An International Guide to Bitcoin Taxation (Part 1)

Bitcoin.Tax helps people from all over the world calculate the capital gains they have made on their cryptrocurrency trades. This guide will outline some of the important things you should know about how cryptocurrency taxation is handled in your country. This guide is meant to be informative, but should not be considered financial advice — please always confer with a tax professional about tax-related questions.

* This guide uses “Bitcoin” interchangeably with the phrase “Cryptocurrency”

United States

Classification

In the United States, Bitcoin is classified as a decentralized virtual currency by the U.S. Treasury and as a commodity by the US Commodity Futures Trading Commission (CFTC). The IRS classifies Bitcoin as a property, which is the most relevant classification when it comes to figuring out your cryptocurrency gains and losses.

Calculation: Capital Gain = (Proceed) — (Cost Basis)

  • Proceed refers to how much your coin was worth at the time of it’s sale.
  • Cost Basis refers to how much your coin cost to acquire.
Example: If you purchase 1 BTC for $10,000 USD (your cost basis) and sell it for $15,000 USD (proceed), your capital gain would be $5,000 USD ($15,000 — $10,000).

Taxation

Capital Gains are taxed by the IRS based on two factors: how long the property was owned before selling (long-term vs short-term), and your income.

  • Long-Term refers to more than 1 year.
  • Long-Term Tax Rates: 0%, 15%, or 20% [dependent on income]
  • Short-Term refers to less than 1 year.
  • Short-Term Tax Rates: 10%, 12%, 22%, 24%, 32%, 35%, or 37% [dependent on income and filing status]

*2017 & 2018 Tax Bracket Calculator

*2018 Long-Term Capital Gains Tax Bracket Information

Important Dates

The United States Tax Year runs from JANUARY to DECEMBER

Tax Year 2017 Dates:

  • Filing Deadline = April 17th, 2018.
  • Last day to e-file federal tax return and last day to file individual tax returns for 2017 = October 15th, 2018.

Tax Year 2018 Dates: TBA

*Additional Dates & Deadlines

Additional Information:

  • The 2018 Tax Plan clarifies that cryptocurrency can no longer be calculated using like-kind. Bitcoin.Tax allows like-kind calculation for US-based accounts for 2017 and all years prior.
  • Property gains are typically calculated using the FIFO (First In First Out) method, and that is the default method used on Bitcoin.Tax for US-based accounts.*
*Bitcoin.Tax also offers Average Cost, LIFO, Highest-Cost First-Out, Highest-Price First-Out, Lowest-Cost First-Out, Lowest-Price First-Out, and Closest-Cost First-Out calculation methods.

Canada

Classification

In Canada, Bitcoin is considered a commodity by The Canada Revenue Agency (CRA). You must report cryptocurrency gains or losses when filing your taxes.

Calculation: Capital Gain (Proceeds) — (ACB + Outlays & Expenses)

  • Proceed refers to how much your coin was worth at the time of it’s sale.
  • ACB refers to “Adjusted Cost Basis”, which is how much your coin cost to acquire, plus any costs associated with it.
  • Outlays and Expenses refers to amounts incurred to sell your coin.

Taxation

Capital Gains in Canada are determined by an Inclusion Rate.

  • The Inclusion Rate from 2001 to 2017 has been ½.
  • Inclusion Rate for 2018 is TBA (likely to be ½).
  • Multiply your Capital Gain by the Inclusion Rate to determine your taxable Capital Gain.

Important Dates

The Canadian Tax Year Runs JANUARY to DECEMBER

Tax Year 2017 Dates:

  • Individual: On or before April 30th, 2018.
  • Self-Employed: On or before June 15th, 2018.

Tax Year 2018 Dates: TBA

*Additional Dates & Deadlines

Additional Information:

  • To mimic an Inclusion Rate of ½, Canadian-Based Bitcoin.Tax accounts use the Average-Cost method of calculation by default.

United Kingdom

Classification

In the United Kingdom, Her Majesty’s Revenue and Customs (HMRC) classifies Bitcoin as a private currency (see page 191). The HMRC states that exchanging Bitcoin for fiat (i.e., Euros or Dollars) will not incur the value added tax (VAT). The HMRC states that Bitcoin & other cryptocurrencies are subject to Corporation Tax, Income Tax, and most relevant to this article, Capital Gains Tax. Additional information can be found here.

