Key takeaways
Binance is launching a new blog series to help crypto users stay informed about policies and tax requirements related to digital assets across the world.
The first article in our series covers news in Europe and the Commonwealth of Independent States (CIS) that occurred during the first quarter of 2023.
Find out which European jurisdictions have recently introduced new taxes on crypto income and how different regulatory authorities in Europe view NFT taxation, all in the first Binance Tax Radar article!
Regardless of where you live, you need to know the tax laws that affect you as a crypto user. Complying with them not only benefits you, but it also contributes to the prosperity of the entire Web3 industry. However, cryptocurrency tax rules are evolving more quickly than ever, and considerable effort is sometimes required to keep abreast of changes. To help you navigate digital asset tax law, we're launching a new blog series with support from Binance's team of tax policy experts.
In the first article in our series, we look at new European legislation, proposals and consultations published between January and April 2023.
Italy: introduction of a new tax regulation for the sale of cryptos; mining products and the issuance of utility tokens are not affected by VAT
In January 2023, Italy began taxing profits arising from the sale of crypto assets (Regulation 197/2022). This new law affects anyone receiving crypto winnings above EUR 2,000 per tax year. These gains are then considered as incidental income (redditi diversi) and are subject to a substitution tax of 26%.
This regulation also allows the taxpayers concerned to “increase” the value of their crypto-assets held as of January 1, 2023 and to pay a reduced tax of 14% on the amount thus increased. They have the option of making one payment (before June 30, 2023) or three payments from June 30, 2023, with 3% interest on subsequent payments.
Furthermore, the Italian tax administration has confirmed (sources: this text and this one) that crypto mining is spared from value added tax (VAT). Minors are therefore not taxable for the services they provide to the network and are not entitled to deduct VAT from related purchases.
Italian tax authorities have also publicly clarified that VAT does not apply to utility tokens issued as part of an initial token offering (ICO).
Portugal: new income taxes apply to crypto income
In its state budget for the year 2023 (effective January 1, 2023), Portugal clarified the tax rules regarding income and capital gains arising from cryptos. The new legislation defines cryptoassets for personal income tax purposes as “any digital representation of value or rights capable of being transferred or retained electronically using distributed ledger technology or any other similar technology”, but expressly excludes non-fungible assets.
This new regime includes income or capital gains resulting from trading, staking, mining, validation activities, or constituting a salary or any other payment paid in cryptos as well as the issue of any token corresponding to the definition crypto-assets given above.
Profits arising from the sale of crypto-assets will be considered capital gains and will be subject to a flat-rate tax of 28%, except for assets held for more than 365 days which could benefit from an exemption (this exemption does not, however, apply to digital assets belonging to the category of securities).
Bulgaria: a proposal to tax crypto transactions
The Bulgarian Ministry of Finance has organized a public consultation on proposed amendments to the Income Tax Law (the PIT Law), including the addition of explicit rules on the taxation of income related to cryptocurrencies.
The main suggestion aims to define taxable income resulting from the sale or exchange of virtual currencies as the sum of profits made during the year from which losses suffered during that same year are subtracted. In Bulgaria, income is taxed at 10% (flat rate).
Romania: more clarity on the tax regime applicable to income arising from NFT and crypto trading
The Romanian Tax Administration published a guide on the tax regime for NFT and crypto trading on February 9.
Profits made by NFT creators are considered intellectual property rights income. Income from trading crypto-assets is in turn taxable at a rate of 10% as “other income”, except in the case of gains of less than 200 RON (approximately $44) per transaction if the total profit made for the fiscal year is less than 600 RON ($133).
Spain: new crypto reporting requirements for businesses
The Official Bulletin of the Spanish State published on April 4 the text of the legislation governing the reporting requirements of crypto exchanges and related parties operating in Spain.
Article 39 stipulates that entities resident in Spain or permanent establishments of foreign entities providing crypto exchange or more general related services will have to make an informative declaration each year about the transactions they process or facilitate.
Details regarding the format of this annual declaration will be communicated soon. The information to be transmitted will include the personal information of persons or entities in relation to their relationship with virtual currencies at any time of the year (as holder, authorized person or beneficiary), as well as the currency balance held as of December 31 of the year in question (in euros) and the data of acquisition, sending, exchange and transfer of any virtual currency.
