It won’t be out of place if you say that cryptocurrency has been the most persecuted business in the world today.
Crypto has survived even the strongest economic hitches, and obstacles are thrown at it. Everyone, including those who buy bitcoin just for keeps, has, in one way or the other, felt the heat from various governments. These Governments have found a way to leverage from the same industry they fought through taxation.
Countries like the United States, United Kingdom, Italy, Canada, Germany, India has all placed taxes on cryptocurrencies. Some of these taxes are huge, while others are moderate and accommodating. This new development has compelled some traders and even people who buy bitcoin for buying sake to migrate to those cryptocurrency heavens, e.g., Portugal, Switzerland, Singapore, Japan, and Malta. China has since joined the list of non-friendly crypto nations after their clampdown on miners: a situation that has forced some of them to move out of the country.
The idea of taxing crypto traders is a welcome development, but what the stakeholders are after is that the government goes easy on them. Since the cryptocurrency industry is a trillion-dollar business, it will only be rational to tax it. Below, we have listed some countries that have placed a tax on cryptocurrencies and how well the policy is facilitated.
Five countries where those who buy bitcoin are taxed
The United Kingdom
This was one of the first countries to initiate the crypto tax. Cryptocurrency is seen as a capital asset in that country, hence integrating a capital gain tax. This means that any business having crypto assets is levied a capital gain tax. The tax is charged on the cryptocurrency disposition, e.g., selling your coin for money, exchanging it for a money equivalent, or using it to pay for goods.
All these transactions are liable to crypto tax in the United Kingdom. The capital gain tax (as they call it) is as high as 20% and 10% for what they refer to as “basic rate taxpayers.” Things considered while placing this tax include how big you gain, the total taxable income, and the allowance deducted. Also, a total of £12,300 is subject to a tax-free allowance.
The United States
The United States Internal Revenue Service (IRS): a US government department responsible for collecting taxes, has made it known that cryptocurrency transactions, including selling or buying bitcoin, can be classified as property, unlike its previous recognition as a currency. This new development has made the currency liable to tax. However, it also means that it will be taxed the same way assets like gold, stocks, diamonds, etc., are taxed.
And transactions like receiving crypto (whether you sell or buy bitcoin), paying for your goods with crypto, exchanging one crypto for another, receiving an already mined cryptocurrency, getting paid in cryptocurrency by your employer or equivalent are all regarded as crypto transactions and are taxable. However, whereas those who whole purchase crypto for hold (e.g., those who buy bitcoin with fiat and hold it), those who transfer cryptocurrency from one wallet to another as a donation are all tax-exempt: they are not taxable. But those who are taxable are liable to pay between 10%-20% on cryptocurrency transactions within the United States.
The Italian tax authorities have decided to liken cryptocurrency to a foreign currency. With this, they now tax the proceeds from an exchange between cryptocurrency and fiat, or the exchange between two cryptocurrencies at 26% in what they prefer calling a substitutive tax.
In Germany, the crypto is seen as personal money, as in, those who buy bitcoin for keeps are seen to be staking real money and not necessarily an asset. Those who hold it for less than a year are taxed, unlike you, have a profit below €600. And if you happen to hold it for more than a year and sell it, swap it, or use it to pay for goods or services, you will be tax exempted.
Finally, you have to understand that although the cryptocurrency is currently receiving harsh treatment from many countries, the good news is it is still here, waxing stronger as nothing has happened. Today, all those forces that were once against this sector have come up to see how they can benefit from it; as they say, if you can’t beat them, join them – and that’s what’s going on in the world today.