Bitcoin, Ether, Litecoin, IOTA and others: Cryptocurrencies may not be money, but they are gaining importance in financial markets. Indeed, these currencies are increasingly used as a means of payment or as an investment and can be sold profitably. The online financial platform Hellosafe looked at tax policies relating to capital gains in Europe and North America. She noted that regulations are varied and sometimes very different from one country to another.
Denmark is one of the strictest countries: high progressive tax rates are applied, with no exemption threshold or tax exemption depending on the length of ownership. It is even envisaged to tax unrealized capital gains on cryptocurrencies, that is to say on the basis of annual variations in the value of the assets and not only during the sale or exchange.
On the contrarysome countries do not impose any tax under certain conditions. In Luxembourg for example, Hellosafe considers that the regulations are relatively favorable: “Luxembourg is one of the countries which imposes the least capital gains on cryptocurrencies”. The platform justifies this assertion by “tax exemption for wallets held for more than six months”. This statement needs to be qualified, as the Ministry of Finance specifies in The essentials.
“The tax legislation does not contain any provisions specific to cryptocurrencies,” explains the ministry. From a tax point of view, virtual currencies are considered intangible assets and are therefore treated in accordance with the rules applicable to income tax, corporate income tax and wealth tax. . “In the event of capital gains on cryptocurrencies, the following income tax categories may be taken into account: commercial profit or miscellaneous net income.”
If the sale constitutes a commercial profit, this must be declared, regardless of the duration of the holding. This is the case in almost all countries. On the other hand, the category of “miscellaneous net income”, which applies to individuals, is not taxable if the purchase and sale of the currency are separated by more than six months.
-“If the cryptocurrency is sold within six months, it is a speculative capital gain, which is subject to progressive tax,” specifies the Ministry of Finance. In the extreme case, the rate then rises to 42%, which leads other evaluation sites to describe the investors’ judgment as “catastrophic”. An exemption threshold generally applies to profits below 500 euros per year. According to the ministry, no changes are planned.
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