Cryptocurrency is a hot topic these days. The craze and demand for cryptocurrencies are growing. The past five years have seen an increase in market cap and the total number of investors.
Cryptocurrency and its tax implications have always been a point of discussion. The entire world tracked India’s budget announcement. Finance Minister, Nirmala Sitharaman announced that cryptocurrency income will be taxed at 30%. Another notable announcement was the plan to launch India’s native cryptocurrency. This cryptocurrency will be governed and monitored by the Reserve Bank of India.
Now that India has declared their stand, let us look at the taxation policies of other countries on crypto investments.
USA
The USA takes the second position in terms of crypto investments. More than 40% of the population has crypto investment and undertakes daily trading. Cryptocurrencies are considered capital assets. Any gains made through crypto investment are taxable. The US government currently charges a 30% tax slab on all crypto gains. But, this tax limit is applicable only if you are holding cryptocurrency for more than 12 months. But if you are simply looking at buying and selling crypto in less than a year, then there is no tax implication on your gains.
Canada
Unlike the USA and India, cryptocurrency is not considered a capital asset. Instead, the government provides these investments with the status of being a commodity. The tax concept here is the same as that of your investments and gains through rental income or stock trading. The revenue agency in Canada tracks all crypto investments of their citizen. Canada had recently announced that they are working towards creating a native exchange to enable user-friendly and easier transactions on cryptos. This exchange also allows investors to declare their investments in the right manner to tax authorities.
United Kingdom
The UK has not developed any specific tax slabs for crypto investment. Instead, all crypto investments are subjected to two types of tax policy. It can either be a capital tax or income tax. Depending on the type of investment applicable tax is levied. There are no separate tax slabs for capital gains. Depending upon the total volume of gains, an investor needs to pay taxes ranging from 10% to 20%.
Australia
The Australian Taxation Authority has declared that all crypto investments are assets. All investments will carry both capital gain and tax on income. Every investor needs to declare their crypto investments as part of their tax filing regime. The government has also established its connections with all exchanges that have established their operations in Australia. In case you are holding a crypto investment for more than one year, then you are liable to pay up to 50% tax on your total capital gains.
Netherlands
Tax policy in the Netherlands is different from others as listed above. As against capital gains or income tax, the Netherlands levies wealth tax on crypto investment. This is slightly pricey compared to other tax policies. Assuming that your total crypto investment is more than $50,000 then you are liable to pay tax up to 31% of the total investment.
Let us now look at certain countries that provide tax relaxation on crypto investment.
Germany
Germany considers crypto investments as personal income against capital gains. However, this tax scheme is applicable only if an investor is buying and selling crypto within a year. If you are holding onto your investment for more than a year, then these types of investments are completely tax exempted.
Portugal
Like Germany, there is a tax exemption on crypto transactions. Your investment does not attract any tax benefit. However, if you are carrying out professional trading activities then tax schemes apply to all your transactions. Other than individual investments, even companies are exempted from tax benefits while receiving crypto payments.
Most countries consider crypto investments as either capital gains, personal income, or wealth. Applicable tax schemes as defined by the taxation authorities are levied on all these investments. Also, most countries have schemes to track all crypto investments.
