Use this free tax calculator to instantly find your net profit on crypto transactions.
Most countries recognise Ethereum, as well as most crypto currencies, as property rather than currency. As a result, Ethereum is taxed as an asset.
You do not pay taxes when you buy Ethereum. If you are swapping another cryptocurrency for Ethereum, you will pay tax on the coin swap because a coin swap is seen by most tax authorities as the disposal of one asset and the purchase of a new asset. This means that you will have to pay tax on the asset that you disposed off.
Yes! Since Ethereum is seen as property rather than currency, if you make a purchase using Ethereum you are seen by most tax authorities to be disposing of property and making a purchase with the proceeds. Any gains you have made when you purchase with Ethereum are taxable by most countries in the world.
It is very difficult to evade taxes on cryptocurrencies. Many exchanges share data with the tax authority of the country they are headquartered with. This is either voluntary or mandatory. Coinbase has famously given all of its user information to the IRS, along with the transactions made by users. Many other exchanges have also been forced to do the same.
There are a few countries who have little to no tax on crypto.
Alternatively, implementing a strong tax strategy can minimise the tax you have to pay.
Tax loss harvesting refers to realising a loss, then buying back in and carrying over that loss to future tax years. If you hold your investment for longer than 12 months, you can be eligible for a Capital Gains Tax discount, which when combined to your losses can heavily reduce the amount of tax you have to pay. This means you can keep more of what you make.
To calculate tax on your Ethereum investments, use the ethereum tax calculator above. Enter in your income, date of purchase, date of sale, and quantity of transaction. The calculator will tell you how much your gross gain or loss is, if you are eligible for a Capital Gains Tax discount, how much tax you will pay, and how much your net gain or loss is after tax.
The ethereum tax calculator is free to use. There is no sign up required. Just start using it today.