Tax Guides

Dive into our guides and discover how crypto taxes work in your country!

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.

Tax Rate Taxable Income
10% Basic Rate Income Band (up to £50,270)
20% Higher Rate Income Band (up to £150,000)
20% Additional Rate Income Band (more than £150,000)

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

Tax Rate Taxable Income
18% Basic Rate Income Band (up to £50,270)
24% Higher Rate Income Band (up to £150,000)
24% Additional Rate Income Band (more than £150,000)

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 & 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!

UK
UK Crypto Tax Guide 2025
Navigate crypto taxes in the UK with ease! Explore our 2025 UK Crypto Tax Guide for detailed insights on capital gains, income tax, NFT taxes, HMRC compliance, cost basis calculations, and more. Simplify your tax reporting with Kryptos.

Puerto Rico has emerged as a premier destination for cryptocurrency investors and businesses, offering a unique combination of tax advantages and regulatory incentives. With a 0% capital gains tax for bona fide residents and a 4% corporate tax rate, it is a particularly attractive choice for American citizens seeking to reduce their tax burden without renouncing their citizenship. This guide explores the essentials of crypto taxation in Puerto Rico for 2025, helping investors navigate the regulatory landscape and maximize their tax benefits.

How is Crypto Taxed in Puerto Rico?

Puerto Rico’s tax system offers significant advantages to bona fide residents. Under Act 60 (previously known as Act 22), individuals can enjoy a 0% tax rate on capital gains derived from cryptocurrency, as well as interest and dividends. Corporations operating in Puerto Rico are subject to a highly competitive 4% federal income tax rate. However, these benefits come with strict eligibility criteria.

To qualify as a bona fide resident and benefit from Puerto Rico’s crypto tax advantages, you must meet the following tests:

1. Presence Test:
  • Spend at least 183 days annually in Puerto Rico.
  • Spend fewer than 90 days in the U.S. annually.
  • Earn less than $3,000 taxable income in the U.S. annually.

2. Tax Home Test:
  • Your primary workplace or residence must be in Puerto Rico.

3. Closer Connection Test:
  • Demonstrate long-term intent to reside in Puerto Rico by purchasing property within two years of receiving your Act 60 decree, maintaining it as your primary residence, and making two $5,000 donations annually to approved Puerto Rican nonprofits.

While the tax advantages are compelling, any gains from cryptocurrency acquired before relocating to Puerto Rico remain subject to U.S. taxes. It is critical to carefully plan your move and consult a tax professional to ensure compliance.

Can the Tax Authorities Track Crypto?

Tax authorities in Puerto Rico, similar to other jurisdictions, can track cryptocurrency transactions under certain circumstances. Here’s how this works:

1. Compliance with U.S. Regulations:
  • Since Puerto Rico is a U.S. territory, financial institutions and cryptocurrency exchanges operating in Puerto Rico are required to comply with U.S. regulations, including Anti-Money Laundering (AML) and Know Your Customer (KYC) policies.
  • Exchanges report suspicious transactions to authorities, which could include cryptocurrency activities.

2. Blockchain Transparency:
  • The public ledger nature of most blockchains allows for transaction tracking. While users might think cryptocurrencies are anonymous, they are pseudonymous, meaning transactions can be linked to wallet addresses. With sufficient information, authorities can trace these addresses to individuals.

3. Foreign Account Tax Compliance Act (FATCA):
  • U.S. citizens, including Puerto Rican residents, are subject to FATCA, requiring financial institutions to report foreign accounts and holdings to the Internal Revenue Service (IRS). This includes cryptocurrencies held in offshore accounts or exchanges.

4. Information Sharing:
  • International cooperation between countries, tax agencies, and organizations like the OECD under the Common Reporting Standard (CRS) can help track global crypto holdings. While Puerto Rico isn’t directly part of CRS, its status as a U.S. territory and the interplay with IRS rules ensure significant oversight.

How is crypto taxed in Puerto Rico?

For bona fide residents, cryptocurrency gains in Puerto Rico are exempt from local taxes, and Puerto Rican corporations benefit from a low 4% federal income tax rate. This favourable tax structure makes Puerto Rico an attractive destination for reducing tax obligations.

However, to qualify for the tax exemption, crypto assets must be both earned and sold while residing in Puerto Rico. If the cryptocurrency was acquired while living in the mainland United States and sold after moving to Puerto Rico, U.S. capital gains taxes would still apply.

How to Calculate Crypto Taxes in Puerto Rico

To determine the taxable portion of your crypto transactions, it is essential to:

  1. Establish the cost basis (original purchase price plus any fees).
  2. Record the fair market value at the time of disposal.
  3. Separate pre- and post-relocation gains.

Example Calculation:
  • Purchased 1 BTC for $10,000 in the U.S. on January 1, 2023.
  • Moved to Puerto Rico on January 1, 2024, with BTC valued at $20,000.
  • Sold BTC for $40,000 on December 1, 2024.
  • $10,000 gain before relocation is taxable in the U.S.
  • $20,000 gain after relocation is tax-exempt in Puerto Rico.

Accounting Methods for Crypto in Puerto Rico

Accounting records in Puerto Rico must adhere to Generally Accepted Accounting Principles (GAAP). Common methods include:

  • FIFO (First In, First Out): Oldest assets are sold first.
  • LIFO (Last In, First Out): Most recent assets are sold first.
  • HIFO (Highest In, First Out): Highest-cost assets are sold first.

Choose the method that best aligns with your tax planning strategy, and maintain thorough documentation of all transactions.

What Are the Crypto Tax Rates in Puerto Rico?

Bona fide residents enjoy a 0% capital gains tax rate on cryptocurrencies earned and disposed of in Puerto Rico. Meanwhile, corporations operating under Puerto Rico’s Act 60 pay a 4% corporate tax rate—a significant reduction from the 21% federal corporate tax in the U.S.

It is essential to note:

  • Crypto gains from assets acquired before moving to Puerto Rico are subject to U.S. taxes.
  • Only gains earned and realized after achieving bona fide residency in Puerto Rico are eligible for the 0% tax rate.

Capital Gains Tax

Puerto Rico does not impose a dedicated capital gains tax on cryptocurrency. For bona fide residents, capital gains from the disposal of crypto assets are entirely tax-exempt if the assets are earned and sold while residing in Puerto Rico. However, gains from assets acquired before relocating to Puerto Rico remain subject to U.S. taxes.

Income Tax

In Puerto Rico, the income tax rate is progressive, ranging from 0% to 33% for individual residents. For businesses, the corporate tax rate is generally 4% for export services under Act 60 (formerly Act 20/22).

Taxable Income (USD) Tax Rate
Up to $9,000 0%
$9,001 to $25,000B 7% of the excess over $9,000
$25,001 to $41,500 $1,120 plus 14% of the excess over $25,000
$41,501 to $61,500 $3,430 plus 25% of the excess over $41,500
Over $61,500 $8,430 plus 33% of the excess over $61,500

Crypto Activities and Their Tax Treatments

Short- and Long-Term Crypto Trades:

Bona fide residents benefit from a 0% capital gains tax, making Puerto Rico ideal for traders looking to minimize taxes on frequent trades or long-term holdings.

Crypto Mining and Staking:
  • Mining and staking activities in Puerto Rico qualify for the 4% corporate tax rate under the “export services incentive.”
  • Individuals involved in these activities may enjoy a 0% tax rate, provided they are bona fide residents and their activity does not qualify as “business activity.” When in doubt, consult a tax professional.

Crypto as Payment for Goods and Services:
  • Payments made with crypto in Puerto Rico are not subject to capital gains tax, unlike in most other jurisdictions. This allows for more seamless crypto transactions without the tax implications of converting to fiat first.

Utility Tokens and Blockchain Businesses:
  • Businesses issuing utility tokens or engaging in blockchain technology can benefit from Puerto Rico’s 4% tax incentive. These businesses can avoid meeting stringent U.S. securities regulations while enjoying significant tax savings.

Crypto Losses:
  • While gains are tax-exempt for bona fide residents, losses cannot be used to offset gains since they carry no tax benefit.

