GuShiio.com Crypto tax rates in EU countries are already between 20-30%.
Original article from hackernoon
compilation| Odaily Planet Daily Golem
President Trump recently announced he plans to hold talks with Putin to end the conflict in Ukraine. Trump’s recent moves have caught European leaders off guard, who now fear potential peace talks could bypass them. In addition to security issues, the conflict in Ukraine has had a huge economic impact on Europe. In this article, we discuss how Trump’s recent actions have affected the European economy, including his crypto tax policies, and introduce the existing EU tax rate on personal capital gains for crypto users.
EU countries may impose more crypto taxes
The two most important events at the Munich meeting were speeches by U.S. Vice President Vance and European Commission President Ursula von der Leyen. Despite their differences in positions, both men have expressed a lot of opinions on EU security spending. The EU will need to pay social benefits and increase defense spending in coming years. After their latest informal meeting in Brussels in early February, EU leaders decided they needed to invest about 500 billion euros in defense over the next decade.
At the Munich meeting, European Commission President Ursula von der Leyen said she would propose activating exemptions from EU fiscal rules to increase defense spending in member states. EU countries ‘total defense spending accounts for about 2% of GDP. By 2024, this figure will increase from the previous 200 billion euros to 320 billion euros. Ursula proposed raising this figure to 3%, which would increase defense spending by hundreds of billions of dollars, making it necessary to change the economic policies of EU member states. Some countries have also called for the issuance of Eurobonds to fund increased defense spending.
Overall, any increase in defense spending is likely to be debt financing, which means a significant increase in tax revenue that affects all financial sectors, including the cryptocurrency industry.
According to the European Parliament, the EU’s economic recovery after the 2019 epidemic has been negatively affected by the conflict in Ukraine. In 2022 alone, the budget impact will increase by 175 billion euros, accounting for approximately 1.1% to 1.4% of EU GDP. One direct impact is rising energy prices, which leads to higher inflation. In order to reduce inflation, the European Central Bank began to raise interest rates. Despite some recovery, including interest rate cuts by the European Central Bank, the EU economy remains in trouble.
As Europe plans to increase defense spending, EU cryptocurrency companies and individuals with net assets are likely to be subject to higher taxes. The following is an in-depth study of the existing EU cryptocurrency tax landscape.
Current status of cryptocurrency taxation in EU countries
The following are the countries in the EU that impose higher cryptocurrency taxes.
Netherlands
In the Netherlands, a 36% tax is levied on presumed gains on cryptocurrency holdings in the previous year.
Denmark
In Denmark, crypto income is taxed in four levels, namely, national income tax of 12.1% to 15%, municipal tax of 24.982%, labor market tax of 8%, and church tax of an average of 0.7%. Taken together, the effective tax rate is 37%.
Finland
Finland has complex crypto tax rules, which include a 30% tax on all income above € 1000 and below € 30,000. A 32.4% tax is levied on any additional income.
Ireland
Ireland has a 33% capital gains tax (flat rate).
Germany
For short-term crypto transactions, Germany’s tax rate is 45%.
EU average crypto tax rate
For large European economies, crypto tax rates are already between 20-30%. France imposes a 30% capital gains tax on cryptocurrencies, and Italy and Spain impose a 26% capital gains tax on cryptocurrency profits. The tax rate in Austria is 27.5%, and in Belgium it is 25%.
EU cryptocurrency tax haven
However, there are also some EU countries that have relatively loose regulations on individual cryptocurrency taxation, and impose the lowest taxes on the sale of cryptocurrencies. Here are four EU countries, but there are actually many more.
Cyprus
Cyprus is known as a tax haven and is friendly to corporate and individual cryptocurrency activities. The country provides a 0% tax option for individual long-term holders and a 20% tax option for short-term holders.
Romania
In Romania, all cryptocurrency investments enjoy a temporary tax pardon until July 31, 2025.
Germany
In Germany, long-term holders of cryptocurrencies are not subject to capital gains tax.
Czech Republic
In the Czech Republic, people who have held cryptocurrencies for more than three years are not subject to capital gains tax.
other jurisdictions
Poland has a positive attitude towards cryptocurrencies, with a tax rate of 19%. Greece and Bulgaria impose a tax rate of 15% on personal cryptocurrency income. In addition, Luxembourg and Portugal exempt long-term holders (holding for one year) from capital gains tax. Among European countries, Malta and Andorra also have low capital tax rates.
Progress in Bitcoin Reserves in EU Countries
At a press conference on January 30, 2025, European Central Bank President Christine Lagarde rejected the idea of adding bitcoin to EU reserves. She pointed out that Bitcoin is too volatile and closely related to money laundering. Despite such announcements, some EU countries are still considering adding bitcoin to their reserves.
Norway
Norway’s sovereign wealth funds manage more than US$1.5 trillion and have huge indirect Bitcoin exposure. Norway Bank Investment Management (NBIM) has shares in MicroStrategy worth more than US$600 million.
Czech Republic
Although the Czech Republic is not part of the eurozone, it is part of the ECB General Council. Central Bank Governor Aleš Michl acknowledged Bitcoin’s volatility while discussing its possible addition to central bank assets. Recently, the Czech Central Bank confirmed that it had analyzed the addition of new asset classes to its reserves. However, it does not plan to take action until the analysis is complete.
The move comes as the Trump administration makes proposals to build a Bitcoin reserve. So far in the United States, Texas and Utah have proposed legislation to incorporate Bitcoin into their treasuries. Utah passed a yes vote, while Texas has two bills pending.
Possible future scenarios
The European Central Bank may increase its cryptocurrency holdings in the coming months if the Trump administration continues with its plans. But this will not lead to a decrease in the effective tax rate for cryptocurrency investors, and as central banks increase their cryptocurrency holdings, the increase in the value of cryptocurrencies caused by this move may lead to more taxes.
As Trump tightens the trade imbalance between the EU and the United States, this could deepen Europe’s economic difficulties and lead governments to consider new ways to collect taxes. In addition to the United States, the EU’s economic relations with Russia and China have also deteriorated, which may also lead to increased taxes for EU citizens, with the potential result that cryptocurrency investors will move to friendlier countries.
At the same time, if the EU maintains preferential tax policies, the high taxes of the above-mentioned EU member states will lose their effect. If military spending increases, the tax policies of member states may be unified. But even if that does not happen, major contributors to the EU’s military budget will be forced to find additional sources of revenue and raise taxes further.
In this sense, European countries such as Germany, France, Poland, Italy, Spain and the Netherlands may be at greater risk. In addition, such measures may extend to capital income and general financial transactions. Even if these measures are implemented gradually to avoid causing excessive panic among investors, they will still hurt the eurozone economy.
From the perspective of EU interests, supporting innovation and capital inflows, including the crypto industry, is definitely beneficial to member states, but in the face of crisis and increased military spending, EU countries have less room for choice.
