Comparing Tax On Crypto in Other Countries in 2022
India has been waiting for a long time for crypto, which recently has been cleared by the Government of India. The government has made the clarification on how it has been planned to tax these assets.
Finance Minister Nirmala Sitharaman has announced that India will impose the tax on ‘Virtual Digital Assets’ at 30% with no exemptions and deductions from 1 April 2022
But Wait…. What do you think is good news for you? So, here is the killer blow for you of TDS (Tax Deductible at Source), especially for traders.
Yes! On every single transaction, including 1% of TDS will be deductible.
According to the New Finance Bill that has been introduced, a new section 194S will be added from 1 July 2022. Any buyer will have to deduct 1% of the payment of the seller.
So, what other countries are up to for crypto?
Taxation on Crypto Globally
United States of America
The IRS in the US views cryptocurrency as a capital asset, meaning there are taxes to be paid on any gains obtained from selling them.
In other words, if you are holding a security for less than one year, then you’ll pay for the short-term capital tax, and you’ll owe long-term capital gains tax if you held your positions for longer than one year. If you simply buy, there is no taxation involved.
Theoretically, you can avoid the taxation forever if you simply hold it. You’ll only be taxed on, if you sell or exchange it again in the future.
Talking about the tax rate of Bitcoin, capital gain varies between 0 percent to 37 percent if you sell them within a year.
If it was kept for more than a year, the appropriate tax rate is substantially lower, ranging from 0 percent to 15 percent, or even up to 20 percent, depending on the individual or combined martial income.
Any losses from the sales can be used to offset income tax up to $3000 in total.
Canada
Cryptocurrency doesn’t seem like fiat in Canada. It’s viewed as a commodity, which is a capital asset like any other rental property. If your crypto is taxed as income, you’ll pay Income Tax on the entire proceeds of a crypto transaction.
If your crypto is taxed as capital gain, you’ll only pay Capital Gain Tax of any profits of any transaction related to it.
The crypto tax is bifurcated somehow differently in Canada; let’s watch out taxability system:
| Tax Rate | Income |
| 15% | On First $49020 of taxable income |
| 20.5% | $490201-$98040 |
| 26% | $151979-$216511 |
| 33% | $216512 onwards |
The Canada Revenue Agency can track all your investment. They made an announcement that they are working on a system that will help crypto exchanges to share customer information.
They are doing this to keep track of the Canadian Investors for ensuring they’re reporting their investments accurately and paying tax on crypto.
United Kingdom
In Britain, the capital tax rates are disposing of cryptocurrencies at 20% for higher and additional rate taxpayers with 10% basic rate taxpayers. The allowance that is tax-free is $16610. The tax you will pay depends on the specific transactions that you are doing with crypto.
Unlike many other countries, it has been seen that the UK doesn’t follow short-term and long-term Capital Gains Tax rates. All are taxed under the same rates. It totally depends on how much you earn.
Check out here:
| Rate | Total Income |
| 10% | Basic Rate Income Band (up to £50270) |
| 20% | Higher Rate Income Band (up to £150000) |
| 20% | Additional Rate Income Band (more than £150000) |
Australia
In countries like Australia, cryptocurrency has been viewed as an asset and attracts capital gain tax and Income Tax, both by the Australian Taxation Office (ATO).
If you are trading in crypto in the past financial year, you have to declare it on the total tax return.
- The ATO has a data-sharing program with the Australian exchanges.
- The ATO knows crypto transaction data from as far back as 2014
- The ATO has to know your customer (KYC) details that have been provided while signing up for the Australian exchange wallet.
The Australian Government does not see bitcoin and other cryptocurrencies as money or foreign currency. It has been classified as property and charged as a Capital Asset.
| $0-$18200 | 0% |
| $18201-$45000 | Nil+19% on excess of $18200 |
| $45001-$120000 | $5092+32.5% on excess of $45000 |
| $120001-$180000 | $29467+37% of excess of $120000 |
| $180001 onwards | $51667+45% of excess of $180000 |
Netherland
The taxation system in the Netherlands is quite different as compared to other countries. It levies a wealth tax rather than a capital tax. Rather, a presumed interest is levied when you talk about the value of all the assets and deduct liabilities at the start of the tax year.
If your asset with the inclusion of it goes up to 50000 or more, then it is subject to 31% of the wealth tax in the Netherlands.
RELAXATION IN OTHER COUNTRIES
There are some countries where crypto tax has been lenient. Owing to the same, these places are often seen as cryptocurrency havens and attract a lot of blockchain and investment houses and start-ups.
Germany
Cryptocurrency in Germany has been viewed as a private asset and not a property, unlike other countries. Now, what does it indicate? It indicates that Income tax will be charged rather than Capital Gain.
Germany only taxes crypto if it’s sold within the same year. In Germany, it is classified as ‘other asset’ and selling it as ‘private disposal.’
Portugal
In Portugal, the Government has chosen to adopt a lenient policy as well on crypto. Individuals in Portugal who profit from the purchase and sale of cryptocurrency are not taxed on the capital gain.
Buying and Selling in Portugal would not be subject to the Capital Gain Tax or Value Added Tax, and it’s a virtual tax that is charged on digital assets.
The tax on Crypto Currency will be charged if you do activities like professional trading. Otherwise, they are considered non-taxable in Portugal.
Singapore
The Monetary Authority of Singapore or the central bank views that the cryptocurrency ecosystem should be monitored to prevent money laundering and activities that are not legal.
It is also exempt from Capital Gains taxes in Singapore.
In Singapore, there are certain factors that are considered for the tax, like the frequency of transactions and holding period.
Some countries have implemented welcoming regulations on crypto such as promoting it by allowing trade and investment in cryptocurrencies at low or zero rates.
A lot of things recently happened in India as well, and tax laws will change to adjust to the new form of growing currency.
