How other countries tax crypto gains
Summary
Major economies tax cryptocurrency investment gains under different rules based on holding periods, income and transaction type. The United States applies ordinary income tax rates to short-term gains and lower long-term capital gains rates to qualifying holdings, while Britain taxes gains at 18 or 24 percent and provides an annual allowance. Canada distinguishes capital gains from business income, and Japan generally treats crypto profits as miscellaneous income. Germany and the United Arab Emirates offer exemptions for some personal crypto investments, though UAE crypto businesses may face corporate tax.
Key Facts
- In the United States, short-term crypto gains are taxed at federal income tax rates of 10 to 37 percent, while long-term gains are taxed at rates of 0, 15 or 20 percent, depending on income.
- Britain’s annual tax-free capital gains allowance is 3,000 pounds per person.
- Canada includes half of a profit in taxable income when it classifies the profit as a capital gain.
- Japan’s combined income and resident tax rate on cryptocurrency profits can reach about 55 percent; proposed changes would introduce a separate 20 percent levy on qualifying transactions and allow losses to be carried forward for three years, subject to legislative changes.
- Germany generally exempts ordinary crypto assets sold after more than a year; shorter-term gains may also be exempt when total annual profits from private asset sales are below 1,000 euros.
A representation of bitcoin / Korea Times photo by Shim Hyun-chul
Major economies, including the United States and Britain, already tax cryptocurrency investment gains, though rates and allowances vary depending on holding periods, income levels and the nature of transactions.
In the United States, cryptocurrencies are treated as property. Profits from assets held for a year or less are taxed at ordinary federal income tax rates ranging from 10 to 37 percent, while gains on assets held longer qualify for federal long-term capital gains tax rates of 0, 15 or 20 percent, depending on income. State taxes and additional levies may apply.
Britain imposes capital gains tax at 18 or 24 percent, depending on income, with an annual tax-free capital gains allowance of 3,000 pounds per person.
Canada classifies trading profits as either capital gains or business income. For capital gains, only half the profit is included in taxable income.
Japan generally treats cryptocurrency profits as miscellaneous income, combining them with other earnings and applying a maximum combined income and resident tax rate of about 55 percent. It is seeking to introduce a separate 20 percent levy on qualifying transactions and allow investors to carry losses forward for three years, subject to legislative changes.
Some countries offer tax exemptions for personal investments.
Germany generally allows individuals to sell ordinary crypto assets tax-free after holding them for more than a year. Shorter-term gains are also exempt if total annual profits from private asset sales, including other qualifying transactions, fall below 1,000 euros.
The United Arab Emirates levies neither personal income tax nor capital gains tax, although cryptocurrency businesses may face a 9 percent corporate tax.
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