Crypto Tax Guide: Complete Guide to Crypto Taxes in 2024
Although taxes aren’t exactly the most exciting aspect of investing in crypto, the fact of the matter is that gains from cryptocurrency are taxed in most countries. In this crypto tax guide, we will explain how cryptocurrency taxes work in major countries across the globe.
Key highlights:
A growing number of countries is adopting tax laws specifically designed to address crypto investing.
In many countries, profits from crypto trading are taxed under capital gains tax laws.
In some countries, taxes are only charged on crypto profits if the crypto was held for a short period of time before it was sold.
We’re highlighting how crypto taxes work in the UK, Canada, India, Germany and Italy.
Crypto tax guide for 2024 – Here’s how major countries tax crypto
Let’s take a quick look at how cryptocurrency-related transactions are taxed in various countries.
Crypto taxes in the UK
The United Kingdom has a well-developed system for crypto taxes, and taxes various crypto transactions. If you sell cryptocurrency for a profit or receive crypto through mining, airdrops or employment, you’ll be liable to pay taxes.
There are two types of taxes in the UK that are relevant when it comes to cryptocurrency transactions – capital gains tax and income tax. Here’s a quick breakdown of which types of which taxes apply to different types of crypto transactions.
Capital gains tax:
Selling cryptocurrency for a profit
Swapping between different types of cryptocurrency
Spending crypto on goods and services
Receiving cryptocurrency as a gift
Inheriting crypto
Cryptocurrency received from hard forks
Income tax:
Profits earned from professional crypto trading activity
Cryptocurrency received from mining
Cryptocurrency received from aidrops
Cryptocurrency received from an employer
Notably, crypto assets are classified into four categories in the United Kingdom.
Exchange tokens (e.g., Bitcoin): Crypto assets that are used as a means of payment or exchange.
Utility tokens (e.g., BNB): Crypto assets that provide holders access to services and products in a specific blockchain network.
Security tokens (e.g., Polymath): Crypto assets that have characteristics of traditional investments (for example shares or debt instruments).
Stablecoins (e.g., Tether): Privately issued crypto assets that have their value tied to fiat currencies or other assets (for example gold).
If you want to learn about UK crypto taxes in greater detail, make sure to read our ultimate guide to crypto taxes in the UK.
Crypto taxes in Canada
In Canada, transactions related to cryptocurrency are taxed either as capital gains or as business income.
When it comes to capital gains, 50% of gains from crypto investments are taxable. If you purchased $10,000 worth of Bitcoin and sold it for $15,000 later after it increased in price, taxes would only apply on $2,500 of your $5,000 total profit. However, you would still have to report the entire gain.
Meanwhile, 100% of business income from crypto-related transactions is taxed in Canada. Depending on how frequently you trade cryptocurrency and how high your profits are, proceeds from your crypto trading activity could be considered as business income.
Here is a quick overview of taxable and non taxable crypto transactions in Canada:
Taxable:
Selling cryptocurrency for fiat currency
Trading a cryptocurrency for another kind of cryptocurrency
Using cryptocurrency to purchase goods and services
Gifting cryptocurrency
Receiving rewards through cryptocurrency mining or staking
Not taxable:
Buying cryptocurrency with fiat currency and holding it
Receiving a gift in the form of cryptocurrency
Transferring cryptocurrency between two of your own crypto wallets
Creating a DAO (decentralized autonomous organization)
If you want to learn more about how crypto is taxed in Canada, make sure to read our ultimate guide to crypto taxes in Canada.
Crypto taxes in India
In India, cryptocurrency gains are subject to a flat 30% tax, applied when capital gains are realized, meaning a positive change in value between the purchase and sale of a virtual digital asset (VDA). Notably, any losses incurred during the holding period cannot be deducted for tax purposes.
Additionally, a 4% cess is imposed by the Central Board of Direct Taxes, effectively raising the total tax on capital gains to 34%. Moreover, there is a surcharge through Tax Deducted at Source (TDS) that applies to crypto transactions, further impacting the overall tax burden.
In the Indian tax system, cryptocurrencies fall under the category of VDAs (virtual digital assets). The term VDA refers to any piece of code, information, number, or token that operates independently of traditional fiat currencies and is created using cryptographic methods. This includes assets like cryptocurrencies and digital tokens that rely on blockchain or similar technologies.
