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How Tax Agencies Are Going After Crypto Traders

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Bitcoin investors have in recent months faced increased pressure from various governments around the world regarding unpaid taxes accrued from their holdings.

Tax agencies across the globe continue the regulatory push that has put crypto under the radar, especially in the aftermath of the massive gains enjoyed during the bitcoin price boom of 2017. And although Bitcoin and other cryptocurrencies have since experienced a major tanking esp. over the last 20 months, the focus has shifted gears. Now tax authorities are keen on having cryptocurrency holders file their tax returns properly, and in some cases, are pushing for penalties on potential crypto tax cheats.

Here is how various governments are reacting to the issue of unpaid bitcoin taxes.

U.S.A

The U.S’ Internal Revenue Service (IRS) recently began sending out crypto tax-related letters to some 10,000 individuals. The IRS letters are to the effect that crypto investors may owe the taxman money for cryptocurrency trades they may have carried out in the last couple of years. 

In 2014, the IRS issued guidance that classed Bitcoin and other cryptocurrencies as property, meaning that trading crypto among other activities is a taxable event. Thus, taxpayers who made profits on their crypto face penalties and tax on cryptocurrencies, ranging from 10% to 37% but the exact tax one owes depends on how long they held the assets.

Stiffer penalties and prosecution

The IRS is after those people who failed to file returns or misreported their crypto taxes. The only good news is that individuals have the option of filing amended tax returns before the agency goes after them. Stiff penalties related to tax fraud or evasion are likely to be handed out to those that do not heed the notices.

United Kingdom

In the United Kingdom, the tax agency, HM Revenue & Customs (HMRC) recently asked several cryptocurrency exchanges to provide customer details for taxation. Affected exchanges included Coinbase, eToro, and CEX.io.

HMRC’s move followed that of IRS and is targeted at using the provided information to track down people who may have failed to pay taxes on their cryptocurrency holdings. The HMRC issued a guideline in 2018 suggesting that crypto holders were required to pay capital gains tax and income tax. The agency has also maintained that it has the power to ask cryptocurrency exchange service providers to submit the required information as crypto trades result in potential tax, an end that falls within the tax body’s jurisdiction.

Generally, the U.K has identified corporate tax, individual income tax, and capital gains tax as chargeable on transactions involving cryptocurrencies.

Sweden

Sweden has begun taking strict action against those who have held or used crypto and failed to declare taxes. A marked increase in crypto usage and investment in the country has seen authorities seek up to 30% in taxes from crypto income.

The reaction from the Swedish Tax Agency (STA) has been swift in recent months. One trader had up to five STA officers raid his house after he received a mammoth tax bill related to his crypto trades. Linus Dunker says that his $2.9 million crypto trades have attracted a tax penalty from the STA amounting to $1 million- that’s almost 300% of the trades instead of just 30%.

Dunker isn’t the only one though. Several bitcoin traders in Sweden have received tax bills, with the STA investigating up to 400 individuals who could be prosecuted for failing to pay taxes on their crypto holdings.

Earlier this year, the agency issued a deadline of May for those who sold, paid for goods or services, or were paid in crypto, to declare their taxes.

Australia

In Australia, crypto holders and traders have been advised to report their due taxes with the Australian Taxation Office. The agency recently issued guidance that classed bitcoin and other top cryptocurrencies as “property” meaning that taxpayers need to pay capital gains taxes on these assets. Crypto taxation in Australia is quite similar to that in the US.

Brazil

Brazil’s Department of Federal Revenue recently issued guidance asking crypto traders to report all their crypto transactions above $7,600 to the country’s National Treasury. The directive went into effect on August 1, and anyone who fails to comply faces fines and interest.

South Korea

South Korean’s National Tax Service recently announced that using bitcoin attracted tax. While it hasn’t gone after specific traders yet, the agency’s reaction to bitcoin’s boom is to find ways of incorporating bitcoin use into the country’s tax rules on capital gains and VAT.

India

The country’s Central Board of Direct Taxes (CBDT) has said that bitcoin traders who fail to file or pay taxes face action. The government recently began sending notices to people it said had not paid taxes on bitcoin.