Airdrops & Forks
  • In Puerto Rico, the tax treatment of cryptocurrency received from airdrops and hard forks aligns with U.S. federal guidelines. According to the IRS, if a hard fork occurs without an accompanying airdrop, and you do not receive new cryptocurrency units, there is no taxable event. However, if an airdrop follows a hard fork, resulting in the receipt of a new cryptocurrency, the fair market value of the received tokens at the time they become accessible is considered taxable income.

Crypto Gift & Donation

In Puerto Rico, cryptocurrency gifts and donations are subject to unique tax treatments. Here's a breakdown:

1. Crypto Gifts:
  • Gifts of cryptocurrency are not subject to capital gains tax for the giver, as no sale occurs.
  • If the recipient is a bona fide Puerto Rican resident, they may inherit the donor's cost basis and holding period for tax purposes.
  • Gift tax exclusions or thresholds may apply under Puerto Rican law, similar to U.S. federal gift tax rules.

2. Crypto Donations:
  • Donations of cryptocurrency to qualified charities are generally tax-deductible at the fair market value of the crypto at the time of donation.
  • Bona fide residents may benefit from Puerto Rico's local tax incentives when donating to Puerto Rican-based nonprofits.

Puerto Rico generally follows U.S. federal tax principles, so these guidelines likely apply. However, Puerto Rico has its tax code, and there may be differences in interpretation or application. Given the complexities and potential for unique local regulations, it's advisable to consult with a tax professional familiar with Puerto Rican tax laws to ensure accurate reporting and compliance.

Reporting Crypto Taxes in Puerto Rico

Residents must file:

  • Puerto Rico Tax Return (Form 482): To report worldwide income earned in Puerto Rico.
  • U.S. Tax Return (Form 1040): To report worldwide income excluding Puerto Rico-sourced income, provided the bona fide residency criteria are met.

Non-residents of Puerto Rico must:

  • File a Puerto Rico tax return reporting only income sourced from Puerto Rico.
  • File a U.S. tax return reporting worldwide income. Double taxation is avoided through foreign tax credits on Form 1116.

Crypto Tax Filing Forms in Puerto Rico

  • Form 482 (Puerto Rico Tax Return): For residents to report global income earned in Puerto Rico.
  • Form 1040 (U.S. Tax Return): To report global income, excluding Puerto Rico income.
  • Form 1116: To claim foreign tax credits for taxes paid to Puerto Rico when applicable.
Puerto Rico Crypto Tax Guide 2025
Learn everything about crypto taxes in Norway with this comprehensive guide. Understand how Skatteetaten taxes crypto, calculate capital gains, and file your crypto taxes correctly.

Tax authorities in the USA consider crypto a form of property, not a currency according to Notice 2014-21, and any transactions made using crypto assets entail tax liabilities. Depending on the nature of your transactions, you’ll either pay income tax or capital gains tax in the USA. Crypto assets held for less than a year attract short-term capital gains tax with tax rates ranging between 10-37%, while those held for over a year attract long-term capital gains tax which is either 15% or 20% depending on the value of your gains.

The following transactions are considered taxable by the tax authorities:

  • Selling cryptocurrency for fiat currency
  • Trading one cryptocurrency for another
  • Using cryptocurrency to purchase goods or services
  • Earning cryptocurrency as income
  • Receiving cryptocurrency through mining or staking activities
  • Giving cryptocurrency as a gift or donation (subject to gift tax rules)
  • Inheriting cryptocurrency (subject to state tax rules)

If you’re involved in any of these transactions, you must report them to the IRS and file your taxes by April 15, 2025. This guide covers all types of crypto transactions that entail tax liabilities such as mining, staking, or trading crypto assets. It also answers some crucial questions like “How do I 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 the USA?

Crypto transactions broadly fall into two categories in the USA, the first one attracts income tax while the other attracts capital gains tax. Transactions where crypto assets are received as a result of provisioning service or as interest usually attract income tax, while those where crypto assets are acquired and then sold on a later date for a profit attract capital gains tax.

Capital Gains Tax

There’s both short-term and long-term capital gains tax in the US, so if you’re selling your assets within less than a year of acquisition then the transaction would attract short-term capital gains tax, and if you’ve held it for over a year then it would attract long-term capital gains tax.

Note that if your gains are less than $47,025 (for the 2024 tax year), you don’t have to pay any long-term capital gains tax.

Example:

Consider the following transactions:

01/13/2024 - Jack bought 2 BTC in the Binance Wallet

02/15/2024 - Jack bought 2 ETH tokens in the Binance Wallet

04/16/2024 - Jack sold 1 BTC from the Binance Wallet

06/04/2024 - Jack sold 2 ETH from Binance Wallet

01/16/2024 - Jack sold 1 BTC from the Binance Wallet

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

Out of the three disposals, two were short-term disposals made within a year, and one was a long-term disposal.

1st Disposal

1 BTC sold on 04/16/2024

Let’s assume Jack incurred a capital gain of $8,000 on this transaction, for the sake of simplicity

2nd Disposal

2 ETH sold on 06/04/2024

Let’s assume Jack incurred a capital gain of $2,000.

Collective Gain from both disposals =  $8,000 + $2,000 = $10,000

So the above amount will be subjected to short-term capital gains tax.

3rd Disposal

1 BTC sold on 01/16/2024

Let’s assume Jack made a capital gain of $14,000 on this transaction.

However since the disposal was made after holding the asset for over a year, it comes under long-term capital gain.

And since the gain is less than $47,025, Jack owes no long-term capital tax to the IRS.

Listed below are the tax rates applicable on both short-term and long-term capital gains transactions.

Short-Term Capital Gains Tax Rate

These tax rates are for the 2024 tax year, to be filed in 2025

Tax Rate Single Head of Household Married filing jointly Married filing separately
10% $0 to $11,600 $0 to $16,550 $0 to $23,200 $0 to $11,600
12% $11,600 to $47,150 $16,551 to $63,100 $23,201 to $94,300 $11,601 to $47,150
22% $47,150 to $100,525 $$63,101 to $100,500 $94,301 to $201,050 $47,151 to $100,525
24% $100,525 to $191,950 $100,501 to $191,950 $201,051 to $383,900 $100,526 to $191,950
32% $191,950 to $243,725 $191,951 to $243,700 $383,901 to $487,450 $191,951 to $243,725
35% $243,725 to $609,350 $243,701 to $609,350 $487,451 to $731,200 $243,726 to $365,600
37% $609,350+ $609,350+ $731,201+ $365,601+

Long-Term Capital Gains Tax Rate

You can refer to the long-term Capital Gains Tax rates for the 2024 tax year (to be filled in 2025) listed below.

Tax Rate Single Head of Household Married filing jointly Married filing separately
15% $44,626 to $492,300 $59,751 to $523,050 $89,251 to $553,850 $44,626 to $276,900
20% $492,301+ $523,051+ 553,850 $276,900+

Crypto Income Tax

There are many ways you can earn crypto income and some of the most common ones include:

  • Receiving crypto as airdrops
  • Getting paid in crypto in exchange for a product or a service
  • Mining crypto as a hobby
  • Hard forks
  • Referral programs
  • Staking rewards

Moreover, any income derived from staking, lending, or liquidity farming on Defi protocols or engaging with Play2Earn platforms is also categorised as income and hence subject to the regular income tax rules. 

Income Tax Rates

Following are the income tax rates in the USA for the 2024 tax year.

