Crypto Taxation around the World: from Germany to Japan

December 18, 2018 10:51 pm



at Cryptonomos

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Do you pay taxes for using crypto? Or let’s better rephrase the question: do you know that you must or must not pay taxes for using crypto in your country? 

If you do – and we are confident you do, still, this article is something you should not skip. Taxation is becoming one of the principal issues, when it comes to cryptocurrencies, as every country differs in its policies and approaches. Today we’ll examine which countries could be lauded as ‘tax havens’ for crypto owners and in which ones you will be taxed for a full ride. Buckle up, ladies and gentlemen, our trip across taxations is in high gear.


 Federal ministry of finance Germany

Source:  Federal Ministry of Finance, photo: Ilja C. Hendel

Germany is positioning itself as one of those European countries that have business-friendly tax policies. It has become a true shelter for both mid-term and long-term crypto investors. Here trading crypto is considered as a private sale under the rule 23 EStG which implies tax-free benefits. According to this document, trading cryptocurrencies is totally tax exempted, provided that your capital gains are not more than 600 EUR.

The punch line is that in Germany digital currencies are not considered as a commodity, a stock, or any kind of currency. Instead, since 2013 they are recognised by the German Finance Ministry as private money in a way that’s similar to foreign currency.

Interestingly, profits made through any kind of operation with crypto (e.g. mining, trading, exchanging) are subject to a capital gains tax (which is 25-28 percent, by the way) including a solidarity surcharge. According to the German Income Tax Act, if the assets are held for more than one year, they become tax exempt.


 President of Poland

Andrzej Duda

Source: Profil Prezydenta RP Andrzeja Dudy 

 A legal framework in Poland has been dramatically changing so far. In April 2018, the government decided to tax crypto investors on each and every crypto transaction they were involved in. The country’s government bound citizens to declare all their crypto and exchange gains. This far-fetched tax was too heavy for crypto owners. That’s why the government decided to backtrack it and commenced the establishment of a new well-thought-out one.

Polish community had to wait for almost 3 months. In August, regulators in Poland have come forward with a long-promised Crypto Bill. This regulation, as government believes, will enable it to keep a strong focus on the illegal activities which are carried out in the guise of cryptocurrency transactions. The crypto taxation was officially released on 24th August 2018.

Additionally, in mid-November, the Income Tax Department of the country has suggested President Andrzej Duda’s government to levy a steep tax of 19% on income from using crypto. If enacted, the taxation is expected to come into force from January 2019.


 Internal Revenue Service Building on Constitution Avenue in Washington, D.C.

Source: Wikimedia

 The whole story with crypto-taxes in the US began in 2014 when the Internal Revenue Service (IRS), the country’s government agency that collects taxes and enforces tax laws, issued the general guidance on how cryptos are taxed.

According to the guidance, in the US “virtual currency is treated as property”. It also says that crypto-taxes are calculated individually for every taxpayer who uses crypto and they depend on the coin’s value as of the date it was traded:

A taxpayer who receives virtual currency as payment for goods or services must, in computing gross income, include the fair market value of the virtual currency, measured in dollars, as of the date that the virtual currency was received”

As of today, by the look of things, Internal Revenue Service is not going to be soft with crypto owners. In February 2018, Coinbase, a San Francisco-based digital currency exchange, sent an official notice to about 13,000 customers, informing them that their data is being handed over to the IRS per their request. The IRS is also famous for using software designed to track crypto tax cheats. 

Agency periodically sends emails to crypto holders, reminding them to pay their taxes and even published a memo, highlighting the “inherently pseudo-anonymous aspect” of crypto transactions.


 The Ministry of Finance Japan

Source: Japan Times

 Japanese crypto holders seem to be operating in a crypto-paradise, but it’s not that simple. Although country recognises the crypto as a legal means of payment, the main reason behind this move to legalization is to ensure tighter oversight from the Financial Services Agency of Japan over the virtual economy.  

In Japan, cryptocurrency investors must pay between 15 and 55 percent taxes on their profits declared on their annual tax filings by the end of the year. Judging from the statistics which shows that the trading pair BTC/YEN is one of the most popular, we can safely say that the country will receive large revenues from taxing crypto.

Speaking of the latest news, in early December, Japan’s government announced that it prepared a new system that would allow the National Tax Agency (NTA) to obtain data from transaction intermediaries – crypto exchanges. A new regulation is expected to come into force in late 2019.  According to several sources, this will be the case for those crypto owners who earned over 10 mln yen ( ̴$88,700) from crypto transactions.