Crypto

Cryptocurrency Tax And Rules By Country

Bitcoin may have been around for more than a decade, but governments have yet to develop ways to regulate cryptocurrency.

Expats investing in crypto have a more challenging time than most, as holding and trading is treated differently as they move across borders.

To help keep up with the fast-moving world of crypto, here’s an explanation of the legal and tax treatment of digital currency investments in some leading economies.

USA

The US is one of the global centres for cryptocurrency and blockchain developers. Since China banned crypto mining in September 2021, the market has shifted to make the States the leader in uncovering new bitcoin and other ‘mined’ crypto.

The US financial regulator, the Securities and Exchange Commission (SEC), considers crypto a security. Strict rules to protect investors surround the launch and ongoing administration of securities, like publishing a detailed prospectus for an initial coin offering (ICO).

Cryptos are not recognised as currencies but property, which means they are not exempt from capital gains taxes when sold or income taxes when generating interest or other returns.

Two cases to watch are the SEC v Ripple Labs, the company behind crypto XRP, and the SEC v Coinbase, the leading US crypto exchange.

China

China ordered crypto exchanges to close and stopped them from providing services in the country in 2017, prompting Binance, the world’s largest exchange, to uproot and move to the Cayman Islands. A ban on mining crypto followed the move in May 2021.

China was the world’s largest crypto mining community until the ban. Miners have now relocated to the US and Kazakhstan.

The government refuses to treat crypto as legal tender.

UK

Crypto is not illegal in the UK but is treated as property rather than legal tender. That means capital gains tax applies to disposals, and income tax is charged on interest.

Traders may pay income tax on profits, depending on how much trading they do and the level of profits they make. Companies trading cryptos pay Corporation Tax on any profits and gains.

Regulator the Financial Conduct Authority (FCA) has banned derivative trading in cryptos.

Australia

Cryptocurrency is property, not legal tender in Australia, which triggers capital gains tax on investment profits. ICOs are tightly monitored, but exchanges cannot offer privacy coins.

Singapore

treats cryptocurrency in ways similar to the UK and Australia. Cryptos are not legal tender but property for tax, but a benign tax regime means long-term gains are often exempt from tax. However, professional set-ups, like companies, pay income tax on regular crypto gains.

European Union

Crypto is not illegal in the European Union, but the EU is working towards a common licensing and regulatory standard. No EU nation accepts cryptos as legal tender but treats them as property. How property is taxed varies between states. Some apply capital gains and income taxes, while others charge tax to cryptos at a zero rate.

Countries With Crypto Bans And Taxes

The US Library of Congress keeps a list of countries where cryptocurrencies are illegal. The listings cover absolute and implicit bans.

An absolute ban is when any cryptocurrency activity is illegal. An implicit ban covers stopping banks and exchanges from dealing in cryptocurrencies or offering services to trade cryptocurrencies.

Nine countries have absolute bans and 42 implicit bans.