Tax Rate Single Head of Household Married filing jointly Married filing separately
10% $0 to $11,600 $0 to $16,550 $0 to $23,200 $0 to $11,600
12% $11,600 to $47,150 $16,551 to $63,100 $23,201 to $94,300 $11,601 to $47,150
22% $47,150 to $100,525 $$63,101 to $100,500 $94,301 to $201,050 $47,151 to $100,525
24% $100,525 to $191,950 $100,501 to $191,950 $201,051 to $383,900 $100,526 to $191,950
32% $191,950 to $243,725 $191,951 to $243,700 $383,901 to $487,450 $191,951 to $243,725
35% $243,725 to $609,350 $243,701 to $609,350 $487,451 to $731,200 $243,726 to $365,600
37% $609,350+ $609,350+ $731,201+ $365,601+

Note that any attempts you make to underreport your assets and evade some taxes may end up with severe penalties as the IRS can track crypto transactions through the following avenues:

  • KYC requirements in the US mandate crypto exchanges to share customer data with authorities
  • Exchanges track user wallets, and bank transactions and report them to the IRS.
  • All major exchanges send Form 1099 to the IRS

Classification of Crypto for Tax Purposes

Back in 2014, the IRS issued Notice 2014-21 which states that crypto assets are to be treated as ‘property’ from a tax perspective. The IRS defines cryptocurrency as:

“...a digital representation of value that functions as a medium of exchange, a unit of account, and a store of value other than a representation of the United States dollar or a foreign currency.”

Therefore, any transactions involving the purchase and sale of such assets would be capital in nature and hence attract capital gains tax. Moreover, these assets are taxable as income when received as compensation for a product or service, or as interest.

How to Calculate Crypto Income in the USA?

Calculating income from crypto transactions is fairly straightforward, the taxable value of crypto assets received as income is simply their fair market value on receipt. The real problem lies in calculating capital gains. Since most investors buy multiple assets of the same kind, they usually end up in a stir when it’s time to calculate the capital gains upon disposal. That’s exactly why one must rely on dedicated accounting methods as specified by the tax authorities for capital gains calculations.

The IRS permits the use of three accounting methods namely FIFO, HIFO, and LIFO. Let’s discuss them in a bit more detail.

FIFO

FIFO or First-In-First-Out is one of the most commonly used accounting methods. It states that the first asset you buy is the first one you sell.

LIFO

LIFO or Last-In-First-Out states that the last asset you buy is the first one you sell.

HIFO

HIFO or Highest-In-First-Out simply considers the highest acquisition price of an asset to be the cost basis.

Here’s an example to better understand capital gains calculations.

Consider the following transactions:

01/14/2024 - Mark buys 2 BTC for $20,000 each in Binance Wallet

03/16/2024 - Mark buys 1 BTC for $21,000 in Binance Wallet

04/05/2024 - Mark buys 10 ETH for $2,200 each in Binance Wallet

04/28/2024 - Mark buys 2 ETH for $3,000 each in Binance Wallet

05/06/2024 - Mark sells 2 BTC for $34,000 each from Binance Wallet

07/16/2024 - Mark sells 1 BTC for $35,000 from Binance Wallet

08/18/2024 - Mark sells 8 ETH for $3,400 each from Binance Wallet

As evident from the above ledger of transactions, Mark made 3 disposals.

Let’s look at each transaction separately and calculate the gains/losses associated with them.

1st Disposal

2 BTC sold for $34,000 each

Now since BTC tokens were acquired on two different dates for different prices, we need to figure out which one was sold by Jack, and we need to use a specialised accounting method as suggested by the IRS.

We will be using FIFO for these calculations.

The FIFO accounting method assumes that the first asset you buy is the first one you sell.

So the BTC tokens sold were the ones acquired on 01/14/2024 for $20,000 each.

Cost Basis = $20,000

Disposal Amount = $34,000

Capital Gain/Loss = Disposal Amount - Cost Basis = $34,000 - $20,000 = $14,000(For 1 BTC)

Gain from 2 BTC = 2*14,000 = $28,000

2nd Disposal

1 BTC sold for $34,000

This token was acquired on 03/16/2024 for $21,000

Cost Basis = $21,000

Disposal Amount = $34,000

Capital Gain/Loss = $34,000 - $21,000 = $13,000

3rd Disposal

8 ETH sold for $3,400 each

Now using the FIFO accounting method, these tokens belong to the same group of tokens acquired on 04/05/2024 for $2,200 each.

Cost Basis = $2,200

Disposal Amount = $3,400

Capital Gain/Loss = $3,400 - $2,200 = $1,200(from 1 ETH)

Gain from 8 ETH tokens = 8* 1,200 = $9,600

Collective Gain from all 3 disposals = $28,000 + $13,000 + $9,600 = $50,600

This is your taxable base and capital gains tax will be levied on it.

Wallet-by-Wallet Reporting

The IRS’s wallet-by-wallet reporting requirement, effective January 1, 2025, mandates that taxpayers must track and report cryptocurrency assets based on each wallet or account rather than aggregating all holdings. This means each digital wallet (whether hosted by a broker or an unhosted wallet like a private crypto wallet) must be treated as a separate “account” for tracking the cost basis, acquisition details, and disposition of assets. 

Key Aspects of IRS Wallet-by-Wallet Reporting:

1. Separate Cost Basis Tracking for Each Wallet:

  • Each wallet’s digital assets need individual cost-basis records. Taxpayers must document acquisition dates, purchase prices, and any adjustments for each asset in each wallet separately.
  • This approach eliminates multi-wallet or universal tracking, where all assets across multiple wallets were previously aggregated for tax purposes.

2. Specific or Global Basis Allocation:

The IRS allows a safe harbor for basis allocation:

  • Specific Unit Allocation: This option lets taxpayers allocate basis to specific assets by identifying each unit within a wallet, making the basis tracking detailed at an individual asset level.
  • Global Allocation: Alternatively, a taxpayer may apply a set rule (e.g., highest-cost basis first) to allocate the basis within each wallet without individually identifying each asset.

3. Required for Both Brokered and Unhosted Wallets:

  • For broker-hosted wallets (like those held on exchanges), specific identification can occur through broker records.
  • For unhosted wallets, taxpayers must maintain their detailed records to meet IRS requirements.

4. Compliance on Transactions and Sales:

  • When a taxpayer disposes of assets (sells, transfers, or exchanges), they must specify the units and associated basis per wallet.
  • Each wallet’s transactions are reported individually, which aligns with IRS requirements to track and report gains and losses on a wallet-specific basis.

Transitioning of existing digital assets on 1st January 2025

The document issued by the IRS provides a framework for transitioning from a universal or multi-wallet tracking approach to wallet-by-wallet tracking in line with the new IRS regulations effective January 1, 2025 (essentially, this will be applicable for returns filed in 2026 for tax year 2025. However, the taxpayers need to allocate the cost basis by the end of tax year 2024). As per the said documents, the transition shall be done in the following manner:

1. Identify Digital Assets and Basis:

  • Confirm which digital asset units are still held by the taxpayer as of January 1, 2025, and designate these as "remaining digital asset units."
  •  Separate units of unused basis (the original per-unit basis of assets still held) from any basis previously identified and used.

2. Maintain Comprehensive Records:

  • Records must document each wallet's digital assets, including the number of units, unused basis, original acquisition cost, and dates of acquisition.
  • This ensures the specific identification of assets within each wallet is possible, supporting compliance with wallet-by-wallet tracking requirements.

3. Allocation of Basis (Safe Harbor Option):

  • The IRS allows taxpayers to make a "reasonable allocation" of unused basis to each wallet. There are two option:
    • Specific Unit Allocation: Allocate specific units of unused basis to individual remaining assets based on characteristics like acquisition date or cost.
    • Global Allocation: Use an ordering rule (e.g., prioritizing highest or earliest basis) to allocate basis to each wallet or account pool.

4. Complete Allocations by Relevant Deadlines:

  • Specific unit allocations must be completed by the date of the first asset sale or transfer after January 1, 2025, or by the federal income tax filing due date for 2025.
  • Global allocations must be described in records before January 1, 2025, and completed according to prescribed rules for wallet or account pools.

5. Ensure Irrevocability:

  • Any allocation made under this procedure is irrevocable, securing consistency in reporting and compliance with IRS standards going forward.

 Requirements for new assets:

In case of assets acquired after 1st January 2025 monitor new acquisitions and basis adjustments.

  • Any assets acquired or transferred into a wallet after January 1, 2025, should be tracked and reported separately within that specific wallet.
  • Reconcile new units with existing wallet records, ensuring any basis adjustments align with IRS wallet-by-wallet reporting.

https://www.irs.gov/pub/irs-drop/rp-24-28.pdf

Crypto Tax Exemptions in the USA

While the tax regime in the US is considered to be a little rough by crypto investors and traders, there are some tax-free allowances offered by the IRS that can help you reduce your tax bill significantly:

Although investors consider the IRS to be one of the thorough and austere tax authorities in terms of crypto tax regulations, it does offer some tax exemptions for investors to lower their tax bill.

