99% of Global Investors Don’t File Their Taxes – Cryptopolitan
Crypto taxation has been one of the main focal points of most regulatory activities worldwide. A recent study by a Swedish tax firm has discovered that only 0.53% of cryptocurrency investors worldwide paid taxes on their trades in 2022. The research focused on the compliance rate of cryptocurrency taxpayers in 24 different countries, with results that varied significantly.
In Finland, over 4% of crypto investors met their tax obligations, leading the pack in Europe. In contrast, only 0.03% of investors in the Philippines paid their crypto taxes. The disparities in compliance rates highlight the need for improved regulatory oversight and tax enforcement in the fast-growing cryptocurrency market.
Crypto tax compliance across different countries
The study surveyed 24 nations to determine the percentage of investors who declared their crypto investments and paid appropriate taxes in 2022. Finnish investors demonstrated the highest compliance rate at 4.09%, while Italy lagged behind with only 0.26% of taxpayers reporting their crypto holdings.
Italy’s low rate can be attributed to the crypto tax reporting threshold, which currently stands at $56,000. However, the Italian budget for 2023 contains provisions to adjust this threshold, which could lead to increased compliance.
The lowest rate of crypto tax payments came from Southeast Asia, as the Philippines recorded the world’s lowest payment rate of 0.03%. Although the country imposes a 35% tax on trading in digital assets, this rate only applies to earnings that exceed $4,500.
In the US, 1.62% of cryptocurrency investors paid their taxes, with Canada slightly ahead at 1.65%. Japan led Asia with a tax payment rate of 2.18%, followed by Singapore at 0.65%.
The study also indicated that nearly 95.5% of global cryptocurrency traders failed to pay their taxes by 2022. The firm believes compliance rates could improve as governments introduce updated regulations and improve enforcement mechanisms.
Which countries are the best tax havens for crypto investors?
Due to the extreme volatility of the digital asset market, investors are always looking for the perfect tax haven to minimize the additional costs of their gains. A separate study by crypto research firm Coincub identified Germany as the country with the most favorable crypto tax legislation. The German finance ministry announced last year that individuals would not be taxed on bitcoin or ether sales if they held the assets for more than a year. This marked a significant change from the previous requirement of a ten-year holding period to qualify for tax exemption.
Italy came second in Coincub’s study, with Switzerland third. Although Swiss crypto tax laws vary from canton to canton, most regions do not require residents to pay taxes on their digital assets.
Singapore and Slovenia completed the top five crypto tax havens. While both countries currently exempt residents from crypto taxes, Slovenian citizens may face a 10% tax rate in the future.
Overall, these statistics reflect the urgent need for improved regulatory oversight and tax enforcement in the global cryptocurrency market. As governments adapt to the rapid growth of digital assets and introduce updated regulations, the hope is that more investors will comply with their tax obligations, ensuring a fairer and more transparent financial landscape.