Germany: court rules that capital gains from crypto sales are taxable
The German Federal Financial Court (Bundesfinanzhof) issued a judgment on February 14, 2023 decreeing that capital gains following sales of cryptocurrencies constituted taxable income.
The case concerned a couple of German citizens challenging the taxation of €3.4 million received from the sale of various cryptocurrencies in 2017. Capital gains made by a German citizen following private transactions are currently taxable if they are greater than €600 for the tax year and if they result from the transfer of movable property (shares and bonds not included) within the year following the date of acquisition.
It was therefore a question of determining whether cryptocurrencies constitute movable property whose capital gains arising from their sale are taxable income. The court chose to interpret the term "personal property" broadly to include cryptocurrencies, and therefore held that capital gains resulting from the sale of digital assets during the year following the date of The purchase constituted taxable income, a rule that also applies to the exchange of cryptocurrencies.
Denmark: organization of a public consultation on crypto reporting obligations
The Danish Ministry of Taxation opened a public consultation on January 26 on the integration of the DAC8 proposal into the country's legislation as an extension of the European Directive on Administrative Cooperation (DAC) in the field of crypto- assets and digital currency.
The proposed Directive (DAC8) constitutes a future European law that requires providers of services related to crypto-assets and intermediaries facilitating transactions in such assets to collect and report information about their customers to tax authorities, who will in turn transmit this information. information to other European Member States.
Belarus: a large-scale tax exemption for cryptocurrencies
The Belarusian government issued Presidential Decree No. 80 on March 30 exempting cryptocurrency-related income from taxes, an exemption that will be in effect from January 1, 2023 to January 1, 2025.
These provisions prevent citizens from paying taxes on income related to profits from trading activities and investments in cryptos as well as gains from staking and mining activities. These rules also concern crypto exchanges, which are exempt from corporate tax and VAT.
Kazakhstan: Added new tax rules for digital assets
The Revenue Committee of the Kazakh Finance Ministry said on January 13 that capital gains from sales of digital assets will be subject to income taxes from January 1, 2023.
New amendments to the Tax Code will also come into force on April 1, 2023 and will concern the taxation of digital miners' income from digital mining pools and digital asset exchange.
Expenses related to the acquisition of digital assets sold outside of exchanges registered with the Astana International Financial Center (AIFC) are not tax deductible, nor are fees related to services provided by a digital mining pool.
Don't miss part two of our general review of tax obligations in the first quarter, which will cover relevant developments in Asia Pacific and the Americas.
For more information
Crypto tax policy: what to do, what to avoid, and best practices
Paying your taxes on cryptocurrencies helps you and the entire Web3 industry: Here's how
Getting the Truth Out of Crypto Myths, Part 3: Cryptos Are Used for Tax Evasion
This content is presented as such to users for information and educational purposes only. The information provided in this article is not intended to constitute legal, accounting or tax advice, and should not be construed as a substitute for such advice. We strongly recommend that you seek the services of independent advisors in this regard. Binance makes no representations or warranties as to the accuracy, completeness or reliability of the data and information set out in this article. We are not responsible for any losses arising from the use of and reliance on this information.
Trade anywhere with the Binance mobile crypto trading app (iOS/Android)
Find us on :
Instagram : https://www.instagram.com/binancefrench
Twitter : https://twitter.com/LeBinanceFR
Facebook : https://www.facebook.com/BinanceFrance
Telegram : https://t.me/BinanceFrench
Risk Warning: Digital asset prices are subject to high market risk and price volatility. The value of your investment may fall as well as rise, and you may not get back the amount invested. You are solely responsible for your investment decisions and Binance is not responsible for any losses you may incur. Past performance is not a reliable indicator of future performance. You should only invest in products that you are familiar with and whose risks you understand. You should carefully consider your investment experience, financial situation, investment objectives and risk tolerance and consult an independent financial advisor before making any investment. This does not constitute investment advice, nor an inducement or recommendation to trade in any digital asset. For more information, see our Terms of Use and Risk Warning.
