Cryptocurrency Taxation in Different Countries
Taxation is one of the most important issues for governments all around the world, as they are trying to control all transactions in their territories.
With the advent of cryptocurrencies specifically bitcoin, there were little regulations in the crypto market taxation as their market capacity was not too high. Since the crypto market started to grow day by day, governments became more and more greedy for cryptocurrencies tax laws.
In this article, we are going to introduce some ways of how leading countries apply taxes to cryptocurrencies.
“Taxation is one of the most important issues for governments all around the world”
Cryptocurrency Taxation in United States
US Government apply taxes to the crypto assets similar to the property taxation category, which states if it’s sold to gain something, a tax must be paid to the state’s income. However, the tax calculation is depended on the first Value of cryptocurrency starting from the date of negotiation.
According to the Australian Taxation Office (ATO) Cryptocurrencies may be considered assets for capital gains tax purposes, with the guidance stating: “Where you use bitcoin to purchase goods or services for personal use or consumption, any capital gain or loss from disposal of the bitcoin will be disregarded (as a personal use asset) provided the cost of the bitcoin is $10,000 or less.
According to a New Tax System (Goods and Service Tax), sales and purchases of digital currency are not subject to GST. If a person is carrying on business about the digital currency or accepting digital currency as payment as part of a business, then there are GST consequences. The changes were aimed at removing “double taxation” of digital currencies under the GST system.
The German Federal Financial Supervisory Authority (Bundesanstalt für
Finanzdienstleistungsaufsicht, BaFin) qualifies cryptocurrencies as units of account and therefore, financial instruments. Undertakings and persons that arrange the acquisition of tokens sell or purchase tokens on a commercial basis, or carry out essential broking services in tokens via online trading platforms, among others, are generally required to obtain authorization from BaFin in advance.
In Germany, Bitcoin and other cryptocurrencies are classified as private wealth in tax laws. Thus, any profit obtained for the negotiation of cryptocurrencies is considered an income.
The Swiss Canton of Zug is trying to establish itself as a hub for cryptocurrencies and Fintech start-ups. On November 2, 2017, the Commercial Register Office in the Canton of Zug started accepting bitcoin and ether as payment for administrative costs. Furthermore, the Commercial Register accepts cryptocurrencies as a contribution in kind for purposes of forming a company.
In the city of Zug, municipal services (resident registration) of up to CHF200 (about US$210) can be paid with bitcoin.
Cryptocurrencies are classified as an asset for the purposes of capital gain tax, which is just applied to citizens qualified as professional merchants, depending on the amount or frequency of transactions performed annually.
In Japan, cryptocurrency exchange businesses are regulated. The Payment Services Act was amended in June 2016, and the amendment took effect on April 1, 2017. The amended Payment Services Act defines “cryptocurrency” as:
A property value that can be used as payment for the purchase or rental of goods or provision of services by unspecified persons that can be purchased from or sold to unspecified persons and that is transferable via an electronic data processing system
A property value that can be mutually exchangeable for the above property value with unspecified persons and is transferable via an electronic data processing system.
Additionally, cryptocurrencies as income, which is classified as “miscellaneous income”, they are taxed on 15% – 55%, depending on the price of crypto assets. The maximum value is applied to the people who earn more than 40 million yen (US$ 365.000).
The crypto market as a robust business all around the world is more than a decade old, and the implementation of taxes for cryptocurrencies has remained a significant problem for governments. A lot of countries do not have clear laws to regulate the cryptocurrency industry. However, governments have no choice but to regulate the cryptocurrencies as a primary alternative investment whether they like it or not!