America is one of the few countries to make citizens pay tax at home while living abroad. But Puerto Rico provides all the advantages of living at home with 0% capital gains and a 4% company tax rate. (Via CointelegraphZN)
Outside of the few no-tax jurisdictions, “crypto-to-crypto trades are mostly taxable, but some countries do not tax them,” explains Filip Kraljičković, an expert on cryptocurrency taxation. He worked as a lawyer and manager of corporate taxation at KPMG in Croatia before joining crypto tax automation firm Taxtris as a tax and legal manager.
In many jurisdictions, there is also a difference in tax treatments between short-term and long-term capital gains. In the United States, long-term capital gains get a discount, but selling before 365 days taxes the gains at the same percentage as regular income, which means that the effective tax rate can double. Canada does not differentiate between long- and short-term capital gains, taxing them all at half the rate of income tax.
Adding to this, India treats cryptocurrency in a way comparable to lottery tickets and other gambling, whereby lossesbe deducted from gains. “Basically, everybody trading crypto in India fled from local crypto exchanges and started using decentralized apps,” Kraljičković observes. “There are certain factors to take in like the number of transactions, size of transactions, regularity. All these factors can influence the determination of the government,” Kraljičković explains. Those who go pro, even against their will, might have to report all their trading gains as income tax, which carries a much higher rate and otherwise be far more stringent in their accounting. “You will have to behave as a company or as a craftsman depending on jurisdiction.
Average cost is another method, which would calculate the average cost of the assets as the purchase price. Per the previous example, where someone purchased a total of 5 BTC for $11,110, the average price per Bitcoin would be $2,222, meaning that the taxable gain from selling a fifth of holdings in 2022 would be slightly lower at $17,778.
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