Cryptocurrency Tax Guide: Reporting and Compliance by Country
This guide is for informational purposes only and does not constitute legal or tax advice. Cryptocurrency tax laws vary by jurisdiction and change frequently. Consult a qualified tax professional for advice specific to your situation.
Cryptocurrency taxation is one of the most practically important aspects of crypto regulation for individual holders and traders. As of 2026, virtually every major economy taxes cryptocurrency transactions in some form, and international information-sharing agreements are making it increasingly difficult to avoid reporting obligations.
This guide covers how cryptocurrency is taxed across major jurisdictions, what constitutes a taxable event, how to calculate your gains and losses, reporting requirements, and practical strategies for compliance.
Fundamental Concepts
Before diving into country-specific rules, it is important to understand the concepts that apply across most jurisdictions.
What Is a Taxable Event?
A taxable event is any transaction that triggers a tax obligation. In most jurisdictions, the following crypto activities are taxable:
| Activity | Typically Taxable? | Type of Income |
|---|---|---|
| Selling crypto for fiat currency | Yes | Capital gain/loss |
| Trading one crypto for another | Yes | Capital gain/loss |
| Using crypto to purchase goods/services | Yes | Capital gain/loss |
| Receiving mining rewards | Yes | Ordinary income |
| Receiving staking rewards | Yes | Ordinary income |
| Receiving airdrops | Varies | Ordinary income (in most jurisdictions) |
| Receiving crypto as payment for work | Yes | Ordinary income |
| DeFi yield (lending, liquidity provision) | Yes | Ordinary income or capital gain |
| Hard fork tokens | Varies | Varies by jurisdiction |
| Transferring between your own wallets | No | Not taxable (no change in ownership) |
| Buying crypto with fiat | No | Not taxable (acquisition) |
| Holding crypto (unrealized gains) | No (in most jurisdictions) | Not taxable until disposed |
| Donating crypto to charity | Varies | May provide deduction; varies by jurisdiction |
Capital Gains vs. Ordinary Income
Most jurisdictions distinguish between:
- Capital gains: Profit from the disposal of an asset (selling, trading, spending crypto). In many countries, capital gains receive preferential tax treatment, especially for long-term holdings.
- Ordinary income: Income from activities like mining, staking, employment compensation in crypto, or business income. This is typically taxed at your marginal income tax rate, which may be higher than capital gains rates.
Cost Basis Methods
Your "cost basis" is the original value of your crypto (typically what you paid for it plus any fees). When you dispose of crypto, your gain or loss is calculated as:
Gain/Loss = Disposal Proceeds - Cost Basis - Transaction Fees
When you have acquired the same crypto asset at different times and different prices, the cost basis method determines which purchase is matched against the sale:
| Method | Description | Used In |
|---|---|---|
| FIFO (First In, First Out) | Oldest purchases are sold first | Most common default; US, UK, EU |
| LIFO (Last In, First Out) | Newest purchases are sold first | Allowed in some US contexts |
| Specific Identification | You choose which specific lot to sell | US (with adequate records) |
| Average Cost | Average of all purchase prices weighted by quantity | UK (Section 104 pool), Australia |
| HIFO (Highest In, First Out) | Highest-cost purchases are sold first | US (variant of specific identification) |
The choice of cost basis method can significantly impact your tax liability. In jurisdictions that allow method selection, consulting a tax professional is advisable.
Country-by-Country Tax Guide
United States
The US has one of the most developed crypto tax frameworks, treating cryptocurrency as "property."
Tax Rates:
| Holding Period | Classification | Tax Rate |
|---|---|---|
| Less than 1 year | Short-term capital gain | Ordinary income rates (10-37%) |
| 1 year or more | Long-term capital gain | 0%, 15%, or 20% (depending on income) |
| Mining/staking income | Ordinary income | 10-37% |
| Net Investment Income Tax | Applies above thresholds | Additional 3.8% |
Key Rules:
- Wash sale rule: As of 2026, the wash sale rule (which prevents claiming a loss if you repurchase the same asset within 30 days) has been extended to digital assets through legislative changes. Previously, crypto was exempt from wash sale rules, which allowed tax-loss harvesting strategies not available for stocks.
- Form 1099-DA: Centralized exchanges are phasing in Form 1099-DA reporting, directly informing the IRS of your transactions. This mirrors 1099-B reporting for securities.
- FBAR and FATCA: US taxpayers with crypto held on foreign exchanges may need to file FinCEN Form 114 (FBAR) if the aggregate value exceeds $10,000, and Form 8938 (FATCA) for higher thresholds.