  1. Capital Gains Tax-Free Allowance: US citizens are allowed a capital gains tax-free allowance. In 2024, if your taxable income is $47,025 or less for single filers or $94,050 or less for married couples filing jointly, you could potentially be eligible to benefit from a 0% long-term capital gains rate.
  2. Gifting Crypto: US citizens are also offered an annual gift tax exclusion which allows every citizen to give up to $18,000  worth of crypto assets to anyone and the transaction is considered tax-free.
  3. Long-Term Capital Gains Tax Rate: By holding onto your crypto assets for over a year, you can take advantage of a reduced long-term capital gains tax rate ranging between 0 and 20%.

Treatment of Crypto Losses

Investors were allowed to deduct losses they might’ve made due to theft or fraud before the Tax Cuts and Jobs Act was passed. This legislation states that investors can no longer use lost or stolen assets as deductible expenses. So any losses you might’ve made due to scams, chain hacks, phishing attacks, or losing the private keys to the wallet are now useless.

But here’s the caveat, any losses incurred in or before 2017 are tax deductible if you have relevant documents to prove ownership and theft of these assets.

If you own tokens that have been delisted from exchanges due to regulatory changes and guidelines, you can dispose of these assets to generate fictitious losses and deduct these losses to lower your tax bill. You can do that by selling these tokens at a centralised or decentralised exchange, swapping them for some other token, or simply burning them.

United States: Tax Treatment of Crypto Losses

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 States (US) handle these issues.

In the US, the tax implications of Celsius-related events vary based on whether the cryptocurrency was liquidated during the bankruptcy process.

  1. Taxable and Non-Taxable Eventssome text
    • Liquidation of holdings constitutes a taxable disposal, with capital gains or losses calculated based on the change in value since acquisition.
    • Receiving the same cryptocurrency in reduced quantity without liquidation is not a taxable event​.
  2. Deduction of Crypto Lossessome text
    • Losses from liquidated investments may be claimed to offset capital gains. If classified as a casualty loss, the deduction is deferred until 2026.
    • Losses exceeding $3,000 annually can be carried forward.
  3. Margin Calls and Staking Rewardssome text
    • Liquidation due to margin calls triggers a taxable event.
    • Staking rewards that cannot be withdrawn may not be immediately taxable​.

Example

  • Voyager refunded 30% of crypto holdings as USD.
  • Tax applies to liquidated funds, not to reduced same-asset distributions.

Taxation of Specific Crypto 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.

Mining Taxes

Crypto assets received as a result of mining are taxed as income based on their fair market value at the time of receipt. Furthermore, if you decide to sell these assets for a higher price at a later date, then you’ll be liable to pay capital gains tax on the gains.

Staking Taxes

The IRS has specified in the past that any assets received as a result of staking crypto assets would attract income tax. However, some investors argue against it while suggesting that staking rewards, like newly created tokens, should be taxed upon disposal and not on receipt.

To clarify this situation, the IRS issued Notice 2024-14 which clearly states that staking rewards are taxable as income, dismissing any doubts regarding the same. However, there are no clear guidelines around the taxation and deductibility of additional expenses like “gas fees” and the calculation of staking rewards for income tax purposes. Therefore, one must seek advice from experienced tax consultants to gain more clarity on the subject.

Airdrops and Forks

Soft forks do not constitute a taxable event since no new tokens are created, Soft forks, on the other hand, attract tax liabilities. Any new tokens received due to a chain split are taxed as regular income and these tokens inherit the tax base equal to the fair market value of these tokens on receipt. 

Staking rewards also attract capital gains tax on disposal.

Crypto Gifts and Donations Taxes

Gifting crypto is a taxable event in the US. However, there’s a personal gift exemption limit of $18,000 for the 2024 tax season. If the total value of the gifted assets is more than $18,000, then investors are required to pay a 40% tax.

But here’s the catch, gifts over $18,000  are only taxable when you surpass the lifetime gift exemption limit of $13.61 million. Note that receiving crypto gifts isn’t taxable and the gifted assets simply inherit the cost base equal to the fair market value of the assets at the time they were gifted. So that you attract capital gains tax when you decide to dispose of these assets for a profit.

Any donation made to a registered charity in the US is tax-deductible given that the organisation you’re donating to has a 501(c)3 status with the IRS. Here’s a list of all charitable organisations having 501(c)3 status with the IRS.

DeFi Transactions

The IRS has yet to declare clear guidelines on the nature of DeFi transactions and how they are viewed from the tax perspective. Since DeFi is a new landscape and is still evolving, making space for new avenues of earnings for people across the globe, there’s no way to accommodate all DeFi transactions and the returns offered by them into a set of tax guidelines.

However, it’s important to note that you might attract tax liabilities if you appear to be making an income or capital gain from DeFi transactions. Given below are some DeFi transactions that can attract tax liabilities from the IRS:

  • Earning liquidity tokens or new tokens from DeFi protocols
  • Taking a loan against collateral from DeFi protocols or private lenders
  • Staking, yield farming, and adding or removing liquidity from liquidity pools
  • Gains made from DeFi margin trades
  • Paying interest in crypto for loans sourced from DeFi protocols, which in some cases may be considered as a disposal of crypto assets and hence attracts capital gains tax.

ICOs and Token Sales

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.

The IRS has yet to release guidelines on the taxation of ICOs. We suggest seeking guidance from an experienced tax professional on the matter to avoid complications with the IRS. Relevant details regarding ICO taxation will be added here as soon as the guidelines hit our radar.

Crypto Lending and Borrowing

Borrowing crypto assets doesn’t constitute a taxable event. But if you lend your crypto assets to an individual, exchange, or a Defi protocol in exchange for interest, then the event will attract income tax.

NFT and DAO 

According to the section titled “Digital Assets” on the 16th page of the new tax guidelines report:

“Digital assets are any digital representations of value that are recorded on a cryptographically secured distributed ledger or any similar technology. For example, digital assets include non-fungible tokens (NFTs) and virtual currencies, such as cryptocurrencies and stablecoins.”

This makes it pretty evident that the Internal Revenue Service (IRS) considers NFTs to be a form of property, similar to cryptocurrencies. In other words, disposing of digital assets, such as through a sale or exchange, may result in tax obligations, just like with any other type of property. This is because such transactions may result in capital gains or losses that must be reported to the IRS.

The recent mandate has provided a clearer understanding of NFTs and established a more defined framework for their taxation. The tax rate for NFTs is not fixed and may vary based on factors like mode of purchase, duration held, and amount of gains or losses incurred upon disposal.

To determine the amount of taxes owed to the IRS, you will need to itemise all of your NFT transactions on form 8949 and then use the standard deduction chart at the end of the form to calculate the tax due.

You can refer to the complete NFT tax guide here.

The IRS is yet to release specific guidance on how income from DAOs is taxed. However, DAOs aren’t registered organisations and can’t file taxes independently, they’re closer to flow-through organisations. Therefore, it's safe to assume that any income from DAOs will be subjected to income tax, and any gains incurred on the disposal of tokens received from DAOs will be taxed as a capital gain.

Crypto Margin Trading, Futures and CFDs

For individual investors, the tax treatment of margin trades, crypto futures, and CFDs is similar to other crypto transactions that incur capital gains tax. Any profits derived from these financial instruments are classified as capital gains and are subject to capital gains tax. Just like the disposal of assets, tax liabilities arise only upon the closure of a margin trade, future, or CFD position.

Regarding crypto futures, trading regulated products can lead to more advantageous tax outcomes, particularly due to the IRS 60/40 rule. Essentially, this rule stipulates that if investors engage in regulated futures trading, 60% of any capital gains will be taxed as long-term gains, while the remaining 40% will be taxed as short-term gains, regardless of the duration of the position. However, it's important to note that most crypto futures are currently unregulated and therefore exempt from this rule.

