regulatory approach in the Philippines is to define and regulate cryptocurrencies, primarily categorising them as securities or "tokenized securities products."

The Securities and Exchange Commission (SEC) of the Philippines has issued advisories and draft rules related to cryptocurrencies and digital financial products. These rules aim to enforce regulations and provide consumer protection within the crypto space. In the absence of comprehensive cryptocurrency legislation, the SEC's guidelines and the Financial Products and Services Consumer Protection Act play a significant role in shaping the regulatory landscape.

Individuals and businesses involved in cryptocurrency activities in the Philippines must adhere to the SEC's regulations and use regulated exchanges to ensure compliance with the evolving regulatory framework.

‍

Can the Authorities Track Crypto?

‍

‍

In the Philippines, government agencies have established a robust regulatory framework to oversee cryptocurrencies, ensuring their safe and lawful usage. The Bangko Sentral ng Pilipinas (BSP), the country's central bank, has taken the lead in issuing circulars and guidelines aimed at promoting the secure use of cryptocurrencies. These guidelines are crucial in providing users with confidence in the crypto ecosystem.

The Securities and Exchange Commission (SEC) plays a significant role in this regulatory landscape. As the authority responsible for monitoring and regulating securities, investments, and financial instruments, including cryptocurrencies, the SEC ensures that crypto activities comply with existing rules and regulations.

One notable aspect of the regulatory framework is the comprehensive oversight of cryptocurrency exchanges. Under the recently issued Virtual Currency Exchange (VCE) rules, any cryptocurrency exchange operating within the country must obtain prior approval from the BSP. These regulations also mandate that crypto exchanges implement Know Your Customer (KYC) processes, adding an extra layer of security and accountability to the crypto ecosystem.

Moreover, the Philippines has introduced tax reporting requirements for its citizens involved in cryptocurrency transactions. Filipino crypto owners and traders are obligated to report their capital gains during their annual tax filings. This move aims to bring crypto transactions into the formal financial system, ensuring that they are subject to appropriate taxation.

To bolster efforts in combating illegal activities related to cryptocurrencies, the Philippines has also implemented AML and CFT measures that apply to cryptocurrency exchanges. These measures necessitate exchanges to establish robust AML/CFT programs, conduct customer due diligence, and report suspicious transactions to authorities.

This comprehensive approach significantly reduces the risk of illegal financial activities associated with cryptocurrencies.

Furthermore, international cooperation is a key component of the Philippines' strategy to combat crypto-related illegal activities. By collaborating with global organisations and foreign counterparts, authorities can share critical information and coordinate efforts to address cross-border issues like money laundering and fraud.

‍

How is Crypto Taxed in the Philippines?

‍

Cryptocurrency taxation in the Philippines encompasses various considerations and depends on the categorization and use of these digital assets. The primary form of taxation applied to cryptocurrency transactions is the capital gains tax (CGT), which can reach up to 15 per cent, though the specific rate may vary based on the type of transaction. Filipino citizens engaged in cryptocurrency ownership or trading are obligated to report their capital gains during their annual tax filings, making it imperative for individuals to include these profits in their income tax returns.

For individuals or entities actively trading cryptocurrency with the intent of short-term resale, these digital assets could be classified as inventory. Consequently, any income generated from the sale or exchange of cryptocurrency could potentially be subject to value-added tax (VAT) if it meets the applicable threshold, typically set at 12 per cent in the Philippines.

In contrast, cryptocurrency held for investment purposes, such as capital appreciation over an extended period, is more likely to be considered an intangible asset. Under this classification, cryptocurrency becomes a capital asset for tax purposes. Gains resulting from the sale or exchange of such assets would then be subject to ordinary income tax.

It's important to note that the landscape of cryptocurrency taxation in the Philippines is dynamic. The government has expressed its intention to implement further regulations and potentially introduce new taxes on cryptocurrency transactions in the near future. As such, individuals and entities involved in cryptocurrency activities should remain vigilant regarding changes in tax regulations and seek professional guidance to ensure compliance with evolving tax laws. The lack of precise guidelines can lead to varying interpretations, making professional tax advice crucial for those navigating the cryptocurrency tax landscape in the Philippines.

‍

Future of Crypto Regulations in the Philippines

‍

The future of crypto regulations in the Philippines appears to be evolving with a cautious but proactive approach. While the country has taken significant steps to develop a comprehensive regulatory framework for cryptocurrencies, several key indicators suggest what the future might hold.

The Philippines' financial regulator, the Securities and Exchange Commission (SEC), has demonstrated its commitment to a well-thought-out approach by partnering with the University of the Philippines Law Center (UPLC) to develop guidelines for digital assets. This collaboration indicates a concerted effort to ensure that regulations are not only robust but also well-informed.

The fact that the Implementing Rules and Regulations of Republic Act No. 11765 were opened for public comment shows a commitment to transparency and stakeholder involvement in shaping regulations. This inclusive approach is likely to continue in the future, ensuring that the crypto community and businesses have a say in the development of the regulatory framework.

The Philippines has emphasised investor protection as a priority in its regulatory approach. The delayed release of the crypto framework to study the reasons behind market failures, like the collapse of the FTX exchange, underscores the commitment to safeguarding investor interests.

