How different countries are taxing crypto-currencies

There are very few crypto friendly countries in the world, who allow the citizens to trade in crypto currencies. It is important to understand the tax regulations.

Regulators all over the world have begun to address the challenges presented by virtual currencies that mostly bypass regulated banks, financial firms, exchanges and central clearinghouses. Blockchain and crypto-currency presents huge scope for their services due to the complexities involved in trading in crypt-currencies.

Many countries have formulated their regulations and consider crypto currency as the commodity and they have imposed taxes on the same, where as majority of the Asian countries prefer to impose a ban on these currencies. Major Asian countries including India and China banned the trades in Crypto currencies. Indian ministers have even gone a step ahead and called the Crypto currencies as Ponzi schemes.  This article is a summary of the tax related provisions in various different countries.

Australia

Digital currency transactions are no longer subject to goods and services taxes (GST) in Australia but remain subject to incomes and capital gains taxes. Australia doesn’t have loose cryptocurrency regulations per se, but the country has shown willingness to incorporate blockchain startups in the country. Before 2016, Australia taxed blockchain companies double the average businesses.

Bulgaria

Personal income from the sale or exchange of bitcoin and other crypto-currencies is taxable, and will be treated as income from sale of financial assets.

Estonia

Tax policies particularly favor crypto-currency investment as they are not subjected to VAT tax. The bitcoin income is treated as capital gains. You have to pay income tax if you made a profit though. Incidentally income tax is also 20% though there are tax free amounts.

Finland

Based on informal interviews, the best indication is that virtual currencies are treated as commodities in Finland.

Japan

The sale of Bitcoin held for investment purposes is considered a capital gain or loss. The gains and losses from the Bitcoin or crypto currency trading, except for cases arising in association with activities that cause incomes such as business income, will be classified as miscellaneous income.

Singapore

Businesses that buy tokens for long-term investment purposes may enjoy a capital gain from the disposal of these tokens. However, as there are no capital gains taxes in Singapore, such gains are not subject to tax. Businesses that buy and sell tokens in the ordinary course of their business will be taxed on the profit derived from trading in the token.