What are the Crypto Tax Rates in Various Countries?

Taxation of cryptocurrency depends significantly on where you live. Some countries may charge high taxes on crypto, while others might not charge a tax at all. Cryptocurrencies are treated as property or investment assets in many places. It means that when they are sold or traded, capital gains tax may apply. Additionally, if you earn crypto via mining, staking, or as a payment for goods and services, some countries may levy income tax.

The taxation rules and rates for crypto will vary from place to place. In this blog, we will discuss the tax rates for cryptocurrencies in different countries.

How is Cryptocurrency Taxed Generally?

Cryptocurrency is taxed like stocks and other kinds of property. You need to pay taxes on the amount gained after disposing of or selling cryptocurrency. The tax rates for cryptocurrency gains are just like the tax rates on capital gains charged on stocks.

Example of Taxable and Non-Taxable Cryptocurrency Events

The table below lists some examples of taxable and non-taxable cryptocurrency events:

How is Cryptocurrency Taxed in Different Countries?

Here is how cryptocurrency is taxed in different nations:

United Kingdom

For selling any crypto or digital coins in Great Britain, the applicable capital gains tax rates are as follows:

For FY 2023-2024, the basic exemption limit (tax-free allowance) is £12,000, and capital gains are applicable only on gains that exceed the limit.

The tax rate for both long-term and short-term capital gains is the same:

• Those earning more than £50,270 - 20%
• Those earning less than £50,270 - 10%

The UK doesn't allow a loss set off under wash trading (tax loss harvesting). It means selling assets at a loss and repurchasing them immediately after to reduce tax liability.

The transactions below are classified as ordinary income and are subject to the regular income tax bracket;

• Airdrops
• Crypto Mining
• Staking Rewards
• Getting paid in Crypto

India

As per the 2022 Union Budget announcement in India, income generated from the transfer of virtual digital assets (VDAs), including cryptocurrencies, is subject to a flat tax rate of 30%

Additionally, a 1% tax deducted at source (TDS) was proposed on all cryptocurrency-related transactions exceeding a specific threshold, which is mainly intended for tracking transaction activity. Gains earned from crypto will be taxed at a flat rate of 30%, regardless of the holding period, because there is no concept of short-term or long-term capital gains.

Canada

In Canada, crypto is considered a digital asset whose sale attracts tax, and not the holding or purchase. Individuals who earn capital gains through the disposal of crypto must include the same in their yearly income. However, the total gains will not be subject to taxation, and only 50% of the capital gain will be taxed.

Germany

Crypto is considered private money in Germany and not as a capital asset. Individuals who hold their cryptocurrency for more than one year and later swap it, spend it, or sell it are not required to pay tax.

However, if you hold cryptocurrency for less than a year, you will have to pay taxes unless the profits are under €600. Individuals may also be subject to cryptocurrency taxes in other areas. It includes transactions such as mining crypto, receiving payments in cryptocurrency, selling staked crypto, and staking crypto within 10 years.

Additionally, it also includes swapping, spending, and selling crypto that are held for less than 1 year and whose gain exceeds €600.

Netherlands

There is no concept of capital gain taxation on the assets held in the Netherlands. No capital gain tax is applicable since crypto is considered a capital asset. However, they will be subject to taxation at a national rate on the asset's value that you are holding (just like wealth tax).

No wealth tax will be charged for individuals who hold assets up to €57,000 (€14,000). Additionally, tax at a rate of 36% will be charged on deemed gains from such assets. Keep in mind that deemed gains depend on the asset's nature.

• Debts = 2.46%
• Bank balance, savings, cash = 0.01%
• Investment/ other assets like crypto = 6.17%

United States

You don't need to pay capital gain tax if your total income is less than $44,626 a year (as a single taxpayer). The table below shows the holding period and tax rates based on the classification of capital gain:

The transactions below are classified as regular income and are subject to the regular income tax bracket;

• Airdrops
• Crypto mining
• Staking rewards
• Getting paid in crypto

Australia

The basic exemption limit is AUD18,200 a year, which is applicable even for capital gains. The following table lists the holding period and tax rate based on the type of capital gain:

The transactions below are considered regular income and are subject to the regular income tax bracket.

• Airdrops
• Crypto mining
• Staking rewards
• Getting paid in crypto

How to Reduce Cryptocurrency Taxes?

Here are some ways to minimise crypto taxes:

• Keep hold of successful cryptocurrency investments for more than one year before you use or sell them. The rate of taxation on such long-term gains is generally less than the rates on short-term gains. It significantly depends on the country where you live, and it might or might not apply.
• Indirect exposure to cryptocurrency is one of the most useful ways to reduce crypto taxes. For example, an Indian investor can get exposure to digital currency using multiple platforms, even without holding or purchasing crypto. This can help the crypto investor in reducing their tax liability.

Final Thoughts

Crypto taxation may vary significantly based on the country where you live. Some places may charge higher taxes, while others might not tax at all. Ensure to have good knowledge of your country's rules regarding crypto taxation. Additionally, keeping track of transactions and seeking guidance from an expert can help you stay compliant and avoid fines and hefty penalties.

When it comes to experts, Savetaxs leads the list. With a team of professionals and experts, we have been helping NRIs with their tax issues for several years now. Our team can solve all your queries and ensure that understanding crypto taxation isn't complicated for you. Connect with us right away and make smart financial decisions with expert guidance.