Taxes on crypto

Published on
September 26, 2022
Published by
Mathew Fernandez

In most countries you pay tax on the trade of majority of the commodities however, it is different in every country. Not all cryptocurrency transactions are taxable. It’s important to research the rules and regulations when it comes to what transactions are taxed and what are not for the country you live in, as they are very different.

For example if we take a look at Canada, any income from transactions that involve cryptocurrency is either a business income or a capital gain depending on the type of transaction. So if earnings qualify as business income or capital gains then any losses are also qualified as business losses or capital losses.

Holding cryptocurrency is not taxable. Any transactions done within an exchange are not taxable. Any transactions based off cryptocurrency business are not considered capital gains. Examples include: cryptocurrency mining, cryptocurrency trading and cryptocurrency exchanges.

Now when you look at trading cryptocurrency for another type of cryptocurrency that is something you must report on your income tax return. So if you send money to a specific account and you convert the value of the cryptocurrency you received into Canadian dollars or vice versa this must be reported on your income tax return as this transaction is considered a disposition meaning that the Canadian barter transaction rules apply. Anything that is transferred from cryptocurrency to Canadian dollars to be sent to your bank account is subject to capital gains.

In Austria cryptocurrencies are considered “private assets”, which means that you do not get taxed on cryptocurrency. In Austria whether you get taxed or not depends solely on the amount of profit generated as well as the how long you hold your cryptocurrency for and the type of asset.

In Portugal however, recently they have removed taxation completely on all crypto trading and payments. The Portugal tax authority published an official ruling document and stated that the trading of crypto for fiat cash is free of tax including that crypto clients do not need to pay tax on income. The Portuguese Tax Authority had expressed that exchanging cryptocurrencies or getting cryptocurrency payments will not be taxed, however, organizations should pay capital gains tax.

The laws and legislation for tax on crypto is different in all countries and should be researched before completing any crypto transactions so you are well aware of the rules.