Despite the absence of explicit references to "crypto" or "blockchain" in the legislation, the regulator's willingness to work on guidelines for digital assets indicates an adaptable regulatory environment.

‍

Frequently Asked Questions (FAQs)

‍

1. Is cryptocurrency legal in the Philippines?

‍

Yes, cryptocurrency is not explicitly illegal in the Philippines. The country does not have specific laws that declare cryptocurrencies illegal. Instead, the regulatory approach is to define and regulate cryptocurrencies, primarily categorising them as securities or "tokenized securities products."

‍

2. What are the key regulatory bodies overseeing cryptocurrency in the Philippines?

‍

The key regulatory bodies overseeing cryptocurrency in the Philippines include the Securities and Exchange Commission (SEC) and the Bangko Sentral ng Pilipinas (BSP). The SEC monitors and regulates securities, investments, and financial instruments, including cryptocurrencies, while the BSP, as the central bank, plays a crucial role in issuing guidelines to promote the secure use of cryptocurrencies.

‍

3. How is cryptocurrency taxed in the Philippines?

‍

Cryptocurrency taxation in the Philippines includes considerations such as capital gains tax (CGT), which can reach up to 15 per cent. Filipino citizens involved in cryptocurrency ownership or trading are required to report their capital gains during their annual tax filings. Depending on the classification of cryptocurrency as either inventory or an intangible asset, it may be subject to value-added tax (VAT) or ordinary income tax.

‍

4. How can individuals and businesses stay compliant with cryptocurrency regulations in the Philippines?

‍

To stay compliant with cryptocurrency regulations in the Philippines, individuals and businesses should adhere to guidelines issued by the SEC and BSP. This includes using regulated exchanges, implementing Know Your Customer (KYC) processes, and reporting capital gains during annual tax filings. Given the dynamic nature of crypto taxation, seeking professional tax advice and staying informed about regulatory changes is crucial.

‍

‍All content on Kryptos serves general informational purposes only. It's not intended to replace any professional advice from licensed accountants, attorneys, or certified financial and tax professionals. The information is completed to the best of our knowledge and we at Kryptos do not claim either correctness or accuracy of the same. Before taking any tax position/stance, you should always consider seeking independent legal, financial, taxation or other advice from professionals. Kryptos is not liable for any loss caused by the use of, or by placing reliance on, the information on this website. Kryptos disclaims any responsibility for the accuracy or adequacy of any positions taken by you in your tax returns. Thank you for being part of our community, and we're excited to continue guiding you on your crypto journey!

Vietnam has been ranked no. 1 two times in a row in Chainalysis’s Global Crypto Adoption Index, and there are good reasons for it. According to a report by Statista, over 69% of the Vietnamese population does not have access to traditional financial services like banking. Moreover, Vietnam is one of the biggest beneficiaries of remittance payments, receiving over $13.5 billion in 2022 alone. With more than 60% of the Vietnamese population residing in rural areas without access to a bank account, Bitcoin and other cryptocurrencies offer a great alternative.

Moreover, Vietnam is one of the few countries lacking a proper framework to regulate cryptocurrencies. Almost all crypto transactions are tax-free in the country, as there is no official statement from the State Bank of Vietnam or other central authorities that categorises cryptocurrencies as an asset or security.

Now, there are regulations governing the categorisation of assets in Vietnam and facilitating their taxation. However, interpreting these regulations in the context of crypto assets is a fairly complicated task and is beyond the expertise of regular citizens. The goal of this article is to explain the current crypto regulatory landscape and summarise the future of crypto taxation in the country.

‍

Is Crypto Legal in Vietnam?

‍

In Vietnam, cryptocurrencies are categorised as assets or goods based on legal definitions provided in the 2015 Civil Code and the Commercial Law 2005. These laws broadly define property to include objects, money, valuable papers, property rights, as well as movable property, including those that may form in the future. This classification implies that cryptocurrencies can be traded within the country.

However, despite their categorization as assets or goods, the legal status of cryptocurrencies in Vietnam is complex and multifaceted. The State Bank of Vietnam, which serves as the country's central bank, does not recognize cryptocurrencies as a legal means of payment. This position is outlined in Article 1 of Decree 80/2016/ND-CP on non-cash payments. The State Bank's stance is further reinforced in Document No. 5747/NHNN-PC dated July 21, 2017.

The Investment Law 2020 does not explicitly prohibit virtual currency investment in its list of industries where business investment is prohibited. Moreover, there is no specific directive that forbids individual investors from participating in virtual currency investments.

However, it's essential to note that certain securities-related entities in Vietnam, such as public companies, securities companies, fund management companies, and securities investment funds, are prohibited from engaging in illegal issuance, trading, and brokerage activities related to virtual currencies. This directive aligns with an Official Letter, specifically Official Letter 4486/UBCKGSDC, dated July 20, 2018, issued by the State Securities Commission.

However, buying and selling crypto assets is legal in Vietnam, and there are no regulations restricting individual investment in crypto assets in the region.

‍

Can the Authorities Track Crypto?