- Like-kind exchanges: Crypto-to-crypto trades are not eligible for like-kind exchange (Section 1031) treatment, meaning every trade is taxable.
- De minimis exemption: Legislative proposals for a small dollar amount exemption for everyday crypto payments have been discussed but not yet universally implemented.
For more on the US regulatory environment, see our US Crypto Regulation guide.
Reporting:
- Report capital gains/losses on Form 8949 and Schedule D.
- Report mining and staking income on Schedule 1 or Schedule C (if self-employment).
- Answer the digital asset question on Form 1040 page 1 truthfully.
United Kingdom
The UK taxes crypto under its capital gains tax (CGT) framework:
Tax Rates (2025/2026):
| Taxpayer Type | Rate |
|---|---|
| Basic rate taxpayers | 10% on gains (18% for residential property, but crypto is 10%) |
| Higher/additional rate taxpayers | 20% |
| Annual CGT allowance | GBP 3,000 (reduced from GBP 12,300 in 2022/23) |
Key Rules:
- Section 104 pool: UK taxpayers must calculate cost basis using the Section 104 pooling method, which averages the cost of all tokens of the same type. This is more restrictive than FIFO or specific identification.
- Bed and breakfasting: The 30-day rule prevents selling and rebuying within 30 days to claim a loss (similar to wash sale rules).
- Same-day rule: If you sell and buy the same crypto on the same day, the cost basis is matched to the same-day purchase.
- Income tax: Mining, staking, airdrops, and crypto received as employment compensation are subject to income tax at your marginal rate (up to 45%).
- DeFi: HMRC has issued guidance on the tax treatment of lending, staking, and liquidity provision, generally treating yields as income and the return of principal as capital.
European Union
Tax treatment varies by EU member state, as taxation is not harmonized under MiCA:
Germany:
- Crypto held for more than 1 year is completely tax-free (no capital gains tax) for individuals.
- Crypto sold within 1 year is taxed as "other income" at the individual's marginal income tax rate (up to 45%).
- There is a 600 EUR annual exemption for short-term gains (below this, gains are tax-free; above it, the entire amount is taxed).
- Staking rewards may reset the holding period in certain circumstances, requiring careful planning.
France:
- Flat tax of 30% (called the "Prelevement Forfaitaire Unique" or PFU) on crypto capital gains.
- Alternatively, taxpayers can opt for taxation at their marginal income tax rate if more favorable.
- Occasional traders receive more favorable treatment than habitual/professional traders.
- An annual exemption of 305 EUR applies to total crypto disposals.
Portugal:
- Previously a crypto tax haven with no capital gains tax on crypto, Portugal introduced taxation in 2023.
- Short-term gains (held less than 365 days) are taxed at 28%.
- Long-term gains (held more than 365 days) are tax-free.
- This makes Portugal still relatively favorable for long-term holders.
Netherlands:
- The Netherlands uses a "deemed return" system where unrealized wealth is taxed based on assumed returns rather than actual gains.
- Crypto holdings are included in Box 3 wealth tax.
- The effective tax rate depends on your total net assets and the assumed return percentage, which increases with wealth.
South Korea
- 20% tax on crypto capital gains exceeding the annual exemption threshold, plus 2% local tax (22% total).
- Losses can offset gains within the same tax year but cannot be carried forward.
- FIFO or moving average method for cost basis calculation.
- See our South Korea Crypto Regulation guide for full details.
Japan
- Crypto gains are classified as "miscellaneous income" and taxed at the individual's marginal income tax rate.
- Rates can reach up to 55% (including national and local taxes) for high earners.
- This is one of the highest effective crypto tax rates in the world.
- Limited ability to offset crypto losses against other types of income.
- There has been active discussion about reclassifying crypto to separate self-assessment taxation (typically 20%) to make Japan more competitive.
Singapore
- No capital gains tax for individuals. Crypto gains from personal investments are not taxable.
- However, if crypto trading constitutes a business activity (i.e., you are a professional trader), profits are taxable as business income (17% corporate rate or individual income tax rates up to 22%).
- The determination of whether activity constitutes "trading" vs. "investment" depends on factors like frequency, holding period, and intent.
Australia
- Capital gains tax applies to crypto disposals.
- 50% CGT discount for assets held more than 12 months by individuals (effectively halving the tax rate for long-term holders).
- Cost basis can be calculated using FIFO or specific identification.
- Mining and staking rewards are ordinary income at the time of receipt.
- The ATO has been proactive in data matching, using exchange data to identify non-compliant taxpayers.
United Arab Emirates
- No personal income tax or capital gains tax.
- Crypto gains by individuals are tax-free.
- Corporate tax (9% above AED 375,000 threshold) may apply to business activity involving crypto.
