Cryptocurrency Taxation Around The World
In the last article, we found out how to pay taxes on cryptocurrency in developed countries. For illustration, we considered two completely different states — Japan and Germany. Indeed, these examples are not enough to judge the situation in the entire world; each country should be considered as a special case. Nevertheless, some common factors clearly demonstrate a global attitude toward cryptocurrencies.
Discussion of the law and tax on cryptocurrency in different countries
The issue of cryptocurrency taxation arises in countries where the government has already decided on a regulatory policy toward cryptoassets. Naturally, this implies that the regulation in these regions is loyal or sufficiently favorable for the development of the sphere. For example, we don't take China into consideration. China is a country with the rapidly developing economy, however, its government introduced a series of prohibitive measures against cryptocurrency in 2017.
In some countries, cryptocurrency market regulation is so strict that it prohibits digital assets whatsoever. Any activity with cryptocurrencies is prohibited to the residents of Algeria, Morocco, Vietnam, Pakistan, Bolivia, and Nepal. The governments of Bahrain and Qatar have a slightly more positive attitude. They allow conducting financial activities with crypto assets, but only abroad. Similarly to China, the policy of partial ban is followed by Thailand, Iran, Colombia, and Bangladesh. It is partial, because mining there is still allowed.
The general picture of the world crypto tax arena is clearly illustrated on the map by the cryptocurrency-tax.info service. Of course, it is necessary to take into account that the data is constantly changing, but the map allows gaining a general understanding of how to pay taxes on cryptocurrency across the world. We can see that developed countries tend to a more strict type of crypto regulation. Traders lose about a quarter of profit there as they have to pay taxes. At the same time, developing countries are more loyal, and this attracts investors from other regions.
Still, it is worth remembering that cryptocurrency flows are much more difficult to track. There are various ways to circumvent unfavorable conditions. For example, crypto holders can trade on platforms without KYC, or directly with other investors. As opposed to the states mentioned above, let's consider the countries that currently have attractive conditions for crypto enthusiasts.
Countries with low cryptocurrency taxes
The Danish government plans to create the world's first cashless economy. In this regard, it's not surprising that the country is neutral about cryptocurrencies. Bitcoin, like other digital currencies, is not considered a payment instrument in Denmark. Moreover, the Danish government focuses on the fact that owning crypto is a risky deal, and investors are the only ones responsible for their activity. Nevertheless, the fact that people there do not have to pay taxes on cryptocurrency puts the country in an advantageous position.
At the end of 2017, the President of Belarus surprised everyone by expressing his more than a positive attitude toward the crypto sphere. He confirmed his words by issuing the decree “On the Development of the Digital Economy”. Thus, he added cryptocurrencies to the legal field and legalized financial operations with them.
The decree has opened up truly ample opportunities for everyone to join the crypto sphere. In Belarus, people can freely trade, keep, change coins and not think about how to pay taxes on cryptocurrency. What a paradise for crypto enthusiasts!
France shows a tendency to reduce cryptocurrency taxes. In November 2018, the French Finance Commission in the lower house of Parliament was proposed to lower tax rates on capital gains from crypto trading to 30%. So far the rate is at 36.2%. If the amendment is adopted, it will enter into force at the beginning of 2019. The crypto trade profit will be automatically considered as non-material assets.
Basically, the end of a financial tax year and the beginning of the next one is a period of dynamic regulatory adjustments. At this time, a budget is created, and the issues that have been postponed throughout the year get resolved. We will closely monitor the situation in the crypto sphere and highlight it in the following articles. Stay with us!