For some time, cryptocurrencies have been gaining good recognition as financial assets, to the point that many tax authorities in different countries have decided to start taking them into account when calculating the taxes that citizens are required to pay for their crypto income.
For some time there were doubts about whether this new type of coins was legally seen as a simple currency or as a property. This difference is of great importance because the gains from storing value in currencies aren't taxed, but the gains when someone buys a property at a price and then sells it at a higher price are taxed in most countries.
Therefore, the tax authorities in many countries decided that cryptocurrencies were going to be treated as if they were property, that is, it was decided to give them the same treatment that is given to stocks, real estate investments, among other similar assets.
This results in many tax obligations for people who invest, buy and sell cryptocurrencies and failure to comply with these tax obligations, can cause serious problems with the authorities of the country in question.
However, not everyone is forced to pay these taxes, there are some exceptions in countries like Switzerland, Portugal, among others. But the norm for countries with larger populations and economies is that this tax exists and its citizens must declare their crypto profits and pay the corresponding tax.
Calculating a tax may sound easy if it is based on a common salary, but in the case of cryptocurrencies, doing these calculations can be quite complicated. The reason for this is because many people in this industry do a lot of trades, and each of these transactions has a different entry (purchase) and exit (sale) price. To calculate the tax correctly, it is necessary to know the difference between both of the prices that were used, in each of the transactions that were carried out in the fiscal year.
It is not difficult to imagine the enormous work involved in carrying out all these calculations. For this reason, a company has decided to create a product that solves all of these complications for those people who make transactions with cryptocurrencies. This product is called CoinTracker and it will be discussed in the next article.
This is my English translation of a segment from one of my previous Spanish articles.
DISCLAIMER
This is not financial advice, nor a guarantee or promise in regards to any result that may be obtained from using the above content. The information provided here is for informational and entertainment purposes only. It should not be considered as financial and/or investment advice. No person should make any kind of financial decision without first consulting their own financial adviser and/or conducting their own research and due diligence.