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Crypto Tax in Europe. How Much Do You Have to Pay in Each Country

Digital assets are gaining prominence as a financial instrument alongside stocks, bonds, equities, etc. The rising popularity of trading and investments in cryptocurrencies is leading to regulative speculation and governments applying policies for taxation.

The major issue among many traders is the confusion on what policy governments use to tax cryptocurrency. Most of them are wondering whether to buy crypto, what exchanges to trade on, and what gains they get after paying their crypto taxes.

How do I pay my crypto tax?

Although the EU has not issued any definitive ruling regarding the status of Bitcoin as a means of exchanging goods and services, it has stipulated that converting fiat currency to Bitcoin is not subject to VAT/GST taxation. However, cryptocurrency transactions involving the exchange of goods and services are subject to VAT/GST and income-tax taxes. Bitcoin is legal nearly everywhere in the EU. The European Union categorizes Bitcoin and other cryptocurrencies as qualified financial instruments (QFI).

Here are a few factors and guidelines to consider while paying your tax on crypto. 

First of all, keep in mind that taxation bodies in each country treat crypto like a commodity for the purpose of income taxes acts. Income generated from the transactions carried out is treated as a capital gain. So if the cryptocurrencies are taxed, that’s done under the capital gains tax. Tax on crypto is between 0-50%, which is dependent on the use of crypto and the tax brackets they fall under in terms of your investments.

The top tips to remember when it comes to crypto tax are:

Ensure to report taxes on your crypto investments

Financial authorities across the globe have started taking note of investors trading or investing in digital assets. It is advisable to report your crypto holdings and ensure complete transparency to avoid any regulatory scrutiny from authorities. 

Keep records of all of your crypto transactions

A well-detailed record makes it easier for you to keep track of cryptocurrency tax reporting. It is important to note all the transactions that you have carried or perform in digital assets. 

File taxes even after you’ve had losses

The crypto market is very volatile, and so losses are inevitable. Most jurisdictions allow for taxes to be carried forward and so ensure you report all of your activity.

Keep in mind airdrops and hard forks can be taxed

Read about the rules regarding airdrops and hard forks in the jurisdiction you are in. You can also make consultations with advisors in the event you receive an airdrop and make sure to report that as additional income.

Crypto Tax Examples

Crypto Taxes in the UK

The views of the regulatory body for crypto taxes in the UK, the HMRC, on crypto-assets keep changing because the sector is always developing. Bitcoin in the UK is considered an exchange token. The tax imposed on cryptocurrencies solely depends on the activity of the holder. Individuals that hold their crypto as a personal investment are liable to pay capital gains tax. The frequent traders pay the income tax.

In the event of a loss, it is adjusted with the total capital gain. An annual exempt amount in the UK also applies where if you hold your crypto. Profits that you make on the investment will be taxed if it exceeds the yearly exempt limit.

Crypto Taxes in the US

The IRS classifies cryptocurrency as property, and so its taxation is at the same level as stocks and bonds. Taxpayers are thus required to submit their crypto reports for the last year, and the audits can cover the past three years.

Americans are expected to pay taxes on crypto-based income, trading, and investments too. The tax rates in the country are dependent on whether it is a short-term or long-term investment. The short-term are those that last less than a year, and the long-term ones are more than a year. The short-term investments are subjected to higher taxes, and tax rates also depend on one’s income bracket.

How Much Am I Taxed?

In the EU, the tax rates vary in each country the capital gains tax ranges from 0-50%. The general terms are:

  • Cryptocurrencies held over a year are not restrained to taxation.
  • If you have a business that accepts Bitcoin as a payment means you ought to pay taxes

To check the tax levels applied in different countries, we recommend readers to take a look at the list below:

  • Germany: 0 - 45%
  • United Kingdom: 10-20%
  • France: 19%
  • Spain: 19-23%
  • Poland: 19%
  • Romania: 10%
  • Netherlands: 30%
  • Belgium: 33%
  • Czech Republic (Czechia): 15%
  • Greece: 15%
  • Portugal: 0
  • Sweden: 30%
  • Hungary: 30.5% (15% starting 2022)
  • Austria: up to 55%
  • Serbia: 20%
  • Switzerland: 22-44% depending on cantoon
  • Bulgaria: 10%
  • Denmark: 53%
  • Slovakia: 19-25%
  • Norway: 22%
  • Ireland: 33%
  • Croatia: 12% (18% if you live in Zagreb)
  • Lithuania: 0 - 15%
  • Slovenia: 25%
  • Latvia: 20-31%
  • Estonia: 20%
  • Malta: tax free
  • Iceland: 20%

Bottom Line

Cryptocurrencies are gaining relevance and subsequently acquiring acceptance by various authorities. Most countries are, however, a bit skeptical about them. 

In the next few years, many developments are expected to give a clear idea of taxation policy on cryptocurrencies. 

Now that you know how much tax you will have to pay, it's time to start investing in crypto. If you don't know where to buy it from, check out our crypto exchange comparison platform. It will help you find the best trading platform for your needs. Just answer a few simple questions and our algorithm will show you which crypto broker is best suited for you.

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