How to Avoid Paying Tax on Cryptocurrency in the US?

To make things clear, there’s no legal way to avoid paying taxes on crypto entirely in the US and any attempt at doing so will be met with regulatory and legal repercussions from the feds. However, there are ways you can avoid paying taxes on a portion of your gains and here are some of them:

1. Buy and HODL Crypto Assets

As mentioned above, buying crypto assets and holding them is not a taxable event in the US. An individual attracts tax liabilities only when he/she disposes of his/her assets and makes a capital gain as a result.

2. Utilise Tax Deductions

The IRS offers several exemptions that can significantly lower your tax bill, therefore it’s advisable to utilise your tax deductions like tax-free capital gain allowance, and the gifting allowance to reduce your taxable base.

3. Actively Track Your Losses and Harvest Them

You can close some of your dud positions or even potentially good ones at a loss and use them as an anchor to bring down your net capital gains and hence save thousands of dollars in capital gains taxes. The wash-sale rule for tax-loss harvesting is only applicable for securities at the moment and therefore, you can sell your assets to create a fictitious loss and then buy the same assets right after.

4. Gift and Donate Crypto

Gifting and donating crypto are considered tax deductibles by the IRS and can be used to bring down your tax bill, however, make sure the total amount of crypto gifted should not exceed $18,000  and the donations made are towards a registered charity and aren’t directly or indirectly linked to you in any way.

5. Invest in IRAs and OZFs

Invest in tax-advantaged investment funds to compound your returns and plan for the future. Alternatively, contribute to an Opportunity Zone Fund (OZF) to support public good initiatives while potentially benefiting financially.

Reporting Requirements, Compliances and Deadlines

Typically, in the US, you must report your cryptocurrency taxes by April 15th, which coincides with the deadline for filing individual income tax returns. However, if April 15th falls on a weekend or holiday, you may be granted an extension to the next business day.

How to File Crypto Taxes in the US

You can file your crypto taxes online or offline. If you decide to go the traditional way and use paper forms to file your taxes with the IRS, follow these steps to make sure everything goes smoothly:

  1. First download Form 8949 and use it to report all your crypto disposals within a tax year.
  2. Use Schedule D on Form 8949 to report all your capital gains and losses
  3. If you receive crypto income from sources such as airdrops, forks, liquidity pools, or bonuses, you'll need to fill out Schedule 1. However, if you happen to be self-employed or operate a crypto-based business and earn crypto income, you should utilise Schedule C instead.
  4. Once all of this is done, complete your tax return using Form 1040 and add all other tax forms with it before you file it with the IRS.

If you choose to go the modern route, there are several ways to file taxes online:

  • You can use an online crypto tax platform like Kryptos that can guide you through the process step-by-step, help you find deductions and credits, and e-file your tax return directly with the IRS.
  • If you meet certain income requirements, you can use the IRS Free File program to file your taxes online for free. The program partners with various tax preparation companies to offer free filing options to eligible taxpayers.
  • Many tax professionals offer online tax filing services through their websites. These services typically involve uploading your tax documents to a secure portal and allowing the tax professional to prepare and file your return on your behalf.

What Crypto Records Will the IRS Want?

The IRS requires taxpayers to maintain adequate records to support the positions taken on their tax returns. To meet this requirement, it is essential to keep records of all crypto transactions, including:

  • The market value of your assets on the day of acquisition
  • The market value of your assets on the day of disposal
  • A detailed record of all your gains and losses
  • Date and time of your transactions
  • Receipt of all sales and purchases
  • Record all transfers made between your personal and external wallets

Reporting requirements for brokers

IRS regulations introduce several compliance requirements for taxpayers, brokers, and certain intermediaries handling digital assets. With effect from January 1, 2025, here are the main compliance obligations outlined:

 1. Reporting by Brokers on Form 1099-DA

  • Gross Proceeds Reporting: Brokers must report the gross proceeds from digital asset transactions beginning with transactions conducted on or after January 1, 2025.
  • Basis Reporting: Starting January 1, 2026, brokers are required to report the cost basis for specific transactions to help taxpayers determine gains and losses accurately.
  • Special Cases:
    • Real estate brokers involved in transactions where digital assets are part of the payment must report the fair market value of digital assets received by sellers on or after January 1, 2026.
    • Sales of stablecoins and NFTs exceeding de minimis thresholds can be reported in aggregate.


 2. Scope of Applicability

  • These rules apply to brokers, custodial platforms, certain hosted wallet providers, and digital asset payment processors (PDAPs) that handle asset transactions for customers.
  • Exemptions: Decentralized or non-custodial brokers who do not hold custody of assets are currently exempt. However, further guidance for these brokers is expected.

 3. Penalty Relief (Notice 2024-56)

  • For transactions in 2025, the IRS will not impose penalties for late or incorrect Form 1099-DA filings if brokers make a good-faith effort to comply.
  • Relief from backup withholding requirements and penalties is also available in 2025 and 2026 for brokers who follow TIN-matching procedures or specific withholding protocols.

 4. Temporary Exceptions to Reporting (Notice 2024-57)

  • Certain digital asset transactions, such as wrapping/unwrapping, liquidity provision, staking, lending, short sales, and notional principal contracts, are temporarily exempt from reporting on Form 1099-DA. This relief will continue until the Treasury and IRS provide further guidance.

These regulations are aimed at increasing transparency and simplifying the process for taxpayers to report income from digital assets while helping the IRS improve tax compliance for crypto transactions.

https://www.irs.gov/newsroom/final-regulations-and-related-irs-guidance-for-reporting-by-brokers-on-sales-and-exchanges-of-digital-assets

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.
  6. Specifically for US investors, we provide extensive reports that will help in your tax filing;
  7. We provide automatically filled-up Schedule D, form 8949 and, form 1040 excerpts;
  8. You can use these reports and send them to your tax accountant to complete your tax return (or you can use other tax software and file your tax return with the help of these reports).

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

FAQs

1. Do you pay tax on crypto in the US?

Yes, in the United States, cryptocurrency is treated as property for tax purposes, which means that any gains or losses from buying, selling, or trading cryptocurrency are subject to capital gains tax. The tax rate depends on various factors, such as how long the cryptocurrency was held and the individual's income tax bracket. Additionally, cryptocurrency transactions may trigger other tax requirements, such as reporting requirements for foreign accounts. It's always best to consult with a tax professional or accountant to understand your specific tax obligations related to cryptocurrency.

2. Is cryptocurrency legal in the US?

Yes, cryptocurrency is legal in the United States. Although the government has been engaged in efforts to establish cryptocurrency regulations, there are no federal statutes forbidding individuals from engaging in the purchase, sale, or retention of cryptocurrencies. However, it's important to note that the use of cryptocurrency for illegal activities, such as money laundering or financing terrorism, is illegal and can lead to criminal charges.

3. Do you pay tax when transferring crypto in the US?

Transferring cryptocurrency from one wallet to another wallet or from one exchange to another exchange is generally not a taxable event in the United States. This means that you will not owe taxes on the transfer itself. However, you may be subject to taxes on the cryptocurrency if you sell or exchange it for another cryptocurrency or fiat currency.

4. What happens when you don’t report crypto in your tax report?

Failure to report cryptocurrency on your tax return can result in penalties and interest charges from the Internal Revenue Service (IRS). The penalties for not reporting cryptocurrency can vary depending on the specific circumstances of the situation but they can include:

If you fail to file your tax return on time, the IRS may impose a penalty of 5% of the unpaid tax amount per month, up to a maximum of 25% of the unpaid tax.

  • If the IRS determines that you understated your tax liability due to negligence or disregard of tax rules, they may impose a penalty of 20% of the understated tax liability.
  • In case of intentional tax evasion or fraud, you could face criminal penalties, including fines and imprisoAll 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!
USA
USA Crypto Tax Guide 2025
A comprehensive guide to crypto tax regulations in the USA, covering taxable crypto transactions, capital gains, income tax, and exemptions.

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 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…

Latest Updates/Guidelines

26/06/23- Updated to accommodate ICO, Gifts and Donations taxes

26/06/23- Updated to accommodate DAO taxes

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.