- This makes the UAE particularly attractive for crypto traders and investors.
DeFi-Specific Tax Considerations
DeFi activities create complex tax situations that many jurisdictions have not fully addressed:
Lending and Borrowing
- Lending: Interest earned by lending crypto on DeFi protocols is generally taxable as ordinary income when received.
- Borrowing: Taking a crypto loan is generally not a taxable event (you are not disposing of the crypto, just pledging it as collateral). However, liquidation events are taxable.
Liquidity Provision
- Depositing: Depositing tokens into a liquidity pool may or may not be a taxable event depending on the jurisdiction and how the LP tokens are classified.
- Impermanent loss: The tax treatment of impermanent loss is unclear in most jurisdictions.
- Fee income: Fees earned from liquidity provision are generally taxable income.
Yield Farming and Staking
- Rewards received: Staking and yield farming rewards are generally taxable as ordinary income at the time of receipt.
- Cost basis: The cost basis of received rewards is typically their fair market value at the time of receipt.
- Subsequent disposal: When you later sell the rewards, you owe capital gains tax on any appreciation beyond the cost basis.
Token Swaps and Wrapping
- Swaps: Trading one token for another on a DEX is a taxable event in virtually all jurisdictions.
- Wrapping: Whether wrapping a token (e.g., ETH to WETH) is a taxable event is debated. Some jurisdictions treat it as a like-for-like exchange (not taxable), while others may treat it as a disposal.
- Bridge transactions: Bridging tokens between chains raises similar questions and is generally treated as a taxable event in most conservative interpretations.
NFT Taxation
The tax treatment of NFTs varies but generally follows these principles:
- Creating and selling an NFT: Income from the sale is taxable (as business income or capital gain, depending on whether you are an artist/creator or a trader).
- Buying and reselling an NFT: Capital gain or loss on the difference between purchase and sale price.
- Royalty income: Ongoing royalties from secondary sales are taxable as ordinary income.
- Using crypto to buy an NFT: The crypto disposal is a taxable event (capital gain or loss based on the crypto's cost basis vs. the NFT's purchase price).
Record Keeping
Good record keeping is essential for crypto tax compliance. At minimum, you should record:
| Information | Why It Matters |
|---|---|
| Date and time of every transaction | Determines holding period (short-term vs. long-term) |
| Type of transaction (buy, sell, swap, stake, etc.) | Determines tax treatment |
| Amount of crypto involved | Basis for gain/loss calculation |
| Fair market value at time of transaction (in your local fiat currency) | Determines cost basis and proceeds |
| Transaction fees | Typically added to cost basis or deducted from proceeds |
| Counterparty or platform | Documentation trail |
| Wallet addresses involved | Connecting on-chain activity to your accounts |
| Exchange/wallet receipts | Supporting documentation |
Tax Software
Several specialized crypto tax software tools can aggregate transactions from exchanges and wallets, calculate gains and losses, and generate tax reports. Popular options include:
- Koinly
- CoinTracker
- TokenTax
- CryptoTaxCalculator
- Accointing (by Glassnode)
These tools typically connect to exchanges via API, import CSV files, and can parse some on-chain transactions. However, complex DeFi activity often requires manual adjustment.
International Information Sharing
OECD CARF (Crypto-Asset Reporting Framework)
The OECD's CARF is a game-changer for international crypto tax enforcement:
- Establishes a standardized framework for the automatic exchange of crypto transaction information between countries.
- Crypto exchanges and intermediaries must report user transactions to their local tax authority.
- This information is then shared with the tax authority of the user's country of residence.
- Implementation is being rolled out from 2026-2027 across OECD member countries.
- CARF is modeled on the Common Reporting Standard (CRS) used for traditional bank accounts, which effectively ended offshore bank account secrecy.
Practical implication: Using a foreign exchange to avoid domestic tax reporting obligations will become increasingly ineffective as CARF is implemented.
US-Specific: FATCA and FBAR
- FATCA (Foreign Account Tax Compliance Act): Requires foreign financial institutions to report US account holders to the IRS. Crypto exchanges are increasingly subject to FATCA obligations.
- FBAR (Foreign Bank and Financial Accounts Report): US taxpayers must report foreign financial accounts (potentially including foreign crypto exchange accounts) with an aggregate value exceeding $10,000 at any point during the year.
Tax Planning Strategies (Legal)
While specific tax advice requires a professional, several legal strategies are commonly discussed:
Long-Term Holding
In jurisdictions that offer reduced rates for long-term holdings (US, Australia, Germany, Portugal), holding crypto for longer than the qualifying period can significantly reduce tax liability.