‍

Although the authorities have made attempts to regulate exchanges and crypto service providers based in the region, the task has proved to be more challenging than expected due to the lack of a concrete regulatory framework.

The absence of AML and reporting regulations has posed significant challenges for authorities in the country. First off, the lack of investor protection measures has left individuals exposed to various scams and fraudulent schemes within the crypto sector. Without regulatory safeguards, it becomes easier for malicious actors to deceive unsuspecting investors, leading to financial losses.

Second, the absence of a well-defined regulatory framework makes it challenging for authorities to track and combat fraudulent and criminal activities associated with crypto, including money laundering. The decentralised nature of crypto transactions can impede efforts to trace wrongdoers, leaving a gap in law enforcement.

Moreover, the volatile and uncertain business environment in the crypto sector adds complexity to the situation. Investors often lack the necessary guidance and information to make informed decisions, contributing to increased risks.

‍

How is Crypto Taxed in Vietnam?

‍

The taxation of cryptocurrency in Vietnam has been a subject of legal disputes and ambiguity due to the lack of a proper regulatory framework. The story starts with a 2016 guidance issued by the Ministry of Finance (MOF) in response to a query from a local tax authority.

According to the MOF's Official Letter No. 4356/BTC-TCT, cryptocurrency transactions, specifically buying and selling digital currency, were initially classified as taxable commercial business activities. These activities were subjected to various taxes, including Value-Added Tax (VAT), Corporate Income Tax (CIT) for businesses, and Personal Income Tax (PIT) for individuals. This interpretation was based on the view that digital currency was a form of property and a movable commodity.

However, this approach led to disputes, with taxpayers challenging the tax assessments imposed by local tax authorities. The legal battle culminated in a court case, which resulted in a significant decision. The court ruled that cryptocurrencies were not officially defined as an asset or good within Vietnamese law. Furthermore, the court found that the MOF's official letter had exceeded its authority.

Adding to the complexity, the State Bank of Vietnam does not recognize virtual currencies like Bitcoin as legal currencies or accepted means of payment. Decree No. 96/2014/ND-CP, issued by the government, outlines administrative penalties for the illegal issuance, supply, and use of means of payment involving virtual currencies.

As a result of these legal intricacies and inconsistencies, there has been a lack of substantial progress or clear guidance regarding crypto taxation in Vietnam. The absence of a well-defined regulatory framework leaves the taxation of crypto income in a state of uncertainty, making it challenging for both taxpayers and tax authorities to navigate this evolving landscape.

‍

Future of Crypto Regulatory Landscape in Vietnam

‍

The future of cryptocurrency regulations in Vietnam is transforming, led by a series of official decisions, directives, and guidelines.

In August 2017, Decision No. 1255/QD-TTg by the Prime Minister initiated the establishment of a legal framework for managing virtual currencies, electronic money, and virtual assets. This decision recognized the need for regulatory clarity in the cryptocurrency space, indicating the government's awareness of its growing importance.

Following this, April 2018 saw the issuance of Official Directive No. 10/CT-Ttg, which defined the roles and responsibilities of state agencies in overseeing crypto-related activities. This directive underlines how various government bodies should manage and regulate the cryptocurrency sector, solidifying the government's commitment to maintaining control.

A pivotal development came with Decision 942/QD-TTg, a recent move that outlines the e-government development strategy, charting a path toward a digital government by 2030. This decision designated the State Bank of Vietnam as the primary entity responsible for researching, building, and piloting the use of virtual money based on blockchain technology between 2021 and 2023. It underscores the government's commitment to exploring the potential of cryptocurrencies and blockchain for modernising the economy and governance.

Moreover, the Ministry of Finance established a Study Group on virtual assets and currencies in April 2020 under Decision No. 664/QD-BTC. This group's mission is to conduct research and propose policy frameworks and management mechanisms for regulating digital assets. This initiative reflects the government's proactive stance in comprehending and regulating the crypto landscape.

‍

Frequently Asked Questions (FAQs)

‍

1. Is cryptocurrency legal in Vietnam?

‍

Cryptocurrency's legal status in Vietnam is currently in a state of transition. While there isn't a comprehensive regulatory framework governing cryptocurrencies, it's not explicitly illegal. The State Bank of Vietnam does not accept cryptocurrencies as legal currencies or means of payment. Decree No. 96/2014/ND-CP prohibits the illegal issuance, supply, and use of means of payment such as Bitcoin. However, this implies an outright ban on crypto transactions. The government is actively exploring the use of virtual money based on blockchain technology, signalling a potential shift in stance.

‍

2. How are cryptocurrencies taxed in Vietnam?

‍

Cryptocurrency taxation in Vietnam remains uncertain due to the lack of a clear legal framework. However, some directions have been issued. Digital currency is considered a taxable commercial business activity, subject to Value-Added Tax (VAT), Corporate Income Tax (CIT) for businesses, and Personal Income Tax (PIT) for individuals. The application of these taxes is yet to be fully defined.

‍

3. What is the current status of cryptocurrency regulations in Vietnam?

‍

As of now, Vietnam lacks a comprehensive regulatory framework for cryptocurrencies. The government is exploring options and has issued directions for managing virtual currencies and digital assets. This regulatory landscape is evolving, and the legal status of cryptocurrencies remains a subject of debate.

