Around the world, cryptocurrency taxation is beginning to gain favor, despite attempts by many governments to suppress widespread adoption of digital assets. Like it or not, government oversight of the crypto space, including properly filing taxes on the assets, is coming. It may take a while for the regulations to propagate and many crypto enthusiasts may try to oppose the move, but it is without a doubt an inevitability. If there’s money to be made, governments will figure out how to get involved.
In Chile, for example, lawmakers have introduced new legislation that will see crypto assets taxed beginning this April. The decision is seen as a step toward the legitimization of crypto for trade and use as a currency, despite the country’s previous denials of virtual currencies. Chileans were not obligated to pay a VAT (value added tax) on crypto last year – because the government said they were “intangible assets” – but that now changes with the new laws.
In Spain, in order to combat illicit activity through fiat or crypto, a new anti-fraud law was drafted last October that forces crypto investors to declare all assets, whether held in the country or overseas. Profits earned from crypto transactions are also taxed, with rates ranging from 19-23%. To help enforce the new laws, as many as 200 officials within the government will be assigned to a taskforce specifically created to monitor and track crypto activity.
Romania has also embraced digital currencies – at least to boost the government’s coffers. On January 20, Romanians had to begin paying a tax of 10% on all profits made from the sale of digital assets. Profits that don’t reach 200 leu (around $48) don’t have to be reported, unless they reach 60 leu ($144) in the year.
France was a pioneer on crypto taxes. It began taxing crypto assets in 2014 when it introduced a 45% capital gains tax on the sale of currency. It justified the tax by categorizing crypto as “commercial and industrial property.” In April of last year, it lowered the tax rate to 19%, with exceptions.
This is just the beginning. Over the next couple of years, more governments will undoubtedly introduce legislation to tax crypto assets. However, this is no different than what has happened throughout the entire history of man, since the idea of a tax was first conceptualized. Governments will also find a way to tax any good, product or service to receive a portion, but they must first recognize that there is real, intrinsic value to crypto to make it a taxable asset.
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