Tax-Loss Harvesting
Selling underperforming assets to realize losses that offset gains from other disposals. Note that wash sale rules (where applicable) require waiting periods before repurchasing the same asset.
Charitable Donations
In some jurisdictions (notably the US), donating appreciated crypto to a qualified charity allows you to deduct the fair market value without paying capital gains tax on the appreciation.
Jurisdiction-Specific Planning
Some individuals relocate to jurisdictions with more favorable crypto tax treatment (e.g., UAE, Singapore, Portugal for long-term holdings, Germany for assets held over 1 year). However, exit taxes and ongoing tax residence rules can complicate this strategy. Always consult with a cross-border tax specialist before making residency decisions based on tax treatment.
Retirement Accounts (US)
In the US, some self-directed IRAs and 401(k) plans allow crypto investments. Gains within these accounts are tax-deferred (traditional IRA) or tax-free (Roth IRA), though contribution limits and other rules apply.
Common Mistakes
-
Not reporting crypto-to-crypto trades: Many people mistakenly believe that only crypto-to-fiat sales are taxable. In virtually all jurisdictions, trading one crypto for another is a taxable disposal.
-
Ignoring small transactions: Every transaction, no matter how small, may be taxable. Accumulating many small unreported transactions can create significant compliance issues.
-
Not tracking cost basis from the beginning: Retroactively reconstructing your cost basis years later is difficult and error-prone. Start tracking from your first purchase.
-
Forgetting DeFi and airdrop income: Staking rewards, yield farming income, and airdrops are taxable in most jurisdictions even if you do not sell the received tokens.
-
Assuming foreign exchanges avoid reporting: With CARF and other international agreements, foreign exchange usage will be reported to your home tax authority.
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Confusing transfers with disposals: Moving crypto between your own wallets is not taxable. However, exchanges may report these as outgoing transactions, requiring reconciliation.
Maintaining control of your crypto through self-custody simplifies some aspects of tax compliance by giving you a clear record of when assets enter and leave your control. SafeSeed's Address Generator helps you derive addresses for multiple blockchains from a single seed, making it easier to track your holdings across networks. Explore all SafeSeed tools.
FAQ
Do I owe taxes if I just hold cryptocurrency and do not sell?
In most jurisdictions, no. Unrealized gains (paper profits) are generally not taxable until you dispose of the asset. However, some jurisdictions (like the Netherlands with its deemed return/wealth tax system) may tax holdings regardless of actual disposals. Additionally, staking rewards and other income received while holding are taxable when received.
Is transferring crypto between my own wallets taxable?
No, in all major jurisdictions, transferring crypto between wallets you own is not a taxable event because there is no change in beneficial ownership. However, you may need to pay network transaction fees, and exchanges may report outgoing transfers, requiring you to document that the receiving wallet is also yours.
How do I determine the fair market value of a crypto transaction?
Typically, you use the exchange rate at the time of the transaction as reported by a major exchange or price aggregator. For less liquid tokens, you may need to reference the specific exchange where the transaction occurred. Tax software typically pulls price data automatically.
What happens if I do not report my crypto taxes?
Penalties vary by jurisdiction but can include fines, interest on unpaid taxes, and in serious cases, criminal prosecution. As international information sharing (CARF) is implemented, the risk of detection for non-reporting increases substantially. Voluntary disclosure programs may be available in some jurisdictions for those who want to come into compliance.
Are crypto donations tax-deductible?
In many jurisdictions, including the US and UK, donating crypto to qualified charities can provide a tax deduction. In the US, donating appreciated crypto held for more than one year allows you to deduct the fair market value without paying capital gains tax on the appreciation, making it one of the most tax-efficient forms of charitable giving.
How are crypto mining taxes calculated?
In most jurisdictions, mining rewards are taxable as ordinary income at the fair market value on the day received. The cost of mining equipment and electricity may be deductible as business expenses if mining is conducted as a trade or business. When you later sell the mined crypto, any appreciation above the cost basis (the fair market value when received) is a capital gain.
Do I need to report crypto if I had losses?
Yes. Even if you had a net loss, most jurisdictions require you to report crypto transactions. Reporting losses is actually beneficial because they can offset gains from other crypto transactions or, in some jurisdictions, offset other types of income (up to annual limits). Unreported losses are wasted losses.
How do airdrops get taxed?
In most jurisdictions (including the US, UK, and Australia), airdrops are taxable as ordinary income at their fair market value when received. The cost basis for the airdropped tokens is set at the fair market value at receipt. If the tokens have no readily determinable value at the time of the airdrop, the cost basis may be zero, and the full amount is taxable upon disposal.