Consider the following transactions,

2022/01/13 - Oliver buys 2 BTC

2022/01/27- Oliver sells 1 BTC (Assuming a gain of €8,000)

2022/03/23- Oliver buys 7 ETH

2022/05/12- Oliver sells 6 ETH (Assuming a gain of €15,000)

2022/06/15- Oliver receives 6.25 BTC as mining rewards (Assuming 1 BTC to be €25,000)

2022/08/17- Oliver receives 12 ETH as compensation(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 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.

Please note that the allowance limit mentioned is applicable for the tax year 2021-2022 and will be reduced by 50% starting from April 2023.

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.

Tax Rate Taxable Income
10% Basic Rate Income Band (up to £50,270)
20% Higher Rate Income Band (up to £150,000)
20% Additional Rate Income Band (more than £150,000)

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

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:

2022/01/13 - Jaimie bought 1 BTC for £21,000

2022/03/15 - Jaimie bought 4 ETH for £2,000 each

2022/04/19 - Jaimie bought 2 BTC for £23,000 each

2022/05/20 - Jaimie sold 1 BTC for £25,000

2022/07/21 - Jaimie sold 1 ETH for £2,800

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 amount 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 £12,300, 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 2021-22 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.

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.
  1. 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.
  1. 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:

2022/01/23 - Emily bought 1 BTC 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

2022/02/23 - Emily bought 2 ETH for £2,000 each

2022/03/15 - Emily sold 2 ETH for £2,500 each

2022/03/21 - 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.

Tax Rate Taxable Income Band
0% up to £12,570 Personal allowance
20% £12,571 - £50,270 Basic rate
40% £50,271 - £150,000 Higher rate
45% £150,000+ Additional rate

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 individuals with a value of less than £250.
  • 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 £12,300), 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.
  1. 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 2021-2022 tax year is 31st January 2023.

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

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!

UK
UK Crypto Tax Guide 2024
Confused about crypto taxes in the UK? Our ultimate guide covers everything you need to know, from calculating gains and losses to filing your tax return. Get expert advice and avoid costly mistakes. Read on!

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
Income Tax Rate
$0-$18,200 0%
$18,201$45,000 Nil + 19% of excess over $18,200
$45,001-$120,000 $5,092 + 32.5% of the excess over $45,000
$120,001-$180,000 $29,467 + 37% of the excess over $120,000
$180,001+ $51,667 + 45% of the excess over $180,000

Tax Rates for FY year 2024-25
Income Tax Rate
$0-$18,200 0%
$18,201$45,000 16%
$45,001-$135,000 30
$135,001-$190,000 37%
$190,001+ 45%

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
Income Tax Rate
$0-$18,200 0%
$18,201$45,000 Nil + 19% of excess over $18,200
$45,001-$120,000 $5,092 + 32.5% of the excess over $45,000
$120,001-$180,000 $29,467 + 37% of the excess over $120,000
$180,001+ $51,667 + 45% of the excess over $180,000

Tax Rates for FY year 2024-25
Income Tax Rate
$0-$18,200 0%
$18,201$45,000 Nil + 19% of excess over $18,200
$45,001-$120,000 $5,092 + 32.5% of the excess over $45,000
$120,001-$180,000 $29,467 + 37% of the excess over $120,000
$180,001+ $51,667 + 45% of the excess over $180,000

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!

Australia
Australia Crypto Tax Guide 2025
Learn how crypto taxes work in Australia for 2025. Understand ATO rules, capital gains tax, and crypto income tax rates to stay compliant and minimize liabilities.

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%.

Taxable Income Tax Rate
Up to $14,000 10.5%
$14,001-$15,600 12.82%
$15,601-$48,000 17.5%
$48,001-$53,500 21.64%
$53,501-$70,000 30%
$70,001-$78,100 30.99%
$78,101-$180,000 33%
$180,001+ 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:

  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.

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!

New Zealand
New Zealand Crypto Tax Guide 2025
Planning to file your crypto taxes in New Zealand? Our 2025 guide covers everything you need to know about tax calculations, deductions, and filing with the IRD.

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:

Tax Rate Profit
19% Profits up to €6,000
21% Profits between €6,000 and €50,000
23% Profits between €50,000 and €200,000
27% Profits between €200,000 - €300,000
28% Profits over €300,000

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:

Taxable base (up to EUR) Tax liability (EUR) Excess of taxable base (up to EUR) Tax Rate
First 10,000 0 12450 19%
Next 10,000 2,365.50 7,750 24%
Next 10,000 4,225.50 15,000 30%
Next 10,000 8,725.50 24,800 37%
Above 40,000 17,901.50 240,000 45%
125,901.50 Remainder 47%

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!

Spain
Spain Crypto Tax Guide 2025
Get ahead with Spain's 2025 crypto tax guide. Understand how to report capital gains, calculate taxes, and ensure compliance with Agencia Tributaria's regulations.

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 217,4000%
  • Step 1: Income from NOK 217,401 to NOK 306,0501.7%
  • Step 2: Income from NOK 306,051 to NOK 697,4004.0%
  • Step 3: Income from NOK 697,401 to NOK 942,40013.7%
  • Step 4: Income from NOK 942,401 to NOK 1,410,75016.7%
  • Step 5: Income above NOK 1,410,75117.7%

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

Tax Class Wealth Tax Rate
Tax Class 0 and 1 NOK 0-1,760,000 0.0%
NOK 1,760,000 and above 0.525%

State Wealth Tax

Tax Class Wealth Tax Rate
Tax Class 0 and 1 NOK 0-1,760,000 0.0%
NOK 1,760,000 - 20,000,000 0.475%
NOK 20,700,001 and above 0.575%

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.

Item Date
Tax year period 1st January 31st December
Filing deadline 30th of April
Extension deadline Special Cases

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
  1. Click on "Andre finansprodukter og virtuell valuta/kryptovaluta" and then "Virtuell valuta/kryptovaluta"
  1. 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)
  1. 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
  1. 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!

Norway
Norway Crypto Tax Guide 2025
Learn everything about crypto taxes in Norway with this comprehensive guide. Understand how Skatteetaten taxes crypto, calculate capital gains and file your crypto taxes correctly.

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:

Annual Taxable Income (THB) Tax Rate
0 – 150,000 0%
150,001 – 300,000 5%
300,001 – 500,000 10%
500,001 – 750,000 15%
750,001 – 1,000,000 20%
1,000,001 – 2,000,000 25%
2,000,001 – 5,000,000 30%
Over 5,000,000 35%

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.

Thailand
Thailand Crypto Tax Guide 2025
Explore Thailand's evolving crypto tax landscape in 2025. Learn about tax rates, legal status, mining regulations, and future trends to ensure compliance as a crypto trader or investor.

DeFi adoption has seen an astronomical rise in the past few years. According to Dune Analytics, the number of unique addresses using DeFi applications has skyrocketed to 4 million since May 2020, and the total value locked across DeFi protocols stood at $78 billion, a 10X multiple of what it was back in 2020, according to DeFi Pulse.

While this has been lucrative for startups and investors in the space, the sheer volume of transactions has mandated regulators across the globe to issue guidelines for DeFi taxes, and regulate the space to protect investors from fraud and unsolicited legal complications. And the UK is no exception to this, the HMRC has issued guidelines to categorize DeFi transactions and offers clarity on their taxation. 

If you don’t have the time to read the entire HMRC taxation report on DeFi transactions, here’s a summary of the doc in a more digestible format.

What is DeFi?

DeFi is an alternative financial infrastructure offering all traditional financial services via a decentralized ledger using cryptocurrencies, removing the need for traditional intermediaries like banks, insurance companies, and brokerage firms. Decentralized finance lowers the barrier to entry for people and makes it easier for them to access basic financial services like loans, payments, brokerage, and investments. 

It is an umbrella term to describe all crypto transactions that involve a decentralized service provider. DeFi is not defined in UK regulatory or tax laws, and the terms used in the industry are primarily created by industry participants.

