Cryptocurrency Tax
About Cryptocurrency Tax
The taxation of cryptocurrency varies by country. In the US, the IRS classified cryptocurrency as property in 2014, meaning capital gains tax applies to every transaction. Buying a cup of coffee with Bitcoin triggers a taxable event. This creates significant compliance burden for crypto users. The IRS stepped up enforcement in 2019, sending letters to 10,000 crypto users. In 2021, the infrastructure bill included reporting requirements for crypto brokers. Germany treats crypto held over one year as tax free. Portugal has been a crypto tax haven with no capital gains tax on crypto. El Salvador adopted Bitcoin as legal tender in 2021, creating novel tax issues. The taxation of staking rewards, DeFi transactions, and NFTs remains uncertain in most jurisdictions.
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