‍

4. Do I need to report my cryptocurrency holdings to tax authorities in Vietnam?

‍

There is no specific requirement to report cryptocurrency holdings to tax authorities as of now. However, due to the evolving regulatory environment, it's advisable to stay informed about any changes in reporting obligations.

‍

All content on Kryptos serves general informational purposes only. It's not intended to replace any professional advice from licensed accountants, attorneys, or certified financial and tax professionals. The information is completed to the best of our knowledge and we at Kryptos do not claim either correctness or accuracy of the same. Before taking any tax position/stance, you should always consider seeking independent legal, financial, taxation or other advice from professionals. Kryptos is not liable for any loss caused by the use of, or by placing reliance on, the information on this website. Kryptos disclaims any responsibility for the accuracy or adequacy of any positions taken by you in your tax returns. Thank you for being part of our community, and we're excited to continue guiding you on your crypto journey!

Malaysia is famous for its tropical climate and exquisite cuisine, but crypto enthusiasts love it for a different reason. Malaysia is one of the top recommendations for anyone looking to relocate to a crypto-friendly nation, thanks to the lenient tax regulations and an open crypto ecosystem that promotes blockchain adoption and offers a favourable regulatory landscape for crypto-based businesses.

The Inland Revenue Board of Malaysia (LHDN) has issued clear guidelines on how crypto transactions are taxed, and it’s good news for the most part. However, these guidelines are extensive and require much effort to read and interpret. That’s why we created this detailed crypto tax guide to answer crucial questions like “How is Crypto Taxed in Malaysia?” “Can the Authorities Track Crypto Transactions?” “How is Crypto Income Taxed in Malaysia?” “How to File Crypto Taxes?” etc..,

Note: This guide will be updated regularly, and we advise you to keep revisiting it to avoid missing crucial updates that might affect your crypto tax bill.

How is Crypto Taxed in Malaysia?

‍

In Malaysia, the taxation of cryptocurrency transactions follows a clear distinction between capital gains and revenue gains. Capital gains or earnings obtained through crypto investments are not subject to taxation. This means that if individuals or businesses acquire cryptocurrency as a form of investment and hold it for an extended period, similar to traditional investment instruments, they are not obligated to pay taxes when they eventually sell or dispose of these assets.

On the other hand, revenue gains derived from cryptocurrency transactions are taxable. This applies to individuals or businesses actively engaged in crypto trading, where digital currencies are regularly bought and sold as a primary source of income. The gains generated from these trading activities are considered taxable in Malaysia.

Moreover, the taxation of cryptocurrency transactions may also depend on the location and presence of the business. If a business's key activities and operations related to cryptocurrency occur within Malaysia or if the company has a physical presence in the country, it may be subject to Malaysian taxation on cryptocurrency-related revenue gains.

The nature of gains or losses resulting from the disposal of crypto assets plays a crucial role in determining how they will be taxed. Transactions categorised as trading are taxable and any losses incurred while trading are tax deductible. However, capital gains transactions attract no taxation, and the associated losses are non-deductible.

‍

Can the LHDN Track Crypto?

‍

As previously mentioned, Malaysia has a well-structured crypto landscape that offers a haven for crypto investors and blockchain-based businesses. However, this means that all exchanges and crypto-based businesses offering financial services in the region have to comply with the AML and anti-terror funding regulations.

This means that the authorities have access to your KYC details and crypto activity. These details can be correlated with the information on your tax return or data available on distributed ledgers to identify any unreported transactions. Therefore, we suggest reporting all your crypto transactions on your tax return and paying all your crypto taxes judiciously to avoid legal or tax complications in the future.

‍

Capital Gains Tax Malaysia

‍

In Malaysia, capital gains from investments, including those from the sale of cryptocurrency held for the long term as a form of investment, are generally not subject to capital gains tax. This means that individuals or businesses who invest in cryptocurrencies to hold them for an extended period, similar to traditional investment instruments like stocks or real estate, do not incur capital gains tax when they eventually sell or dispose of their cryptocurrency holdings at a profit.

The absence of capital gains tax on such investments is advantageous for long-term investors, as it allows them to realize gains from their investments without additional taxation. However, it's important to note that specific tax laws and regulations may evolve, so it's better to stay informed about any changes in the tax landscape.

Note that while capital gains from long-term investments are generally not taxed, revenue gains from active cryptocurrency trading activities are subject to taxation in Malaysia. Income derived from trading crypto assets is taxed at the regular income tax rates.

‍

Capital Gains Tax Rate

‍

Since there is no capital gains tax in Malaysia, income derived from trading cryptocurrencies regularly is taxed under the existing income tax rates. We have discussed income taxes in detail later in the guide.

‍

How to Calculate Crypto Gains and Losses

‍

Calculating your capital gains is pretty straightforward. You can use the following formula to calculate your capital gains or losses:

‍

‍

For those of you who aren’t familiar with the term “Cost Basis”, it is simply the amount you pay to acquire an asset inclusive of any additional costs like transaction fees or gas fees.

