Divly, a Swedish crypto tax firm, has published a new report that shows only 0.53% of crypto investors paid taxes in 2022.
This came about after an analysis of the correlation between the number of people who announced crypto in their tax returns and the search volume for crypto tax-type keywords in numerous places.
The report suggested that Finland rated highest with the largest percentage of crypto taxes from investors with 4.09%, Australia wasn't far off with 3.65%, Austria came third with 2.75%, while Germany, the UK, and Norway followed closely with 2.63%, 2.61%, and 2.4% respectively to complete the top five.
Ranked 10th on the listing is the United States with 1.62%, with India, Indonesia and the Philippines posting the lowest numbers with 0.07%, 0.04% and 0.03%, respectively, to round up the bottom three. The countries' list was dominated by European ones, with the rest coming from Asian nations.
Although the list was generated from Statista's Global Crypto Report, some experts have contested how the estimates came about.
For starters, the report derived the results with volume data that might not be wholly accurate. They argued that the searches did not feature several countries, majorly favoring the ones with superior internet access and search volume data.
Danny Talwar, the global head of the crypto firm Koinly, disagreed with the report. He said that authorities in many countries have systems in place to procure data from crypto exchanges.
"It is likely that 99.5% is not reflective of countries that have specific crypto tax guidance and strict compliance requirements such as the USA, Canada, Australia and India."
He further mentioned how Koinly has witnessed such awareness "increase considerably" amongst investors within their locality, with only a mere "15% of surveyed crypto investors" being ignorant of their reporting obligations.
Greg Valles, a board member of Blockchain Australia, also opined that he wouldn't be able to "say conclusively that the methodology is 100 percent accurate." He spoke about how technology has improved to the point that it can identify any person who derelicts and decides not to report their crypto profits.
With all of these crypto conversations, you might wonder why and if crypto gets taxed.
This happens because the Internal Revenue Service (IRS) classifies crypto as a property. Like every other financial property, crypto is required to be taxable by law.
Since 2014, the IRS has regarded virtual currency as property for federal income tax use. Just like stocks, crypto follows IRS rules that relate to capital gains and losses. Therefore, earning a profit when you sell your crypto means you would owe capital gains tax on the difference.
The IRS – and other regulators – have methods of tracing your trading activity. Centralized exchanges like Coinbase or Gemini always have to report to the IRS, plus they send customers a 1099 miscellaneous form for every gain of more than $600.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information but will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.