It is unlikely that someone is delighted and pleased when filling out tax returns, giving away some of their profits. Especially, if we are talking about cryptocurrencies , which have not yet been settled at the legislative level and are outside the legal field. It would be naive enough to assume that the desire to legalize cryptocurrencies from the point of view of states is initiated primarily with the aim of protecting cryptoinvestors. Certainly, the most important goal of financial regulators is to get additional income from citizens who carry out operations using cryptocurrencies.
The question of how the state will be able to accurately find out about the presence of cryptoactive assets from its citizens is still not clear. Even the KYC procedure , which in fact deprives users of anonymity, is only partially implemented and far from being everywhere. At the same time, the state policy regarding taxation is very unambiguous and voices the requirement to pay tax from any income received. So is it possible now not to worry about taxes for those involved in crypto-trading and mining?
Taxation of cryptocurrency in Singapore and Europe
The most calm at the moment can feel the people of Singapore. Here taxes on virtual cards are not charged at all. For cryptobusinessmen this is the best place right now, despite the fact that regulators are voicing their intention to change the current situation. There are a lot of representatives from Japan in Singapore who are involved in the cryptobusiness. All due to the fact that in their home country now the tax rate is 10-50%. Taxes are progressive and the percentage increases in proportion to income. Accordingly, the greater the profit, the higher the tax deductions.
In Europe, there are fairly mild conditions in Bulgaria and Slovenia, but this is not for long. The countries are part of the European Union and this will definitely make its changes in the near future. Moreover, in Belarus, at least until 2023, taxes on cryptocurrency will not be levied . This is the official position of state regulators.
Taxation of cryptocurrency in the United States
In the US, the government agency IRS took over the function of working with taxation in the field of cryptocurrency. Already, a number of exchanges send reports on a regular basis with the data of their users. The tax is calculated on the capital gains taking into account the real market value of the cryptocurrency specifically at the time of its receipt. Some countries, following the example of their colleagues from the United States, do not try to engage in the identification of income while the funds are in cryptocurrency. This is quite a laborious process and is not always effective. At the same time, the emphasis is on the moment when the cryptocurrency is displayed in fiat funds.That’s when questions arise from the tax authority. In countries where such processes are running, private exchangers are gaining more and more popularity, which provide services to convert cryptocurrency into Fiat and back without reporting to regulators. The course is usually slightly higher, but in general such transactions are more beneficial than with taxes. It is important to understand that such actions can be regarded as tax evasion and lead to corresponding consequences.
By the same principle, representatives of regulators do not spend resources to identify miners and their installations. Everything is concentrated around the moment of withdrawal of cryptocurrency in Fiat . The Organization for Economic Cooperation and Development has created an international system for the automatic exchange of information. They try to answer most questions about cryptocurrency. At the same time, there is still not included the exchange of information regarding the availability and amounts of cryptocurrencies owned by one or another person. Because of this, cases of dilution of the tax base are not excluded, when someone tries to hide income from tax services using cryptocurrency funds.
There is also a practice when the law does not fix tax legislation measures. In this case, they are issued in the form of explanations from the relevant regulatory authorities. One example is the “manual” issued by the British Ministry of Taxation (HMRC) . In the document on the cryptocurrency turnover, their investment status is fixed, and therefore there is a need to pay capital gains tax. The interest rate comes to 45% .
In most western countries, miners are classified as self-employed citizens, for which a separate tax rate is provided . Although in this case the filling of the declaration and the amounts specified there remains on the conscience of the miner himself, since it is not possible to track the exact amount of the “mined” cryptocurrency.
Taxation of cryptocurrency in the Russian Federation
In the Russian Federation, the Ministry of Finance voiced the requirement to independently fill out declarations regarding cryptocurrency income and pay 13% personal income tax . The amount of profit is calculated from the income received during the sale of a cryptocurrency minus the value at which the crypt was acquired. If you have acquired Bitcoin or Altos and they have grown several times, this is not yet considered a profit. The moment of fixation occurs when the cryptocurrency is transferred into fiat funds.
Taxation of cryptocurrency in Ukraine
On the territory of Ukraine, the cryptocurrency tax has not been introducedso far, but a bill has already been prepared . According to this document, it is planned to charge 5% of the profit received at the time of the conversion of the crypt into Fiat , taking into account the cost at which the purchase was made. In addition, the planned military collection for individuals in the amount of 1.5%. When converting cryptocurrencies between themselves, taxation is not provided. If this bill is submitted and approved, this tax format will be valid from 2019 to 2025 . In this case, the National Commission on the Stock Market and Securities will most likely act as the regulator of the cryptocurrency market. Successful steps will entaillegalization of not only cryptoexchangers and cryptobirds, but also ICO .
Thus, the process of legalization of cryptocurrency in most countries is in full swing, and in part already fully functioning. Over time, based on the experience of colleagues, there will be an opportunity to optimize the issues regarding income taxes on cryptocurrencies to the maximum. Now you can use zones that are as comfortable as possible and not worry about penalties from domestic regulators.