Here’s an example:

Consider the following transactions:

18/01/24 - Zikri Purchased 1 BTC for 1,00,000 MYR
27/08/24 - Zikri sold 1 BTC for 1,20,000 MYR

Let’s say Zikri paid 1,500 MYR in gas fees for each transaction.

Therefore,

Cost Basis = 1,00,000 MYR + 3,000 MYR = 1,03,000 MYR

Disposal Amount = 1,20,000 MYR

Capital Gain = Disposal Amount - Cost Basis = (1,20,000 - 1,03,000) MYR = 17,000 MYR

‍

Crypto Losses

‍

In Malaysia, losses incurred from crypto transactions may be eligible for tax deductions, given that certain criteria are met. These losses must be associated with trading activities, such as actively buying and selling cryptocurrencies. Losses incurred from sporadic disposal of crypto assets are not eligible for tax deductions.

Moreover, losses from trading can only offset profits generated from the same source. They cannot be used to offset income derived from other sources.

‍

Lost or Stolen Crypto

‍

No current guidelines dictate how lost or stolen assets are viewed from a tax perspective. However, the LHDN will likely offer some relief after making an individual analysis of claims on a case-by-case basis, given that you have the supporting documents to prove the ownership of assets before losing them.

‍
We suggest seeking the guidance of an experienced tax professional to gain more clarity on the subject.

‍

Crypto Tax Breaks Malaysia

‍

There is no legal way to avoid paying crypto taxes entirely unless you’re an occasional investor with a long-term perspective. However, there are strategies you can use to lower your tax bill:

‍

1. Tax Loss Harvesting

‍

Professional traders can offset their trading losses against their gains to lower their tax bill in Malaysia. Note that these losses can only be used to write off gains incurred from trading cryptocurrencies frequently.

‍

2. Convert Crypto Assets Into Stablecoins

‍

Since crypto-to-crypto trades aren’t taxable in Malaysia, you can convert your crypto assets into stablecoins when disposing of them to avoid tax implications.

‍

Crypto Cost Basis Method

‍

The examples we have used so far are simplistic and do not reflect the complexity of real-world transactions. Traders/Investors usually buy multiple assets of the same kind at different prices throughout the tax year. This makes cost-basis calculations very complicated because identifying the cost basis is tricky when you have multiple acquisition prices for the same asset.

That’s why tax authorities across the globe recommend using specialized accounting methods for accurate cost-basis calculations. The LHDN recommends using the FIFO (First-In-First-Out) accounting method.

‍

FIFO Accounting Method

‍

The FIFO accounting method states that the earliest asset acquired is the first one sold.

Let’s look at an example to understand how it works:

Consider the following transactions:

21/02/24 - Rayyan bought 1 ETH for 10,000 MYR
28/03/24 - Rayyan bought 1 ETH for 8,000 MYR
18/05/24 - Rayyan bought 1 ETH for 11,000 MYR
04/06/24 - Rayyan sold 1 ETH for 15,000 MYR

Now, since the FIFO accounting method states that the first asset bought is the first one sold. The cost basis for this disposal would be equal to the acquisition price of the ETH token acquired on 21/02/24.

Cost Basis = 10,000 MYR
Disposal Amount = 15,00 MYR

Capital Gains = Disposal Amount - Cost Basis = 15,000 MYR - 10,000 MYR = 5,000 MYR

‍

Crypto Income Tax

‍

Income derived from crypto assets as a trader, miner, or as a business is taxable as income under the regular income tax rates. However, one must satisfy at least one of the following criteria to be categorized as a trader in Malaysia:

1. High Volume Trades

2. High-Frequency Trades
3. Short Ownership Duration
4. Promoting crypto projects

5. Selling without actual need for capital

6. Business Mindset

7. Selling assets to finance crypto trades

Moreover, mining is also a taxable event in Malaysia. Tokens received as compensation for mining are treated as income and are taxed under the regular income tax laws. Any expenses or losses incurred while mining or trading are considered tax deductible.

‍

Income Tax Rates

‍

The following income tax rates apply to Individual tax-payers in Malaysia:

‍

‍

Tax-Free Crypto Transactions

‍

Listed below are some tax-free crypto Transactions:

• Buying Crypto
• Selling Crypto as an occasional investor/trader
• Swapping Crypto
• Sending crypto between personal wallets
• Gifting Crypto
• Donating Crypto
• Receiving crypto through Airdrops and Hard Forks
• Buying a product or a service with Crypto

‍

Taxed Crypto Transactions

‍

Listed below are some taxed crypto transactions:

• Trading crypto assets as a professional
• Mining Crypto
• Receiving crypto as compensation

‍

Tax on Mining Crypto

‍

Crypto mining is subject to taxation based on the profit-seeking motive behind the mining activities in Malaysia. If an individual or entity is involved in crypto mining as a business for making a profit, they are liable for income tax. This means that any gains derived from cryptocurrency mining activities are considered taxable income.

However, the taxation of cryptocurrency mining also allows for the deduction of related expenses incurred in the mining process. These deductible expenses can include costs associated with mining equipment, electricity consumption, maintenance, and other related expenses. These deductions serve to reduce the taxable income incurred from mining.