Switzerland

Switzerland is known as a crypto-friendly country, with several crypto-focused organizations headquartered there. The Swiss government treats bitcoin as a foreign currency, which is how it is classified for taxation purposes.

Overall, miners and those that receive their salaries and wages in crypto need to pay income tax while crypto trading attracts business tax. Traders may, however, qualify for an exemption from capital gains tax if they do not trade in a professional capacity.

What should you note as a crypto trader?

Simply, crypto taxation isn’t going away and filing returns on time is the way to go. It is quite unfortunate that a bigger part of the challenge facing investors and tax authorities is the categorization of crypto for taxation purposes. In this regard, some countries classify bitcoin as property, while others classify it as a commodity, financial asset, or foreign currency. Either way, you should be ready to pay taxes on your crypto. Failure to pay these taxes could result in criminal prosecution and hefty penalties.

About the Author: Robin Singh is the co-founder and CEO of Koinly.io – a cryptocurrency tax platform that automatically generates capital gains reports for USA, Canada and Sweden among other countries.

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Is Bex500 an alternative to BitMEX?

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An all around review of Bex500

Bex500 is a young but rapid-growing exchange, less adversarial than BitMEX, but with higher leverage than Binance, Bex500 has enough strings to attract many crypto traders. 

Those dissatisfied with the old exchange, may find Bex500 exchange with a stable system with no manipulation or “overload”, pleasant UX, user-friendly tool kits, and around-clock customer service.

Bex500 says they are making crypto margin trading “easier” and giving you a better return. 

Can they really achieve that? We conduct a comprehensive review as below to see if it is a trustworthy exchange

Question 1. What features does Bex500 have?

Bex500 offers perpetual BTC futures as well as three other cryptos including ETH, XRP and LTC, all paired against USDT. You may find Bex500 doing a good job aggregating most important features traders need for a robust trading experience with better return.

-A fair trade with no overload

Many traders are familiar with “overload” problem, which disables placing orders in peak trading times. It is suspected to be insider manipulations by exchanges which can cost users entire portfolios.

Bex500, with its unmatched TPS (claimed to be over 10,000 orders per second), ensures that the trading…

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Five Strategies for Lowering Your Crypto Taxes

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Getting taxes done isn’t always the highest item on everyone’s to do list. This is especially true if you have accumulated significant gains from investing in cryptocurrencies. What many investors often don’t consider are the opportunities to actually reduce their tax liabilities from their crypto investing. This article discusses five strategies that you can use to help minimize your crypto tax liability.

Depending on what country you live in, your cryptocurrency will be subject to different tax rules. The questions below address implications within the United States, but similar issues arise around the world. As always, check with a local tax professional to assess your own particular tax situation.

1. Tax loss harvesting

Tax loss harvesting is a common strategy in the world of investing where you sell your assets that will realize a capital loss. All you need to do is look at your investments and see which ones you bought for more than they are currently worth. By selling at a loss, you can potentially dramatically lower your net capital gains and thus reduce your taxable income. Given the market we are currently in, there are abundant opportunities to harvest losses and save on your tax bill. Cryptocurrency tax calculators have built specific tax loss harvesting tools that you can use automatically detect which coins present…

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Will Bakkt Push Bitcoin into the Mainstream?

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Bitcoin has been in a prolonged bear market for some time and has dropped as low as $8300 in recent weeks. This is the worst time for the cryptocurrency since prior to the bitcoin boom in 2017, and it has led to speculation that the original cryptocurrency could be on the decline. However, the digital asset may be about to bounce back. This could be thanks to Bakkt, the new digital asset platform which aims to provide a secure and well-monitored place for investors to trade bitcoin. Some analysts are even suggesting that this could lead bitcoin into the mainstream.

Bitcoin has been teetering on the edge of the mainstream for some time now, with various companies accepting payments in the digital currency. The reason why it hasn’t yet taken off is that it doesn’t have enough practical applications to encourage the everyday person to start using it. But the market is there for alternative payments, and this is particularly apparent in the online casino industry when new sites crop up. For example, Johnny Jackpot is a smashing new casino brand that accepts a number of payment systems including Neteller, Skrill, and Paysafecard. Global customers want to be able to use options like these which were designed for the internet.

The problem with all of the aforementioned systems…

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