Recently, a Swedish analytic firm, Divly, conducted a study exploring how people from different regions comply with crypto tax laws.
The study revealed that only about 4.09% of the crypto traders in Finland remitted their mandatory taxes to the authority last year. In addition, only about 0.03% Filipino investors paid their digital currency taxes.
Overall, only 0.53% of the global crypto investors submitted their taxes on profits from trading crypto to authorities last year.
Crypto Tax Trend Varies With Region
According to Divly’s study, traders worldwide responded differently to the tax laws imposed on crypto trades. It showed an overview of the taxes that crypto investors remitted to the appropriate government bodies in their country in 2022.
For instance, the evaluation showed that in the whole of Europe, Finland investors are the most compliant with the tax rules. That has the highest tax remission rate of 4.09%. Meanwhile, Italian investors, on the other hand, have the lowest tax compliance rate in Europe, remitting just 0.26% of their crypto transaction profits as tax.
The analyst explained that the leniency the Italian government exercised in its tax policy as compared with others is the main reason the country’s remission rate is the lowest. In other words, the Italy government only requires its investors to pay taxes on their holdings that exceed $56,000, which was above the tax threshold in other European countries.
Meanwhile, the Phillippines has the lowest tax payment rate globally, accounting for just 0.03% in the study. In the country, the government mandated that local investors pay a 35% tax on every profit made from crypto assets with about $4,500 valuation.
According to Divly, the United States of America holds the record for the most crypto taxpayers. About 1.62% of traders in the country are paying crypto taxes. Next to it is Canada, with a remission rate of 1.65%, as revealed by the study.
In Asia, Japan had the maximum rate, as 2.18% of its investors paid their taxes in 2022. Coming second on the list for Asia was Singapore, with a rate of 0.65%.
As stated by the analysis, about 95.5% of the crypto investors in the world remain defiant to the crypto tax regulations, refusing to pay taxes on their crypto trading profits in 2022. Nonetheless, Divly opined that compliance numbers would shoot up once the governments enforce amended crypto regulations that make taxing easier for traders.
Top Five Countries With Favourable Crypto Tax Rules
In a similar study by Coincub, Germany has the best cryptocurrency tax rules. The nation’s government initially mandated its citizens to pay tax on crypto assets held in less than ten years. However, the government amended the rule in 2022, stating that it no longer intends to tax individual investors on the profits made on the sale of Bitcoin or Ethereum they have held for more than a year.
Before coming second and third on the list of countries with favorable crypto tax laws, according to the survey, were Italy and Switzerland, respectively. In addition, most regions in the Aplean nation enjoy tax-free crypto transactions.
Singapore and Slovenia came fourth and fifth on the list as investors in the country are not under obligation to pay tax on their crypto assets. However, the Slovenia government plans to impose a 10% tax rate soon, according to reports.