It's important to note that the tax treatment of profits generated from cryptocurrency mining depends on whether these gains are categorized as capital or revenue in nature.

‍

Tax on Staking Crypto

The tax treatment of crypto staking remains somewhat unregulated and falls within the framework of the country's existing tax laws. As of now, there are no specific provisions or rules within the Malaysian Income Tax Act (ITA) that explicitly address the taxation of returns obtained through cryptocurrency staking.

Cryptocurrency staking rewards are akin to income, and taxpayers may be required to report and potentially pay taxes on these earnings, following the principles of the ITA. However, due to the lack of specific guidance, the precise tax treatment of staking rewards may vary among individuals and corporate taxpayers.

We suggest seeking guidance from an experienced tax consultant to gain more clarity on the subject.

How are Airdrops and Forks taxed in Malaysia?

In Malaysia, the taxation of digital currency acquired through airdrops and forks hinges on its specific usage and the nature of the gains derived from it. When individuals receive digital currency through airdrops or as a result of a hard fork, it is generally not considered taxable income at the time of receipt. This means that there is no immediate tax liability associated with acquiring these tokens through such events.

If an individual receives tokens through airdrops or forks and subsequently uses them in transactions where they are exchanged for goods or services, the value of the tokens involved in these exchanges may become subject to income tax.

Moreover, the gains realized from the future sale or disposal of tokens acquired through airdrops or forks could be subject to taxation if they are characterized as revenue gains. This means that if an individual or entity generates profit from selling these tokens, and this profit is seen as part of their income, it may be taxable.

‍

Crypto Gifts and Donation Taxes

‍

Crypto Gifts and Donations are tax-free in Malaysia.

‍

Crypto Margin Trades, Futures, and CFDs

‍

There is no specific guidance on the tax treatment of gains derived from crypto margin trades, futures, and CFDs. Any transactions involving such trades will likely be treated the same way as regular trades and attract similar tax implications.

The tax implications of these gains would depend on whether it is capital or revenue in nature. Gains from frequent trades would be categorized as revenue and taxed under the existing income tax laws.

‍

Crypto ICO Taxes

‍

ICOs are special events that allow investors to own native tokens from unreleased projects in exchange for mainstream tokens like Bitcoin and Ethereum. They are similar to IPOs in the regular securities market.

The LHDN has yet to release specific guidelines on the taxation of ICOs. However, since these tokens cannot be viewed as revenue due to their non-recurring nature, ICOs would likely attract no tax implications in Malaysia.

‍

NFT Taxes

‍

While there are no specific guidelines addressing the taxation of NFT transactions, purchasing, selling, and exchanging NFTs will probably result in similar tax obligations as conventional digital asset transactions.

If the NFT trades occur regularly, then they would likely attract income tax. However, if they are infrequent, the gains might be exempt from taxation due to the absence of capital gains tax in Malaysia. To gain a deeper understanding of NFT taxation, it's advisable to consult with an experienced tax professional.

‍

DAO Taxes

‍

DAOs are member-owned communities with a shared vision. All the decisions in a DAO are made by the members in the absence of central leadership. They are new-age institutions that aim to democratize decision-making and allow people to have a say in decisions that directly affect them. DAOs are often called the soul of Web3 and allow members to earn rewards in multiple ways. DAO contributors are rewarded for their contributions to the organization, similar to how centralized organizations pay salaries to their employees. They also pay out bounties for one-time projects and redistribute any profits generated through operations.

There are no guidelines around the taxation of tokens received from DAOs, although these tokens would only be taxable if they are recurring and have enough volume to be categorized as revenue.

We suggest seeking guidance from an experienced tax consultant to better understand how such transactions are taxed.

‍

DeFi Taxes

‍

There are no guidelines regarding DeFi taxation in Malaysia. DeFi encompasses a suite of fairly complex transactions, and interpreting the current guidelines in the context of these transactions lends credence to the notion that any income derived from such transactions would only be taxable if it is recurring and can be viewed as revenue.

We suggest seeking guidance from an experienced tax professional to gain more clarity on DeFi taxation.

‍

When to Report Crypto Taxes in Malaysia

‍

The deadline for submitting individual tax returns for residents and non-residents with regular income is April 30th of the following year. Whereas, the tax deadline for individual tax returns for residents and non-residents with business income is June 30th of the following year.

‍

How to File Crypto Taxes in Malaysia?

‍

You can file your tax return online using the e-Daftar portal. Note that one must always complete his/her tax calculations and keep relevant documents handy to avoid complications while filing the tax return.

‍

What Records will the LHDN want?

‍

Tax-payers are expected to maintain the following documents for a smooth tax filing experience in Malaysia:

• records to determine the nature of the transaction – including the whitepaper  
• records to determine the value of a digital currency based on an online exchange  
• date of transaction  
• name of the other party, i.e. digital currency address
• receipts of purchase/ transfer of digital currency
• other records such as records of agents, wallet keys, software, bank statements, receipts/invoices of business expenses

How to File Crypto Taxes Using Kryptos?

