- The crypto capital gains tax rate heavily depends on the profit made from any crypto trade.
- Germany offers tax-free status for long-term investors.
- There is a proposal to increase the CGT rate to 42% in Italy.
Cryptocurrencies are subject to capital gains tax in different European countries. An investor pays this tax after selling a cryptocurrency for more than they have spent for it. Also, mining and staking rewards are subject to CGT.
Each country in Europe has its own rules for crypto taxes. Profits from crypto trading activities are subject to income tax. Crypto has already become a significant part of Europe’s financial landscape.
Many investors have holdings in Bitcoin, Ethereum, and other altcoins. All European crypto investors need to understand the tax implications associated with these investments.
This article will tell you about the tax rates for crypto capital gains in different European countries. It will help you effectively comply with local tax laws.
How Crypto Capital Gains Tax Work In Europe
In general, capital gains tax is a tax on the profit realized from the sale of an asset. This tax applies to the sale and trade of cryptocurrencies in Europe. The tax rates vary depending on the specific tax laws of your country.
It is similar to paying taxes on the money earned from stocks and real estate properties. Long-term capital gains are taxed at a lower rate than short-term gains.
Also, laws surrounding crypto taxation in many European countries are still in the final stages. This is the reason that it is tricky to navigate for investors.
Calculating Crypto Capital Gains Tax
A profit made from crypto trading is considered a capital gain. It is easy to calculate crypto capital gains tax. First, subtract the price you paid for the crypto from the price you sold it for. In this way, you will get your crypto profit.
Now, multiply profit by the tax rate in your country to get crypto capital gains tax. For example, if you purchased Bitcoin (BTC) for $50,000.
After some time, you sold it for $55,000. You made a profit of $5,000. This $5,000 will be taxed by a percentage applicable to an individual’s tax residency.
Country-Specific Crypto Capital Gains Tax Rates
The rate for Crypto capital gains tax depends on a country’s rules. All European countries have different approaches to taxing crypto gains. Some countries have clear regulations, while others still develop their tax policies.
Factors such as the holding period, the type of transaction, and the investor’s overall income can influence the tax rate applied to crypto gains. Below, we have mentioned details of crypto capital gains tax for the top European countries:
- United Kingdom
Cryptocurrencies are subject to capital gains tax in the United Kingdom. An investor has to pay tax after gaining profits from selling, swapping, or spending crypto. Gifts of crypto to your spouse are tax-free.
The rates are 10% for basic rate taxpayers and 20% for higher rate taxpayers. Then, there is an annual CGT allowance (£12,300 for the 2024/25 tax year), meaning gains below this threshold are tax-free.
Earning crypto from mining and staking rewards are subject to Income Tax in the UK. However, purchasing crypto with GBP and transferring crypto is tax-free. Also, the UK government has allowed offsetting registered losses against gains and carrying losses forward to use in the future.
The UK government is refining its crypto tax policies. We can expect future changes to allowances and rates in the UK.
- Germany
In Germany, crypto is subject to individual income tax. Here, crypto gains are tax-free if the assets are held for over a year. It is quite beneficial for long-term investors. Also, gifting cryptocurrencies up to 20,000 euros per year is not subject to tax.
German investors pay up to 45% on short-term crypto gains. This means that short-term traders could face higher tax liabilities. Here, gains under €600 per year are tax-free. This small exemption allows for minor gains without incurring tax liabilities.
Also, purchasing crypto with EUR, holding crypto, and transferring crypto is tax-free. Losses from crypto can be offset against gains and carried forward in Germany. There are no significant changes expected shortly in crypto tax regulations in Germany.
- France
In France, crypto is considered a moveable asset. This is why profits made from crypto trading are subject to income tax in this country. Here, not all crypto activities are taxed.
Swapping one crypto for another and purchasing crypto with EUR are not subject to tax in Germany. Here, crypto tax rates depend on how you engage with cryptocurrencies.
For occasional investors, France imposes a flat tax rate of 30% on crypto gains. Professional traders are subject to higher rates under the BIC tax regime in this country. Up to 45% applies to individuals who trade crypto regularly or earn through mining.
Gains below €305 per year are exempt from tax. France has been proactive in regulating crypto, with ongoing adjustments to ensure fairness in taxation.
- Italy
In Italy, crypto investors pay taxes on profits from selling crypto for EUR, trading crypto, and spending crypto. Italy currently taxes crypto gains at 26%. There is a proposal to expand this rate to 42%.
Gains below €2,000 are tax-free. Losses greater than €2,000 are deductible and can be carried forward for up to five years. The proposed increase to 42% would make Italy’s crypto tax rate one of the highest in Europe. It reflects a stricter approach to crypto taxation.
- Spain
In Spain, gains from selling, swapping, or spending crypto are considered savings income. Here, investors’ tax rate on crypto gains is 19% to 28%. Then, mining and staking rewards are subject to income tax) at up to 47%.
Crypto gifts are subject to gift and inheritance tax in Spain. Also, investors can compensate for losses against gains. They can even carry losses forward.
The government continuously updates its tax policies to address the growing crypto market. We can expect future changes in rates and regulations.
- Netherlands
In the Netherlands, there is no capital gains tax on crypto trading. Instead, crypto is taxed as part of the “box 3” wealth tax, with a presumed yield taxed at 36%. Allowances for small amounts of wealth reduce the tax burden for smaller investors.
Here, investors pay no tax if the total value of their assets is less than the personal exemption amount (€57,000 for 2024). We can expect potential reforms in the crypto tax rules in the future.
Comparison of Crypto Capital Gains Tax Rates
Based on the comparison, Germany is a highly favorable country for long-term crypto investors. This country offers tax-free gains for assets held over a year and a small gains exemption under €600.
The United Kingdom provides a balanced approach with a 10%-20% capital gains tax and an annual allowance of £12,300. Then, France imposes a flat 30% tax for occasional investors, while professional traders face higher rates.
Italy currently taxes crypto gains at 26% and offers an exemption for gains below €2,000. Their proposal to increase it to 42% is unsuitable for many crypto investors. Spain has progressive rates from 19% to 28% without specific exemptions for crypto gains. Last, the Netherlands taxes crypto as part of the “box 3” wealth tax with a presumed yield taxed at 36%.
Each country has a unique approach that reflects its broader tax policies. It provides varying levels of favorability for crypto investors.
Disclaimer
This article is for informational purposes only. Crypto investment is subject to risks due to the volatility in price. Readers should conduct their own research before making any investment decision. Also, you can consult a crypto expert before investing in cryptocurrencies