CountryCrypto Ban – AbsoluteCrypto Ban – ImplicitCrypto tax
AlbaniaNoNoYes
AlgeriaYesNoNo
AngolaNoNoNo
AnguillaNoNoNo
Antigua and BarbudaNoNo
ArgentinaNoNoYes
AustraliaNoNoYes
AustriaNoNoYes
AzerbaijanNoNoYes
BahamasNoNo
BahrainNoYesNo
BangladeshYesNo
BelarusNoNoYes
BelgiumNoNoYes
BeninNoYes
BermudaNoNoNo
BhutanNoNo
BoliviaNoYesNo
BrazilNoNoYes
BruneiNoNo
BulgariaNoNoNo
Burkina FasoNoYes
BurundiNoYes
Cabo VerdeNoNoNo
CameroonNoYes
CanadaNoNoYes
Cayman IslandsNoNoNo
Central African RepublicNoYes
ChadNoYes
ChileNoNoYes
ChinaYesNo
ColombiaNoNoYes
Costa RicaNoNoYes
Côte d’IvoireNoYes
CroatiaNoNoYes
CubaNoNo
CyprusNoNoYes
Czech RepublicNoNoYes
Democratic Republic of the CongoNoYes
DenmarkNoNoYes
EcuadorNoYesNo
EgyptYesNoNo
El SalvadorNoNoYes
EstoniaNoNoYes
European UnionNoNoNo
FinlandNoNoYes
FranceNoNoYes
GabonNoYes
GeorgiaNoYesYes
GermanyNoNoYes
GibraltarNoNoYes
GreeceNoNoYes
GuernseyNoNoYes
GuyanaNoYesNo
Hong KongNoNoYes
HungaryNoNoYes
IcelandNoNoYes
IndiaNoNoYes
IndonesiaNoYesNo
IraqYesNoNo
IrelandNoNoYes
Isle of ManNoNoNo
IsraelNoNoYes
ItalyNoNoYes
JapanNoNoYes
JerseyNoNoYes
JordanNoYesNo
KazakhstanNoYesNo
KenyaNoNoYes
KuwaitNoYes
KyrgyzstanNoNoYes
LatviaNoNoYes
LebanonNoYesNo
LesothoNoYesNo
LibyaNoYesNo
LiechtensteinNoNoYes
LithuaniaNoNoYes
LuxembourgNoNoYes
MacaoNoYes
MalaysiaNoNoYes
MaldivesNoYes
MaliNoYes
MaltaNoNoYes
MauritiusNoNoNo
MexicoNoNo
MoldovaNoYesNo
MontenegroNoNoNo
MoroccoYesNoNo
NamibiaNoYesNo
NepalYesNo
NetherlandsNoNoYes
New ZealandNoNoYes
NigerNoYes
NigeriaNoYesNo
NorwayNoNoYes
OmanNoYesNo
PakistanNoYes
PalauNoYesNo
PhilippinesNoNo
PolandNoNoYes
PortugalNoNoYes
QatarYesNoNo
Republic of the CongoNoYes
RomaniaNoNoYes
Russian FederationNoNoYes
Saint Kitts and NevisNoNoYes
Saint LuciaNoNo
SamoaNoNo
Saudi ArabiaNoYesNo
SenegalNoYes
SerbiaNoNoYes
SingaporeNoNoYes
SlovakiaNoNoYes
SloveniaNoNoYes
South AfricaNoNoYes
South KoreaNoNoYes
SpainNoNoYes
Sri LankaNoNo
SwedenNoNoYes
SwitzerlandNoNoYes
TaiwanNoNoYes
TajikistanNoYesNo
TanzaniaNoYesNo
ThailandNoNoYes
TogoNoYes
TunisiaYesNoNo
TurkeyNoYesYes
TurkmenistanNoYesNo
UkraineNoNoYes
United Arab EmiratesNoYesYes
United KingdomNoNoYes
United StatesNoNoYes
UzbekistanNoNoYes
VenezuelaNoNo
VietnamNoYesNo
ZimbabweNoYesNo
Source: US LIbrary of Congress


Expats and crypto taxes

How crypto profits are taxed for expats depends on their residence status.

For example, a British expat on temporary assignment to Germany is a likely UK taxpayer and subject to UK cryptocurrency rules. However, an expat who has permanently moved to Spain is subject to Spanish taxes and crypto laws.

Cryptocurrency Tax And Rules By Country FAQ

What is crypto mining?

Some cryptos, like Bitcoin, generate new coins when complex equations built-in to the blockchain are solved. The process of releasing new coins is called mining.

What is a security?

Securities are financial instruments with a monetary value. Securities tend to come in three types:
Equity – a right of ownership, like stocks and shares
Debt – loans with regular payments, like a mortgage
Hybrids – a mix of debt and equity

What is an ICO?

ICO stands for initial coin offering. The ICO is when a start-up crypto seeks funding from investors, similar to a company going public and issuing shares for the first time.

What is a blockchain?

A blockchain is a database or ledger that underpins a cryptocurrency. The blockchain is decentralised on a peer-to-peer network, so no one person or computer controls the crypto. The P2P network monitors and confirms transactions before they are locked into the blockchain.

What is a privacy coin?

Privacy coins are cryptos with enhanced security designed to protect the holder’s identity. Leading privacy coins include Monero, Dash, Z-cash, Verge and Beam.

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