Understanding DeFi Lending and Staking

DeFi lending is a pretty straightforward concept. It refers to the lending of crypto assets you own to others either directly through P2P lending, or through lending platforms like Crypto.com, Binance, and Celsius. The liquidity providers or the owners of crypto assets are rewarded for lending their assets(a form of interest paid using platform-native tokens). Users can also seek loans from these platforms for which they might have to provide collateral.

Staking is different in the context that the crypto assets are added to a liquidity pool created by a DeFi platform by accumulating assets from users called liquidity providers in return for a reward, often referred to as “staking reward” in the DeFi space. Since both staking and lending involve transferring ownership although temporarily in some cases, it is considered as a disposal of crypto assets and attracts capital gains tax. And any recurring returns from staking or lending are considered an income and therefore attract income tax liabilities.

UK Governments Lending and Staking Models

The HMRC has issued clear guidelines listing the existing lending and staking models. As the market evolves, new models will be added to organize the taxation of DeFi transactions.

  • When an individual lends out their tokens directly to a borrower without the involvement of a DeFi platform and transfers control of the tokens to the borrower.
  • If an individual gives tokens to a DeFi lending platform temporarily, which pools the tokens with others to create a liquidity pool.
  • A person lends tokens to a DeFi platform in exchange for different crypto assets or NFTs, which the platform pools and gives back different tokens or NFTs as a reward.

How are DeFi Transactions Taxed as per HMRC Guidelines?

No new legislation has been passed to accommodate the taxation of DeFi transactions, the HMRC has issued guidelines to group DeFi transactions under the current taxable categories. DeFi transactions are not taxes based on the nomenclature, but rather the nature of transactions.

The transaction involving DeFi has three main elements that need to be considered for tax purposes.

  • Lending tokens or making tokens available for staking
  • Rewards received as a result of lending or staking 
  • Withdrawing tokens from liquidity or repayment of a loan

Income Vs Capital Assets

As mentioned earlier, DeFi transactions are taxed based on the nature of transactions. DeFi transactions are categorized into two sections according to the HMRC’s notifications, if the crypto asset is disposed of or exchanged for some other token, then it is counted as a capital asset disposal and attracts capital gains tax.

In the event of recurring rewards from staking, or lending crypto-assets, either from an individual or from a DeFi platform, the gains will be considered as income and will be taxed under the income tax laws.

Lending and Staking Taxes in the UK

Depending on the nature of the DeFi transaction, the gains are taxed according to the following rules:

  • If the return is considered income, it will be subject to income tax (or corporation tax for companies) when it is received. Generally, the return is considered income if it is based on a percentage of the tokens that were lent or staked, such as a 5% per year return for 2 years on staked crypto-assets.
  • If the return is considered capital in nature, it will be subject to Capital Gains Tax when received. Determining whether a return is capital in nature can be complex. Still, it is generally considered capital if it is obtained through the sale of a capital asset or if the return is based on the increase in value of a capital asset.

Liquidity Mining Taxes in the UK

Adding or removing liquidity from liquidity pools is a taxable event according to the new HMRC guidelines. DeFi mining attracts capital gains tax in the UK. The tokens received in exchange for lending or staking crypto-assets inherit the cost basis(amount paid for acquiring the assets) of the assets staked or pledged as a lender.

The taxes will depend on the way they are obtained. Income Tax will apply if you receive new tokens or coins as a result of your contribution, while Capital Gains Tax is more likely to apply if you receive tokens from a liquidity pool that increases in value, but the gains are realized only when you withdraw assets from the liquidity pool.

Crypto Futures and Derivatives Taxes in the UK

Crypto futures and derivatives are advanced financial instruments that are offered by DeFi platforms. These transactions are simply viewed as simple open/close positions by the HMRC and attract capital gains tax in the UK. 

If the futures contract liquidates or you close your position, any capital gains incurred from the event are taxed under capital gains tax rules. It's worth mentioning that as there is no specific guidance on taxes for trading crypto CFDs, it is advisable to consult a UK tax advisor for personalized advice on how these transactions will affect your crypto taxes.

Yield Farming Taxes in the UK

Yield farming is one of the most popular avenues for earning steady returns on a volatile asset like crypto, primarily because of the lower risk profile of the method. It simply refers to the strategic approach of stacking crypto transactions on top of each other to receive the highest returns possible on the investment. The returns may be tokens, NFTs, or interest paid for staking tokens.

Depending on how you club your investments, the taxation may vary. You can club the tax rules for the type of rewards you receive and calculate the taxes owed on the transactions.

Gas Fees Taxes in the UK

The HMRC guidelines offer a list of allowable expenses that can be added to your cost basis to reduce your taxable income. Transfer fees and transaction fees are both categorized as allowed expenses and therefore can be added to your cost basis.

Taxes on Wrapped Tokens

Wrapped tokens are simply crypto tokens that are wrapped with blockchain-based representations on another blockchain, which makes it easier for them to travel across the decentralized financial chain. 

Wrapping assets makes it easier for DeFi protocols to send or receive them, which might not have been practically possible if they were not wrapped. A good example would be how gold as a physical asset is non-transferrable across the decentralized chain, but if gold is wrapped, it can be easily transferred across the DeFi space.

HMRC has not provided specific guidelines on the taxation of wrapped assets yet. However, based on the nature of swapping one cryptocurrency for another, it is likely that any resulting gain would be considered disposal and would therefore be subject to Capital Gains Tax

How to Calculate your DeFi taxes Instantly?

Tracking all DeFi transactions across platforms and calculating your cost basis for every transaction is a tedious task and that’s why filing crypto taxes can be intimidating for a lot of people. 

One smart way to keep track of all your DeFi transactions is to use crypto tax software like Kryptos, that auto-fetches all your transactions across the DeFi space and creates a legally compliant tax report based on your location. 

All you need to do is add all your active profiles across DeFi exchanges on the website and hop in the back seat while Kryptos does the job for you.

FAQs

1.How do DeFi projects earn money?

DeFi platforms make money through multiple avenues and it’s nearly impossible to list every income stream here. However, here are some of the primary ones.

  • Transaction fees: Many DeFi protocols charge small fees for transactions on their platforms, such as trading fees or lending fees. 
  • Liquidity provision: Some DeFi projects allow users to provide liquidity to trading pairs on their platform, in exchange for a portion of the trading fees. These are known as liquidity providers.
  • Yield farming: Yield farming is a form of liquidity provision that allows users to earn returns on their assets by lending them to other users. These returns can be in the form of interest, trading fees, or even new tokens.
  • Governance: Some DeFi projects offer token holders the ability to vote on protocol changes, which can affect the overall value of the token.

2. How are DeFi loans taxed?

The taxation of decentralized finance (DeFi) loans can vary depending on the jurisdiction and the specific details of the loan. However, in general, Defi loans may be subject to income tax, capital gains tax, or both.

Income tax: If a DeFi loan is structured as interest-bearing, the interest earned on the loan may be considered taxable income and subject to income tax.

Capital gains tax: If a DeFi loan is structured as a collateralized loan, and the value of the collateral increases while it is being held as collateral, the borrower may be subject to capital gains tax when the loan is repaid and the collateral is returned.

3. Can you avoid taxes on DeFi?

It is not advisable to avoid taxes on decentralized finance (DeFi) transactions as it is illegal in most countries. Tax laws vary by jurisdiction and it's important to consult with a tax professional or check with the relevant tax authority to understand the tax implications of your Defi transactions.

It's important to note that tax evasion, which is the illegal non-payment or underpayment of taxes, can result in significant fines or even criminal charges. It is important to report all DeFi-related income to the tax authorities.

4. What are some disadvantages of DeFi?

There are several disadvantages of DeFi. Some of them are listed below:

  • High complexity
  • Lack of regulation
  • Volatility
  • Liquidity
  • Smart Contract Risks
  • Lack of insurance
  • Complex taxation
  • Lack of customer support

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!

UK
Your Ultimate Tax Guide For DeFi Crypto Transactions in UK
Confused about taxes on DeFi crypto transactions in the UK? Our comprehensive guide has got...

Step by step on how to declare your tax report

Start by logging in to Skatteverkets website and navigate to "Inkomstdeklaration 1".

