Overview of Cryptocurrency Tax Laws in Various Countries

The popularity of cryptocurrencies has been rising steadily over the past few years. Cryptocurrencies are increasingly being used by people around the world as a payment tool and an investment opportunity. Where there is money, there are taxes. Although tax regulations are non-existent or rather vague in most countries, tax authorities are beginning to wake up.

Many countries have proposed tax policies regarding cryptocurrencies, with some making cryptocurrencies completely tax-free and others taxing them just like stocks and other property.

the Philippines

On November 13, Philippine Finance Minister Carlos Dominguez said the country is considering a bill to fairly tax the digital economy. Earlier this month, the Philippine Securities and Exchange Commission (SEC) warned the public about the unlicensed Bitcoin Digital company. The company fabricated that it had received support from Finance Minister Carlos Dominguez and local celebrities. The Philippine Securities and Exchange Commission said that Bitcoin Digital is not registered and has no right to solicit or accept investments from the public, nor is it authorized to issue investment contracts and other forms of securities.

Russia

Recently, the Russian Ministry of Finance proposed new amendments to the country's upcoming law on crypto assets, which may reduce the requirements for cryptocurrency taxpayers. According to the draft bill, individuals must declare their holdings if the annual transaction volume exceeds 600,000 Russian rubles (about $7,800). In a previous proposal, the ministry had required disclosure when the transaction volume exceeded 100,000 rubles (about $1,300) in a year. The law is scheduled to be passed in January next year, and the Ministry of Finance hopes that the asset disclosure for the next tax year will be no later than April 30, 2022. The bill states that the reported cryptocurrency value will be calculated by the state tax agency based on the price at the time of the transaction.

Canada

The Canada Revenue Agency (CRA) has asked a judge to force Toronto-based cryptocurrency exchange Coinsquare to hand over information and certain documents about all of its customers who have used the platform since early 2013. The CRA will be able to use the details to find out which Canadians have traded on Coinsquare’s platform and then compare them with past tax documents in an effort to combat tax fraud and the underground economy.

USA

The U.S. Internal Revenue Service (IRS) has recently released guidance notes for the draft of Form 1040, "U.S. Individual Income Tax Return," for 2020, stating that taxpayers must check the "yes" box on crypto-related questions if they received any cryptocurrency for free, including through airdrops or hard forks. Earlier, the IRS released guidance notes for the draft of Form 1040 to add clarity to virtual currency questions.

Portugal

Portugal has released a statement making the buying/selling/trading of cryptocurrencies completely tax-free. It is the only European country to have taken such a stance so far. The statement follows Portugal’s closed taxation system (only explicitly listed items can be taxed, such as stocks, bonds, etc.). This makes Portugal a more lucrative country for cryptocurrency traders.

Germany

Bitcoin has been officially recognized as a private currency in Germany since 2013. Bitcoin owners are subject to capital gains tax, which currently stands at 25%. However, this is only taxed if the profit is made within one year of the purchase of the Bitcoins. Cryptocurrency owners are not subject to capital gains tax if they hold the cryptocurrency for more than one year.

malta

Malta, the famous “Blockchain Island”, does not impose taxes on cryptocurrencies, whether VAT, income or capital gains. However, considering intraday trading similar to stocks or foreign exchange, cryptocurrency transactions conducted on the same day are subject to a 35% corporate income tax.

Malta is perhaps one of the most crypto-friendly countries in the world, having introduced legislation that legalized various cryptocurrency operations and made the country home to some of the major cryptocurrency businesses.

Japan

Japan considers Bitcoin to be primarily a form of payment. On July 1, 2017, the Payment Services Act exempted the sale of Bitcoin from consumption tax. Virtual currencies such as Bitcoin in Japan are considered assetized values ​​that can be transferred digitally and used for payment. Profits from Bitcoin are considered business income. Therefore, the owner is subject to both income tax and capital gains tax.

South Korea

The Korea Blockchain Association (KBA) urged the South Korean government to postpone plans to tax crypto trading profits from October 2021, saying it seems unlikely that the infrastructure will be in place in time. The KBA suggested delaying the tax plan until January 2023, when a new set of capital gains income tax rules related to stock and securities transfers will take effect.

New Zealand

The New Zealand Inland Revenue Department (IRD) has once again set its sights on the cryptocurrency sector, requiring businesses involved in crypto assets to provide customer details. The IRD's guidance sets out a series of requirements, including personal details of customers and information on the types of crypto assets held by customers.

China

my country currently prohibits virtual currency transactions and ICOs, so there is no further action on the taxation of cryptocurrencies and crypto assets, but the future situation is uncertain. With the further development and improvement of cryptocurrencies and the digital economy, the taxation of crypto assets may also be put on the agenda. As Zhu Guangyao, former vice minister of the Ministry of Finance, said at the 15th 21st Century Asian Financial Annual Conference, in terms of the digital economy, the digital economy is an important part of the new round of industrial revolution. Under the COVID-19 epidemic, distance education, telemedicine, home office and other digital economies have played an important role. At the same time, under some policy frameworks, including privacy protection, data security, the development of digital currencies, digital taxation and the monopoly of large digital platforms, this structural problem requires a clear policy framework and policy guidance, and requires the coordination and cooperation of the international community, but at present, relevant progress is very slow. (Golden Finance)