‍

‍Now that you’re aware of how your crypto transactions are taxed and what forms you need to fill out to complete your tax report, here’s a step-wise breakdown of how Kryptos can make this task easier for you:

‍1. Visit Kryptos.io and sign up using your email or Google/Apple Account

2. Choose your country, currency, time zone, and accounting method

3. Import all your transactions from wallets and crypto exchanges

4. Choose your preferred report, click on the generate report option on the left side of your screen and let Kryptos do all the accounting.

Once your Tax report is ready, you can download it in PDF format.

‍

How to Avoid Crypto Taxes in Malaysia?

‍

There’s not much to avoid when it comes to crypto taxes since most crypto transactions are tax-free in Malaysia. However, if you do want to lower your tax bill, you can refer to the above section titled “Crypto Tax Breaks Malaysia” where we have discussed tax-saving strategies in detail.

‍

Frequently Asked Questions (FAQs)

‍

1. Is Crypto Legal in Malaysia?

‍

The question can be better phrased as “Is investing in crypto legal in Malaysia?” and the answer is yes. Malaysia stands out as a cryptocurrency-friendly nation, offering a welcoming environment for crypto enthusiasts with its favorable ecosystem and accommodating tax regulations. Investing in cryptocurrency assets is straightforward, particularly for casual investors who typically incur no tax obligations.

‍

2. How is Crypto Taxed in Malaysia?

‍

In Malaysia, the taxation of cryptocurrency transactions involves distinguishing between capital gains and revenue gains. Capital gains, which stem from cryptocurrency investments held as long-term assets, are generally not subjected to taxation. This means that individuals or businesses acquiring cryptocurrencies for investment purposes and holding them over an extended period are typically exempt from taxes when they eventually sell or dispose of digital assets.

On the other hand, revenue gains arising from frequent cryptocurrency transactions, where digital currencies are actively traded as a primary source of income, are subject to taxation. If cryptocurrency is used as part of business activities performed within Malaysia or if a business has a physical presence in the country, the revenue gains from cryptocurrency transactions may be subject to Malaysian taxation.

The nature of gains or losses resulting from the disposal of digital currencies or tokens plays a critical role in determining tax liability. Transactions considered trading in nature are taxable, with corresponding losses being deductible. In contrast, transactions categorized as capital in nature are typically not subject to taxation, and associated losses are not deductible.

‍

3. Is there any Capital Gains Tax in Malaysia?

‍

No, there is no dedicated capital gains tax in Malaysia, and hence most transactions resulting in a capital gain are tax-free.

‍

4. How can Kryptos simplify crypto taxes for you?

‍

We’ve already discussed how to file your crypto taxes in the above sections of the guide, offering a stepwise breakdown of the entire process. However, we agree that it is unreasonably complicated 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 Kryptos.

All you need to do is log in on the platform, add all your trading accounts, wallets, and DeFi accounts, and sip coffee while Kryptos does all the heavy lifting for you. The platform auto-fetches all your transactions from the tax year. It generates a legally compliant tax report within minutes while also suggesting ways to lower your tax bill. It works like magic, all you need to do is try it once.

‍

All content on Kryptos serves general informational purposes only. It's not intended to replace any professional advice from licensed accountants, attorneys, or certified financial and tax professionals. The information is completed to the best of our knowledge and we at Kryptos do not claim either correctness or accuracy of the same. Before taking any tax position/stance, you should always consider seeking independent legal, financial, taxation or other advice from the professionals. Kryptos is not liable for any loss caused from the use of, or by placing reliance on, the information on this website. Kryptos disclaims any responsibility for the accuracy or adequacy of any positions taken by you in your tax returns. Thank you for being part of our community, and we're excited to continue guiding you on your crypto journey!

Greece, with its long history of financial turmoil and regulatory instability is one of the few European countries that relies on fiat currency for most transactions. Since the government underreported its debt obligations and defaulted on bond yield payments, the populace never regained their trust in the authorities and financial institutions. So when Bitcoin and other cryptocurrencies arrived offering an alternative financial framework, Greek residents were quick to adapt.

Although the average Greek resident doesn’t know much about how blockchain works or what are the actual use cases of cryptocurrencies, it is likely that they’ve used crypto for transactions before. However, despite the mass adoption and the huge number of Bitcoin ATMs in the country, the authorities have yet to decide on the regulatory aspects of the crypto economy.

The lack of a concrete regulatory framework and clear guidelines on crypto taxation is a major roadblock to the growth of the crypto economy in Greece. It is even considered a dream destination for crypto enthusiasts due to the absence of tax regulations and marginal tax rates. However, not all crypto transactions are tax-free in Greece and certain regulations exist that oversee the taxation of transactions like Mining. This article is a primer of all the existing crypto regulations in Greece.

‍

Is Crypto Legal in Greece?‍

‍

There is no clarity on the legal status of cryptocurrencies as of now. However, bearing in mind the mass adoption and growing popularity of crypto assets among residents, any regulations barring residents from using cryptocurrencies may prove to be devastating to the economy and hence it is safe to assume that investing in cryptocurrencies will not be classified as illegal by the authorities.

Within the context of Law 4514/2018 MiFID II, Law 4021/2011 EMD II, and Law 4537, PSD II, Cryptocurrencies may be classified as financial instruments, electronic money, or funds if the relevant definitions conform with the transactions. However, there is no official guidance from the HCMC or the BoG discerning the official classification of crypto assets.