When you are on the Inkomstdeklaration 1(Income tax) page, click the "Bilagor" link

Then add the enclosure "Försäljning av värdepapper m.m. (K4)"

Click the "Övriga värdepapper, andra tillgångar (kapitalplaceringar t.ex. råvaror, kryptovalutor) m.m" link.

Then fill in all your purchases and remember to separate profit and loss into two different columns.
(It is only possible to fill in integers).

When everything is filled in and finished, go to "Ändra"(Change) and then "Övriga upplysningar"(other information). In that form you will write the exact amount of crypto in decimals that you have sold or lent out.

Check that everything is correct and then send it in.

Disclaimer

We at kryptos.io strive for the information to be correct in all respects. However, we can not guarantee this, and therefore can not take any responsibility for any losses caused by incorrect information on this web service. However, we are grateful for all remarks about inaccuracies. If you have found something that seems wrong, feel free to send us a message at contact@kryptos.io.

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!

Sweden
How to declare crypto taxes in Sweden?
Start by logging in to Skatteverkets website and navigate to "Inkomstdeklaration 1".‍ When you are on the Inkomstdeklaration 1(Income tax) page, click the "Bilagor" link

Declaration guide for file transfer of SRU files.


When transferring SRU files to the Swedish Tax Agency, the following two files must be transferred:


BLANKETTER.SRU

INFO.SRU


You may not rename the files after they have been created. If you do, the transfer will not work.

The form BLANKETTER.SRU must not be larger than 5 Mb.

The first thing you should do is choose the tax year for the year you want to declare, you do it here on kryptos.io/tax-reports. Then download the SRU files that contain the information you need to declare.

To download the files, go to Reports and select k4 SRU Forms and then click "DOWNLOAD REPORT"

Once the files are downloaded, the content will look like this

Notice that BLANKETTER contains more information, it's the same information as in the k4 form section D but now in SRU code.

What you need to do now in the BLANKETTER och INFO files is to enter your personal information:

BLANKETTER.sru

On the file line #IDENTITET enter your social security number (12 digits).

On the file line #NAMN enter your name.

INFO.sru

On the file line #ORGNR enter your social security number (12 digits).

On the file line #NAMN enter your name.

On the file line #POSTNR enter your postal code.

On the file line #POSTORT enter your street address.

When the files have been downloaded, log in to the Swedish Tax Agency and proceed to Income Tax return ("Inkomstdeklaration").

Then choose "Transfer files" ("Överföra filer").

Select the SRU files: "forms" ("blanketter") and "info" ("info").

Then click "Add" ("Lägg till") and then "Transfer" ("Överför >>")


When the SRU files have been transferred, it will look like this (please note that this is a test file).

You can also make this file transfer when you declare the Income Tax Return ("Inkomstdeklaration").

When you are on the "Inkomstdeklaration 1" (Income tax) page, click the "Bilagor" link.

Then add the appendix "Sale of securities etc. (K4)" ("Försäljning av värdepapper m.m. (K4)") and select "Import" (Importera).

Instead of entering all the events separately, you simply transfer the SRU files which contains all the necessary information.

For more information click here -> Information about SRU

Disclaimer

We at kryptos.io strive for the information to be correct in all respects. However, we can not guarantee this, and therefore can not take any responsibility for any losses caused by incorrect information on this web service. However, we are grateful for all remarks about inaccuracies. If you have found something that seems wrong, feel free to send us a message at contact@kryptos.io.

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!

Sweden
File transfer of SRU files to the Swedish Tax Agency
When transferring SRU files to the Swedish Tax Agency, the following two files must be transferred: Blanketter.sru, info.sru

Deklarationsguide för filöverföring av SRU-filer.


Vid filöverföring av SRU-filer till Skatteverket är det de två följande filerna som ska överföras:


BLANKETTER.SRU

INFO.SRU

SRU file


Du får inte döpa om filerna efter det att de har skapats. Då fungerar inte överföringen.

Filen BLANKETTER.SRU får inte vara större än 5 Mb.

Det första du bör göra är att välja taxeringsår för de åren du vill deklarera, det gör du här kryptos.io/tax-reports. Ladda sedan ner SRU-filerna som innehåller den information som du behöver för att deklarera.

För att ladda ner filerna går du till Reports och väljer k4 SRU Forms och klickar sedan på "DOWNLOAD REPORT"

Download reports on Kryptos

När filerna är nedladdade kommer innehållet att se ut så här

Lägg märke till att i filen BLANKETTER är det mer information, det är den samma informationen som finns i k4-blanketten avsnitt D fast här i SRU-kod.

Det du måste göra nu i BLANKETTER och INFO-filerna är att skriva in din personliga information:

BLANKETTER.sru

På filraden #IDENTITET skriver du in ditt personnummer (12 siffror).

På filraden #NAMN skriver du in ditt namn.

INFO.sru

På filraden #ORGNR skriver du in ditt personnummer (12 siffror).

På filraden #NAMN skriver du in ditt namn.

På filraden #POSTNR skriver du in ditt postnummer.

På filraden #POSTORT skriver du in din postort.

När filerna är nedladdade loggar du in på Skatteverket och går vidare till "Inkomstdeklaration".

Välj sedan "Överföra filer".



Välj SRU-filerna: "blanketter" och "info". Klicka på "Lägg till" och sedan på "Överför >>".

När överföringen av filerna är färdig kommer det se ut så här (observera att detta är en testfil).

Du kan även göra denna filöverföring när du deklarerar "Inkomstdeklarationen".

När du är inne på "Inkomstdeklaration 1" ska du välja "Bilagor"


Lägg sedan till bilagan "Försäljning av värdepapper m.m. (K4)" och välj "Importera"

Istället för att skriva in alla skattepliktiga händelser var för sig, överför du SRU-filerna som innehåller all nödvändig information.

För mer information klicka här -> Information om SRU

Ansvarsfriskrivning

Vi på kryptos.io strävar efter att informationen ska vara korrekt i alla avseenden. Vi kan dock inte garantera detta, och kan därför heller inte ta något ansvar för eventuella förluster som orsakats av felaktig information på denna webbtjänst.
Vi är dock tacksamma för alla påpekanden om felaktigheter. Om du hittat något som verkar fel får du gärna skicka ett meddelande till oss på contact@kryptos.io.

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!

Sweden
Filöverföring av SRU-filer till Skatteverket
Vid filöverföring av SRU-filer till Skatteverket är det de två följande filerna som ska överföras:‍ BLANKETTER.SRU, INFO.SRU

Steg för steg om hur du deklarerar

Börja med att logga in på Skatteverkets hemsida och navigera till "Inkomstdeklaration 1".

När du inne på Inkomstdeklaration 1 ska du välja "Bilagor"

Lägg sedan till bilagan "Försäljning av värdepapper m.m. (K4)"

Gå vidare till "Övriga värdepapper, andra tillgångar (kapitalplaceringar t.ex. råvaror, kryptovalutor) m.m".

Fyll sedan i alla dina köp och kom ihåg att separera vinst och förlust i två olika kolumner. (Det är bara möjligt att fylla i heltal).

När allting är ifyllt och färdigt, gå sedan till "Ändra" och lägg till övriga upplysningar.
Här ska du skriva den exakta mängd krypto i decimaler som du har sålt eller lånat ut.

Kontrollera så allt stämmer och skicka sedan in.

Ansvarsfriskrivning

Vi på kryptos.io strävar efter att informationen ska vara korrekt i alla avseenden. Vi kan dock inte garantera detta, och kan därför heller inte ta något ansvar för eventuella förluster som orsakats av felaktig information på denna webbtjänst.
Vi är dock tacksamma för alla påpekanden om felaktigheter. Om du hittat något som verkar fel får du gärna skicka ett meddelande till oss på contact@kryptos.io.

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!

Sweden
Så här fyller du i deklarationen av Kryptovaluta
Börja med att logga in på Skatteverkets hemsida och navigera till "Inkomstdeklaration 1".‍ När du inne på Inkomstdeklaration 1 ska du välja "Bilagor".
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