In the last few years, cryptocurrencies have exploded in popularity as an industry and form of investment. Many new developments and innovations in the space paired with the newfound popularity made the industry reach its all-time peak. The industry also saw a new high in the value of the most popular coins as well as some smaller coins that skyrocketed for short periods of time. All these profits were achieved thanks to many investors that poured funds into the industry while gaining massive profits.
Many governments have due to the rise and popularity or already have implemented taxation on cryptocurrencies. If you are in the space it is highly advised to read cryptomeistters guide to crypto taxation and other sources of information. The phenomenal increase in virtual and digital assets transactions has different laws depending on the region you live in. A rough estimate you can go by unless you live in a good and crypto-supportive region is around 30%. This is bound to change as the industry grows and changes so make sure to keep up to date.
Table of Contents
Taxation in the United States of America
In the US cryptocurrencies are viewed as capital assets, which makes it so taxes have to be paid on any gains obtained from selling them. This means you will have to pay short-term capital gains tax if you held the security for one year or less. While you will owe long-term capital gains if the cryptocurrency was held for longer than one year. This puts the US in one of the countries with rougher crypto taxation.
Although if you just purchase the cryptocurrency and hold it there is no taxation involved.
Taxation will only occur when you sell or exchange the crypto for a profit in the future.
Taxation in Canada
Canada sees cryptocurrencies as a commodity instead of fiat currencies, making them capital assets like stock or property. Since crypto here is taxed as income you will have to pay income tax on all profits of a cryptocurrency transaction. But if your crypto is taxed as a capital gain you’ll only pay capital gains of half of the profits. Furthermore, Canada’s cryptocurrency tax rates depend on your taxable income.
The range of Tax is from 15% to 33%, and the CRA also tracks its resident’s crypto investments. So make sure to accurately report your crypto investments and pay your fair share of crypto tax.
Taxation in Germany
One of the contours that offer relaxed taxation rules for cryptocurrency is Germany, where crypto is viewed as a private asset. This means that it attracts individual income and not capital gains tax. Additionally, cryptocurrencies are only taxed if they are sold the same year they are bought. Making it so that short-term trades, mining, and staking are taxed, its rules are still much easier on its residents.
It is important to note that in Germany if your crypto sales don’t exceed 600 euros per calendar year you will remain tax-free.
Taxation in Malta
Malta is a heaven for crypto-focused companies and parties due to the tax-free exempts for investors’ capital gains tax. Additionally, it has implemented several crypto-friendly virtual currency legislations and many big companies have established their crypto firms in Malta.
The tax guidelines are distinct between coins and tokens with tokens getting two further subdivisions, financial tokens, and utility tokens. For a cryptocurrency to be a coin it must not have features that make it comparable to classic equity. But when such a coin is involved in a transaction it is taxed identically to a fiat currency.
But in the end, the biggest benefit of Malta is that it is part of the European Union. This is because any crypto projects and operations based in it can operate freely throughout the entirety of the European Union.
