Sale of NFTs- This can trigger capital gains, or income tax depending on the nature of the income.Receiving airdrops- Yup, apparently this is “income.”.Swapping an altcoin for some Bitcoin can also trigger a tax event. Exchanging digital assets on a DEX or centralized exchange- Yup, this one is a bummer.Selling for fiat at a profit or loss- take advantage of writing off those capital losses people! They can offset the tax paid on gains.Here are just some of the different crypto-related activities that are subject to taxation in many countries:
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There are so many ways to earn crypto income, many of which are taxed differently, so it may be a good idea to seek advice from a tax professional as it can be confusing. Crypto can also be taxed as income or business income if you are actively trading, staking, receiving airdrops, renting NFTs, lending etc. That aside, there are many useful tools for calculating crypto taxation regardless of your location to help simply the calculating and filing process.Īlso, note that the capital gains tax is for the event of selling crypto assets. Here’s a table that shows how cryptocurrencies are classified by these countries, and what taxes citizens are required to pay:Īs you can see, the tax laws for cryptocurrency vary depending on the jurisdiction. If you buy or sell crypto on a major exchange, it is best to assume that the government is likely going to know about it.
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Many of these countries are now also working with exchanges and chain analytic companies in order to track transactions, so if you think the tax man doesn’t know about the Bitcoin you sold this year, news flash, they definitely do. These are some of the countries that already have tax regulations in place, and they expect their citizens to pay those taxes reliably. If you’re in the U.S., the U.K., Japan, Canada, Australia, or many European countries, then crypto taxation is something you need to take seriously.
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