A recent study conducted by the Swedish tax firm, Divly, revealed that less than 1% of global cryptocurrency investors paid taxes on their trades in 2022. The study analyzed tax payment rates in 24 different countries and found that Finnish investors were the strictest, with a tax payment rate of 4.09%, while the Philippines had the lowest payment rate at just 0.03%. The USA and Canada had a tax payment rate of 1.62% and 1.65%, respectively. Meanwhile, Japan and Singapore had tax payment rates of 2.18% and 0.65%, respectively.
The report also highlighted that nearly 95.5% of global cryptocurrency traders had not paid their taxes in 2022. However, Divly believes that these numbers could improve with the implementation of amended regulations and better enforcement by governments.
Germany is the cryptocurrency trading heaven
Coincub, another research firm, conducted a study to determine which countries had the best crypto tax legislation. The study found that Germany had the best crypto tax legislation in Europe, while Italy ranked second and Switzerland (where legislations vary in each canton) was placed third. Most provinces in Switzerland do not require residents to pay taxes on crypto.
Singapore and Slovenia rounded up the top 5, with residents of both countries currently being exempt from crypto taxes. However, Slovenes could be subject to a 10% rate in the future.
It is important for cryptocurrency investors to understand their tax obligations and ensure compliance with relevant authorities in their respective countries. As the crypto market continues to grow, it is likely that governments will increase their efforts to regulate and enforce tax laws in this area.