Happy welcome🌸. Dear readers! As we all know:
When we purchase or sell anything, we have to pay a fixed amount of tax along with its price. From a small household item to a large property( houses, cars, or land), everything comes with an additional cost that goes into your government treasury.
Similarly, when it comes to cryptocurrencies, they are also considered taxable assets in many countries. It means that whether you buy, sell, swap, or even earn these digital currencies as rewards and income, you have to pay a tax on them.
However, not all countries have the same crypto taxation rules and policies…….
Some countries have very strict rules that each transaction is reported and taxed, while others have more relaxed and tax-free policies.
To find out how is crypto taxed in the United States and European countries, we have curated this comprehensive article guide. This post will outline:
- Crypto taxation in the US.
- Crypto taxation in the EU.
One by one…..
Along with them, you will learn some terms, like capital gain tax, crypto-to-crypto tax, and mining & staking tax, essential for understanding clearly how is crypto taxed.
So, let’s break down…..
How Is Crypto Taxed – United States(US)
Dear readers! According to the Internal Revenue Service (IRS), cryptocurrencies are treated as property, not just traditional currencies. It means every time you sell or buy crypto, it’s like selling or buying a piece of property, and you will have to pay tax.
The crypto tax has been categorized into two main types: “Capital gain tax & Income tax”. Below, we will explore both these types and some taxable events when such taxes are imposed.
1. Capital Gain Tax
To understand the “Capital Gain Tax”, let’s have an example.
Let’s suppose you bought a Bitcoin for $2000 and after a few time, you sold it for $3000. Now, $1000 is your profit, as well as capital gain. The tax that you will pay on this profit will be the capital gain tax.
Definition: The capital gains tax refers to the tax imposed on the profit earned from selling any digital crypto asset.
There are two main types of this tax, depending on the crypto holding time.
- Long-term gain: If you have held any crypto asset for more than one year, then you will be subject to the Long-term capital gain. In 2025, this gain tax ranges from 0%-20%, depending on your overall income level.
- Short-term gain: The short-term gain tax applies to cryptocurrency held for one year or less. It ranges from 10%-37%.
Taxable Events When Capital Gain Tax Is Imposed
We have discussed three major scenarios where capital gain tax is applied.
1. Selling crypto: Whenever you sell your crypto assets for fiat currency (such as USD or EUR), the capital gain tax is triggered.
2. Converting or Swapping coins: If you ever swap your crypto coins, such as exchanging Bitcoin for Ethereum, it’s also considered a taxable event by the IRS.
3. Making purchases with crypto: If you use your cryptocurrencies to buy things or goods( Laptop, iPhone, Car, and other items), the gain tax is imposed on you.
2. Income Tax
Income tax is charged when you receive cryptocurrencies rather than directly buying them. This tax in the US also ranges from 10%-37&, based on your income level. Learn further how this tax is imposed on your digital assets.
Taxable Events When the Income Tax is Imposed
Let’s discuss 3 events when the crypto-income tax is charged.
1. Mining: When you mine cryptocurrencies, validate the crypto transactions, and add new blocks to the blockchain, you receive new cryptocurrencies as rewards. However, according to the IRS, this reward is also treated as income, and you pay tax on it.
2. Staking: Crypto coins earned from staking( staking your coins to verify the transactions and adding new blocks) are also considered taxable assets.
You may also like to read: Mining vs Staking – Which One Is Better?
3. Airdrop: Airdrop occurs when new free tokens or coins are sent to your crypto wallets to promote awareness and encourage adoption. Although you don’t pay for these tokens, they are also taxed based on their market value.
Crypto Tax Rates for Short-Term Capital Gains(2025)
Once you understand how is crypto taxed, we will discuss some crypto tax rates for short-term capital gains. Read the table below.
| Tax Rate | Single | Married( Joint) | Head of household | Married(separate) |
| 10% | $0-$11925 | $0-$23850 | $0-$17000 | $0-$11925 |
| 12% | $11926-$48475 | $23851-$96950 | $17001-$64850 | $11926-$48475 |
| 22% | $48476-$103350 | $96951-$206700 | $64851-$103350 | $48476-$103350 |
| 24% | $103,351-$197,300 | $206701-$394600 | $103351-$197300 | $103351-$197300 |
| 32% | $197,301-$250,525 | $394601-$501050 | $197301-$250500 | $197301-$250525 |
| 35% | $250,526- $626,350 | $501051-$751600 | $250501-$626350 | $250526-$375800 |
| 37% | $626351 and more | $751601 and more | $626351 and more | $375801 and more |
Crypto Tax Rates for Long-term Capital Gains(2025)
Now, it’s time to explore the crypto tax rates for long-term gains. Read the table below.
| Tax Rate | Single | Married(Joint) | Head of the house | Married(seprate) |
| 0% | 0$-$48350 | $0-$96700 | $0-$48350 | $0-$64750 |
| 15% | $48351-$533400 | $96701-$600050 | $48351-$300000 | $64751-$566700 |
| 20% | $533401 and more | $600051 and more | $300001 and more | $566701 and more |
How Is Crypto Taxed – EU(Europe)
Dear readers! The crypto taxation system in the EU is not constant; it keeps changing. This is because the EU government wants clearer and expanded crypto reporting to ensure transparency, making compliance more difficult for both investors and businesses.