This is one of the biggest reasons why crypto taxes are so complicated in Greece. Decoding the existing guidelines in the context of every transaction to identify which category the assets fall into is tedious and beyond the expertise of a regular Greek resident.

‍

Can the HCMC Track Crypto?

‍

‍There are regulations in Greece, which require digital wallet providers and cryptocurrency exchanges to register with the Hellenic Capital Markets Commission (HCMC) and mandate digital tax records, aimed at preventing tax evasion by increasing transparency in the crypto economy. These regulations represent a significant step toward addressing tax evasion and financial opacity in Greece.

By necessitating registration with the HCMC, the Greek government gains critical visibility into the operations of digital wallet providers and cryptocurrency exchanges. This gives authorities access to investor activity, thereby making it more challenging for individuals and businesses to engage in unreported or underreported cryptocurrency transactions.

The requirement for maintaining digital tax records ensures that individuals involved in cryptocurrency activities must provide a clear and verifiable record of their transactions. This represents a significant shift in how cryptocurrency income is documented and reported. It eliminates the grey areas and ambiguities that may have existed before, making it easier for tax authorities to assess and tax cryptocurrency-related income accurately.

The Bank of Greece ensures compliance with anti-money laundering (AML) and countering terrorist financing (CFT) regulations primarily through supervision and assessment of supervised institutions. It checks these institutions' compliance with their AML/CFT obligations, evaluates the adequacy and effectiveness of their AML/CFT procedures, and issues typologies of suspicious transactions.

These regulations provide a robust legal framework for cryptocurrency activities in Greece. When crypto service providers are required to operate within established legal boundaries, it becomes more challenging for tax evaders to hide their income or engage in illegal financial activities.

‍

How Are Crypto Transactions Taxed in Greece?

‍

‍Cryptocurrency taxation in Greece operates within a somewhat uncertain regulatory framework. While the European Court of Justice has ruled that Bitcoin and other cryptocurrencies are a means of payment, exempting them from value-added tax (VAT) at the supply level, Greece does not have clear guidelines on the taxation of crypto assets and related transactions.

For individual investors, there's a general interpretation that profits or capital gains from cryptocurrency sales could be subject to a 15% capital gains tax (CGT). However, this is merely based on the interpretations of tax lawyers and consultants. To calculate capital gains, you can subtract the acquisition price and associated costs from the sale price.

On the corporate side, businesses involved in cryptocurrency transactions may face a 22% Corporate Income Tax rate on capital gains, considering them as business income.

This ambiguity in the Greek tax system concerning cryptocurrencies necessitates careful record-keeping and a proactive approach to taxation.

‍

Capital Gains Tax rate Greece

‍

From 2025 onwards, the capital gains will be taxed at flat rate of 15%.

‍

Income Tax Rates

‍

Greece applies a progressive taxation system, meaning that your tax liability increases as your income grows.

‍

‍

Tax on Mining Crypto

‍

Cryptocurrency mining in Greece is hampered by the country's high electricity costs, making it less economically viable for miners. Consequently, there are relatively few domestic mining operations, with professional miners often seeking more affordable energy sources abroad. While there is a growing interest in cryptocurrency mining, particularly among women, Greece has yet to fully embrace the crypto economy.

Cryptocurrency mining in Greece is taxed when the mined cryptocurrencies are converted into traditional fiat currency and deposited into a bank account. The taxation rate for cryptocurrency gains, including those from mining, is the standard rate of 22%.

In essence, miners in Greece are required to report their mining earnings as part of their income once they exchange the mined cryptocurrencies for fiat currency and place them in a bank account. These earnings are then subject to the standard income tax rate of 22%.

‍

Tax on Staking Crypto

‍

Although mining and staking are fundamentally different in the way they add new blocks of transactions on a distributed ledger and validate them, most tax jurisdictions across Europe consider them to be the same from a tax perspective. The Greek tax authorities are yet to release clear guidelines on the tax treatment of staking rewards.

However, it is likely that staking rewards would attract the same tax liabilities as mining. Staking rewards would not be taxed on receipt. But as soon as you decide to convert them to fiat currency, they would be taxed at a 22% tax rate based on their market value at the time.

Note that this is speculation based on the existing guidelines and tax laws from neighbouring nations and we recommend seeking help from an experienced tax professional to gain more clarity on the subject.

‍

Future of Crypto Taxation in Greece

‍

The future of cryptocurrencies in Greece appears promising yet complex. Several factors contribute to this outlook. First, Greece's economic challenges have driven individuals to seek alternative investment options like Bitcoin, indicating continued interest in digital assets. Second, the Greek government's support for digital currencies suggests a favourable regulatory environment. Third, the growing number of businesses accepting Bitcoin for payments reflects a gradual acceptance of cryptocurrencies in everyday transactions.

However, Greece's history of financial instability and debt issues necessitates careful regulation and monitoring to ensure financial stability. The expected growth of blockchain-based businesses in Greece, as projected by Statista, indicates an increasing role for cryptocurrencies in the country's financial infrastructure.