Crypto Taxation Laws Around the World

In most jurisdictions, crypto is not considered legal tender but taxed as property or an asset. For example:

• The United States IRS defines cryptocurrency as property, meaning it's subject to capital gains tax when sold or exchanged.

• Similarly, Canada classifies crypto as a commodity, treating crypto-related activities as barter transactions.

Only a few countries treat cryptocurrencies as digital currencies for taxation, like El Salvador, where Bitcoin is a legal tender but still subject to taxation when used in business. This difference is fundamental: classifying crypto as property triggers capital gains on each transaction, whereas treating it as currency could allow for broader exemptions in everyday usage.

Classification determines whether a crypto activity is taxed under capital gains, income tax, or corporate tax:

• Capital Gains: Profits from selling or trading crypto are typically taxed as capital gains.

• Income Tax: Crypto earned through staking, mining, or airdrops may be taxed as income.

• Business Income: If you trade crypto professionally, your profits may be taxed at a corporate or business income rate.

Understanding your country’s stance on classification helps you prepare accurate tax filings and avoid unexpected audits or fines.

• United States: The IRS treats cryptocurrency as property. Taxpayers must report capital gains or losses on Form 8949 and Schedule D. Income from crypto activities like mining or staking is reported as ordinary income.

• Canada: The Canada Revenue Agency (CRA) views crypto as a commodity. Transactions are considered barter transactions, and profits are subject to capital gains or business income tax, depending on the activity.

• Mexico: Cryptocurrency is subject to income tax and value-added tax (VAT). The Mexican Taxpayer’s Ombudsman has provided guidance on the tax regime applicable to crypto-assets.

• United Kingdom: HM Revenue & Customs (HMRC) treats crypto as property. Capital gains tax applies to disposals, while income tax applies to activities like mining or staking.

• Germany: Crypto held for more than one year is tax-exempt. Short-term gains (held less than a year) over €600 are subject to income tax.

• France: Occasional investors pay a flat tax rate of 30% on capital gains. Professional traders and miners are taxed under the business income regime, with rates up to 45%.

• Japan: Cryptocurrency is taxed as miscellaneous income, with rates up to 55%. However, proposals have been made to reduce the tax rate to 20% to encourage investment.

• China: Cryptocurrency trading is banned. The government has cracked down on crypto exchanges and mining activities.

• India: A 30% tax on crypto profits and a 1% transaction levy have been imposed. The industry is lobbying for tax reductions to revive domestic trading.

• Australia: The Australian Taxation Office (ATO) treats crypto as property. Capital gains tax applies to disposals, and income tax applies to earnings from activities like mining or staking.

• South Africa: The South African Revenue Service (SARS) requires taxpayers to declare crypto holdings and pay tax on gains.