Varying Crypto Tax Policies Shape Investment Strategies, from the UAE's Zero Taxes to the U.S.'s High Rates

The crypto taxation landscape varies widely across the globe, as revealed by a research report from Blockpit and Coincub.

A recent study by Blockpit and Coincub has highlighted the varying approaches to crypto taxation around the world, ranging from zero taxes in the United Arab Emirates to high rates in the United States.

The report reveals that the UAE remains an attractive destination for crypto investors thanks to its absence of personal income or capital gains tax on cryptocurrency gains for individuals. Switzerland also offers favorable conditions, with zero personal income and capital gains tax on crypto gains.

In Europe, the landscape is more diverse. Some countries, such as Denmark, impose high personal crypto tax rates, with up to 53% of long-term and short-term capital gains from crypto being taxed by the local watchdog. Others, however, provide more favorable conditions for long-term holdings.

According to the report, many European countries levy relatively high taxes on crypto gains on average, but the old continent “has the most tax breaks for long-term hodling your Bitcoin.”

The United States, on the other hand, has the highest total gains and average tax rates of 17.5% (long-term) and 23.5% (short-term), which could potentially bring in tax revenues of approximately $1.87 billion, according to the analysts. They caution that such high taxation could “discourage investment,” ultimately pushing crypto activities underground or leading investors to relocate to more tax-friendly jurisdictions.

“Nations like Vietnam, Turkey, and Argentina might prioritize attracting crypto investment, fostering technological innovation, and providing alternatives to unstable local currencies over immediate tax collection,” Blockpit noted.

Finally, the report anticipates significant changes in the global approach to crypto taxation starting in 2025. These changes will be driven by international initiatives such as the Crypto-Asset Reporting Framework and the Tax Administration for the Reporting of Crypto-Asset Activities.

Developed by the Organization for Economic Co-operation and Development, CARF aims to enhance tax transparency and combat tax evasion by creating a global framework for reporting crypto transactions. Meanwhile, TARKA facilitates cooperation among tax authorities in the 48 participating countries.