Developments in crypto tax across Europe and CIS at a glance
Taxation in the crypto sphere is fast evolving, and keeping track of the developments is not just imperative but indeed a necessity. The European and CIS markets have seen a bit of turmoil in relation to crypto tax developments. Things are working out with all the major regions cementing their stand about how they want to define digital assets, income generated from their exchange & sale, and taxation.
Italy has implemented a basic taxation policy for digital assets, announcing a substitute tax rate of 26%. Gains from the sale and/or exchange of digital assets (cryptocurrencies, for better clarity) are classified in Italy under miscellaneous income. This, however, applies to individuals whose income exceeds the value of 2,000 EUR.
Alternatively, they can pay 14% of the reduced tax simply by stepping up the value of their holdings. It only applies over the stepped-up amount with an option to settle the dues in installments. An interest of 3% will be charged on subsequent installments for Italian crypto enthusiasts.
The first of three installments begins on June 30, 2023.
The Italian authorities have also drawn up a policy for crypto miners, clearly stating that their services fall outside the jurisdiction of value-added tax. Therefore, they do not have the right to deduct the said tax on respective purchases. It means crypto miners do not qualify as taxable individuals for their services to the network.
Portugal clarified how it intends to tax revenue from digital assets in its 2023 State Budget. Effective January 01, 2023, it defines crypto assets as digital representations of value or rights that can be stored or transferred digitally via distributed ledger technology. It excludes non-fungible assets.
A flat tax rate of 28% applies to capital gains from mining, staking, trading, salary, validation, and other payments done leveraging digital currency. Binance further explains this by stating that issuing any other token meeting these criteria qualify for the applicable tax rate.
Bulgaria looks at a tax structure of 10%, defining revenue from digital assets under personal income. Taxable income comes after deducting losses incurred from the profit generated. It implies that only the positive difference makes up for the taxable income per Bulgaria’s Personal Income Tax Act.
Romania specifically talks about Non-Fungible Tokens, highlighting that revenue from NFTs will be categorized under income from IP rights, taxable at 10% under Other Income. However, gains must be above RON 200 for every transaction, provided the total gain does not exceed RON 600.
Spain is making it mandatory for crypto ventures to present an annual informative declaration about transactions they process under Article 39. A detailed list is expected to be published soon.
Meanwhile, Germany has registered victory with the German Federal Fiscal Court ruling that capital gains generated from the sale of cryptocurrency are taxable. The current norm applies if total gains exceed EUR 600 in a particular tax year.
The Ministry of Taxation in Denmark has opened relevant public channels for consultation. Until then, Directive DAC8 requires collecting and reporting information to tax authorities about clients.
Belarus and Kazakhstan are witnessing the implementation of Presidential Edict N.80 and new digital asset tax rules, respectively. While Belarus is considering granting exemption from tax from January 01, 2023, to January 01, 2025, Kazakhstan is moving forward with taxing capital gains from digital assets.