Bitcoin is usually considered an anonymous cryptocurrency, but it won’t help you escape the watchful eye of your national tax agency. If you’re a Bitcoin investor, you will need to comply with your local tax laws and report your capital gains. These laws vary from country to country, but there are a few broad trends that will help you understand when you need to pay tax on your Bitcoin earnings.
Paying Tax In the U.S.
In the United States, you will need to report all of your Bitcoin-related activities. If you earn capital gains on your Bitcoin investments, you will need to pay tax. On the other hand, if you lose money on your Bitcoin investments, you may be able to claim a deduction and pay less tax. If you donate Bitcoin to charity, you may be able to claim a deduction as well.
You will need to report your activity regardless of whether you invest in Bitcoin speculatively, or whether you have bought Bitcoin for everyday use. Your tax rate will also be affected by whether you have made a short-term or long-term investment. With that in mind, if you hold Bitcoin without trading it, spending it, or earning any gains, you may not have to pay any taxes at all.
Incidentally, the IRS is about to introduce new guidelines that will settle many unanswered crypto tax questions. These guidelines will treat cryptocurrency like regular currency, and they will most likely address issues around price fluctuation and conversion rates. However, at the moment, you can simply calculate the value of your Bitcoin holdings with any price conversion calculator.
Paying Tax In the E.U.
Tax policies in the E.U. are similar to tax policies in the U.S. When in doubt, you should always assume that you will need to pay tax on your Bitcoin earnings, and you should usually include your Bitcoin holdings in your tax report. That said, each country has a slightly different policy, so you should investigate your local taxation guidelines to find out about any possible tax exemptions.
Notably, Bitcoin transactions are not subject to the European Union’s value-added tax (VAT). However, this does not apply to income tax, and each country sets its own tax exemption policies. European countries that offer income tax exemptions include Belarus, Germany, Malta, and Switzerland. See this article from Forbes for more details about worldwide tax exemptions.
Reporting Taxes From Jubiter
Some exchanges will provide U.S. tax forms to their customers, and they may report directly to tax agencies. However, Jubiter serves customers from a wide variety of different countries and does not issue individual tax forms. Nevertheless, you will still need to report your gains when you file your tax report. All relevant information is displayed within your Jubiter account.
Paying taxes isn’t enjoyable, but it is a small price to pay for the widespread acceptance that Bitcoin is currently experiencing. Unfortunately, there are many complexities surrounding Bitcoin taxation, and our blog should not be considered a source of official tax advice. If you need assistance, visit a tax advisor or other tax professional, and they will help you file your return.
Disclaimer: information contained herein is provided without considering your personal circumstances, therefore should not be construed as financial advice, investment recommendation or an offer of, or solicitation for, any transactions in cryptocurrencies.