Calculation

The rate of the Capital Gains Tax (CGT) in the United Kingdom is based on the total amount of your taxable income.

  • The standard CGT rate is 18% on residential property and 10% on other assets.
  • The high CGT rate is 28% on residential property and 20% on other assets.

*Information on how to calculate your CGT can be found here.

Taxation

In the United Kingdom, you are required to pay Capital Gains Tax on gains that are above your Annual Exempt Amount (£11,700 in 2018/2019). You may still be required to report your Capital Gains even if they are not above this threshold.

Important Dates

The UK Tax Year runs APRIL to MARCH

Tax Year 2018/2019 Dates:

  • 2018/2019 Tax Year Begins April 6th, 2018.
  • Paper Returns Due @ Midnight on October 31st, 2018.
  • Online Returns Due @ Midnight on January 31st, 2019.

Additional Information

  • Click here for additional information on CGT in the United Kingdom.

Germany

Classification

In Germany, Bitcoin has been recognized by the German Finance Ministry as a “unit of account” since 2013. Using Bitcoin as a means of payment is not taxed, because Bitcoin is considered legal tender in Germany.

Calculation

Capital Gains in Germany are calculated similar to the United States and Canada. According to § 23 EStG, gains or losses are calculated as the difference between the selling price and the acquisition costs.

Essentially, German Capital Gains = (Proceeds) — (Cost Basis).

Taxation

In Germany, long-term gains are not taxed — if you hold your Bitcoin for over a year before selling or trading it, it is exempt from taxes. Short-term gains are taxed at income tax rates.

Important Dates

The German Tax Year runs from JANUARY to DECEMBER.

Tax Year 2017 Dates:

  • Tax Returns Due = May 31st, 2018.

Tax Year 2018 Dates:

  • TBA

Additional Information

  • Additional Tax Information can be found here.

Australia

Classification

As of July 2017, Bitcoin in Australia is treated the same as fiat money. Sales and purchases of digital currency are exempt from Australia’s Goods and Services Tax (GST) as of July 2017. The Australian Taxation Office views Bitcoin as a property/asset that is subject to a Capital Gains Tax.

Calculation

In Australia, there are three methods for calculating your Capital Gains Tax, and you can use whichever of the three methods that gives you the smallest capital gain. These methods can be found in detail here.

Essentially, the primary methods of calculation are long-term and short-term.
  • “Long-term” in Australia is more than 1 year and allows for a 50% reduction in Capital Gains.
Example: If you bought 1 BTC for 5,000 AUD on August 1st 2017 and sold it for 10,000 AUD on August 2nd 2018, you made a capital gain of 5,000 AUD — since this is a long-term gain, you will only pay capital gains taxes on 2,500 AUD.
  • “Short-term” in Australia is less than 1 year and calls for the basic (Proceed) — (Cost Basis) to determine the Capital Gain.

Taxation

According to the Australian Taxation Office, Capital Gains occur whenever cryptocurrency is disposed of (traded, sold, exchanged). More information can be found here.

  • The Capital Gains Tax Rate for Individuals is the same as the Income Tax Rate.
  • Australian Residents can find their Income Tax Rates here.

Important Dates

The Australian Tax Year runs from JULY to JUNE
  • Individual Returns are due by October 31st
  • Registered Tax Agents can file returns later than October 31st

The information provided in this guide is a combination of research and user-feedback from users of Bitcoin.Tax. Part 2 of this guide will explore the taxation of Bitcoin in New Zealand, China, Hong Kong, Japan, and Finland. Please contact us if you see incorrect information, have suggestions, or would like another country to be included in a future installment.

Since most countries treat profits from cryptocurrency trading as capital gains income, you should ensure you are following your local tax reporting requirements. Please speak with your own tax professional or accountant for correct information and tax advice. To help calculate your own capital gains or losses from trading and other cryptocurrency activity sign up for a FREE trial at https://bitcoin.tax/signup.

Bitcoin.Tax is the leading capital gains and income calculator for Bitcoin and other cryptocurrencies. Simply import your trading, spending and mining information from various exchanges and wallets to create an up to date record of your activity, view your tax liability, and export information to include in your tax returns.