Here are the different types of VDA-related transactions that are taxable in India:
Selling VDAs for fiat currency
Exchanging one VDA for another
Using VDAs to buy goods and services
Receiving VDAs as a payment for goods and services
Receiving VDAs as a gift
Mining VDAs using specialized equipment or software
Taking a salary from an employer denominated in a VDA
Earning yield from staking VDAs
Receiving airdrops denominated in VDAs
If you want a more detailed explanation of crypto taxation in India, make sure to read our ultimate guide to crypto taxes in India.
Crypto taxes in Germany
In Germany, profits made from cryptocurrency investing are taxed according to the capital gains tax framework that also applies to other investments such as stocks.
In Germany, capital gains tax on cryptocurrency only applies if the asset is sold within one year of ownership. If the crypto asset is held for more than 12 months, no tax is due, making the effective capital gains tax rate 0% in such cases. Additionally, if the profit from selling the asset is less than €600, the capital gains tax rate is also 0%, providing further tax relief for small gains.
In Germany, besides capital gains tax, two additional taxes may apply to cryptocurrency gains under certain conditions, resulting in three types of crypto taxes:
Capital Gains Tax: A flat tax is imposed on all profits made within a specific time frame, typically when assets are sold within one year of ownership.
Solidarity Surcharge (Solidaritätszuschlag): A 5.5% surcharge on capital gains, which is levied in addition to the capital gains tax. This surcharge is part of both the income tax and corporation tax systems.
Church Tax (Kirchensteuer): Members of recognized religious communities may be required to pay an additional tax on their capital gains. This tax is applied as a percentage of the individual's income tax or capital gains tax liability.
If you want to take a closer look at the taxation of crypto in Germany, we recommend you read our ultimate guide to crypto taxes in Germany.
Crypto taxes in Italy
Italy has adopted a new crypto-specific tax law which states that profits over €2,000 made from cryptocurrencies are subject to either capital gains tax or income tax, depending on the type of transactions that generated the profit.
Individuals who have earned over €2,000 in profits are now required to report their cryptocurrency gains as miscellaneous income on their annual tax return, and this sum is subsequently subject to capital gains tax.
In italy, a taxable event occurs only when a crypto asset is sold or otherwise disposed of, meaning unrealized gains are not subject to tax under Italian law. Gains are calculated as the positive difference between the selling price and the purchase price, so capital gains tax is only applicable once a crypto asset is sold or traded.
Now, let’s quickly break down the types of crypto transactions that are considered as taxable events in Italy:
Selling crypto assets for fiat currency
Exchanging one cryptocurrency for another
Using crypto to buy goods and services
Receiving crypto as a payment for goods and services
Receiving crypto as a gift
Mining crypto with specialized equipment or software
Taking a salary from an employer denominated in cryptocurrency
Earning yield from staking crypto assets
Receiving airdrops denominated in crypto
If you want to take a closer look at how crypto is taxed in Italy, make sure to take a look at our ultimate guide to crypto taxes in Italy.
Crypto taxes in Australia
It's important to understand that the Australian Taxation Office (ATO) classifies cryptocurrencies as property, meaning that Capital Gains Tax (CGT) applies to any gains made from selling, trading, or using crypto for purchases.
When examining crypto taxation in Australia, note that a 50% discount on capital gains tax is available for cryptocurrencies held for more than 12 months. This provides long-term investors with a reduced tax liability, encouraging the holding of assets to minimize tax obligations.
Additionally, income earned from activities like mining and staking is taxed as ordinary income and must be reported in your tax return along with capital gains.
Australian crypto investors should keep detailed records of all cryptocurrency transactions, including gifting and swapping, to ensure accurate tax reporting. These records should include dates, amounts, and the counterparties involved in each transaction.
In Australia, if your total income is up to A$18,200, you won’t pay any income tax on capital gains from cryptocurrencies. Beyond this threshold, your crypto tax rates align with your income tax brackets.
Income range (A$)
Tax rate
Up to 18,200
0%
18,201 to 45,000
19%
45,001 to 120,000
32.5%
120,001 to 180,000
37%
180,001 and above
45%
Importantly, long-term capital gains on assets held for over 12 months qualify for a 50% discount. This means you only pay tax on half of the capital gain, which significantly reduces your overall tax liability.
If you want to learn how crypto is taxed in Australia in more detail, we recommend you read our ultimate guide to crypto taxes in Australia.
The bottom line
As you can see, crypto taxes vary quite significantly across the world, but the common theme is that governments are starting to take cryptocurrency seriously and are establishing frameworks for taxing crypto-related transactions.
If you are running a business that deals with cryptocurrency or have a very complex crypto tax situation, you might benefit from professional crypto tax accounting services. Take a look at our list of the best crypto tax accountants to learn more.
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