To achieve this, the EU government has introduced two major frameworks: CARF and DAC8. Below, we will discuss their roles briefly in straightening out the crypto tax regulations across different EU countries.
CARF(Crypto-Asset Reporting Framework)
CARF plays a key role in enhancing crypto tax transparency by requiring Crypto-Asset Service Providers (CASPs) to report transaction data. This framework sets different rules for investors to accurately report their transaction records.
Additionally, due to this framework, it has become impossible for investors to hide their crypto gains, allowing authorities to record transaction data in detail.
DAC8( Directive on Administrative Cooperation)
DAC8 is a new EU directive that extends the CARF’s rules and regulations. Under this directive, both centralized and decentralized exchanges have to report the transaction data. The biggest benefit of this directive is real-time transaction monitoring. This feature lets tax authorities know everything about any transaction, like:
- Who has transferred the crypto?
- How much is the transaction?
- How much profit or gain was made by any transaction?
And so on…
After these two frameworks, we will delve into how is crypto taxed in Europe. The next section is waiting for you.
Crypto Taxes In Europe – Major Types
After understanding the roles of CARF and DAC8, let’s dive into some major types of crypto tax in the EU.
1. Crypto Gain Tax
After hearing this heading, you will probably say, “We have already read about this before”. Yeah! You are right. It’s the tax that is applied when:
- You sell your crypto assets and earn a profit on them.
- Swap or exchange your tokens, like Bitcoin for Ethereum.
- Buy goods using your cryptocurrencies.
Now, different EU countries impose this tax at different rates. For example:
- France applies a 30% flat tax.
- Germany doesn’t impose this tax if you have held cryptocurrencies for more than one year.
- Italy charges 26% on profits above €2,000 annually
2. Income Tax
Just like in the US, income tax in the EU countries is triggered when you receive crypto assets rather than buying them from any specific platforms. Below are some taxable events when this income tax is charged in the US.
- Mining and Staking: Just like in the US, if you earn cryptocurrencies through mining and staking, they will be considered taxable.
- Airdrop: If you are gifted some tokens and coins freely, you have to pay a tax on them( discussed in the earlier section).
This tax also varies by EU countries. For example;
- France imposes a 30% tax on crypto trading.
- In Spain, the rate of this tax can go up to 47%.
- Italy is charging 26%, depending on the income level.
And so on……
3. Corporate Crypto Tax
Businesses that rely heavily on cryptocurrency trading have to report their gains or profits as taxable income and pay a corporate tax on them. This tax is also different in different EU countries. For example:
- Ireland applies a corporate tax rate of 12.5%.
- France charges businesses 25% on crypto-related income or gains.
- Italy applies a 24% corporate tax on crypto businesses.
4. VAT Tax
In the European countries, the Value Added Tax (VAT) also applies to certain crypto-related activities. However, not all crypto transactions are subject to VAT.
According to the European Court of Justice, crypto-to-fiat exchanges (like converting Bitcoin to Ethereum) are VAT-exempt, treating cryptocurrencies similarly to traditional currencies.
But if businesses accept crypto as a form of payment for goods or services, VAT applies based on the product’s value. Moreover, cloud mining services, brokerage, and advisory services related to crypto may also be subject to VAT.
Crypto Tax Rates In Different EU Countries(2025)
Hoping! You would have understood clearly how is crypto taxed in the EU. Now, it’s time to give you a simple and quick overview of crypto tax rules in different EU countries. Just see the table below.
| Country | Capital Gain Tax | Income Tax |
| United Kingdom(UK) | 10%(basic rate) and 20%(higher rate. | Ranges from 20%-45%( mining &staking) |
| Spain | 19%–28% based on the profit amount. | Up to 47%( through mining and staking). |
| Sweden | 30% flat tax on crypto profits. | 32%-52% based on the rewards amount. |
| Portugal | 28% (if held more than 1 year); 0% (if held less than 1 year). | 13%-48% on mining, staking, and airdrop rewards. |
| Germany | 0% if held less than one year. If held more than one year, then 45% | Up to 45% on mining and staking. |
| France | 30% based on your income level. | Can reach 45% or up to 45%. |
| Netherland | Box 3 wealth system taxes crypto from 31%-36%. | Crypto activities in the Netherlands may trigger taxation under Box 1. |
| Switzerland | Does not tax capital gain. | Charges income tax up to 40% |
Let’s End It
How is crypto taxed? This is a question that every investor must know before entering the world of crypto and investing their digital assets. From capital gain tax to income tax and VAT to crypto corporate tax, you have to consider each tax complication based on your country’s rules.
The above-mentioned guide is a detailed discussion on how is crypto taxed in the US and the EU. We started with the crypto taxation in the US and provided users with a clear explanation of capital gains, income tax, and taxable events.
Then, we moved toward crypto taxation in European countries. This second section highlighted the role of CARF and DAC8 and broke down how different countries implement the crypto taxation rules.
