Do governments lose taxes with cryptocurrencies?

[MbyzIco]

The question and the fear are recurrent. If the government loses money from the collection of taxes, because people are saving in BTC or another Altcoin, will it stimulate the states to regulate the issue?

The answer is simple, the truth is that NO, the state does not lose tax money for investment in cryptoactives, now, if this migratory situation of money stimulated regulations, I think that not only those, there is more than one reason to regulate, although I think that could be avoided by standardizing the common sense from the community, but I still do not see the maturity for it within the Bitcoin ecosystem and even less within the Active Crypto people.

I explain a little the tax issue, there is an accounting premise called cargo law and credit, we take it into account on the one hand, on the other, we understand that the taxes point to FIAT monies earned and without justification of social spending.

Starting from that premise, when you take money from your bank account to turn it into Cryptocurrencies, that money, even if you do not have it, will be subject to taxes. Hence the question arises, under the understanding that it does not matter if you lost it, you will still pay taxes, what happens when you earn money in the cryptocurrency speculation? the state can not touch you? then the answer is YES, because by the principle of the charge and payment, what you earn, another lost it, therefore, and the taxes are covered, additionally, if you happen to convert it to fiat to pay current expenses, you will return to pay taxes, so in any case, to the governments it agrees the cryptocurrencies, because they are the ones that avoid an important rule of the taxes, and it is the double payment for the same money.

In summary, whenever you use cryptocurrencies in conversion between Cripto and FIAt you will be paying taxes, directly or indirectly, for governments it is not a problem, it is for us, that unless we develop, more than technology and the trading market, we develop everything a consumer market without having to go to FIAT, we will be being punished twice.

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[squatz1]

I'm just going to try to pick apart each thing of what you've said.

The question and the fear are recurrent. If the government loses money from the collection of taxes, because people are saving in BTC or another Altcoin, will it stimulate the states to regulate the issue?

If you're saving money (or investing) by putting money into an altcoin and not selling it, the government isn't losing anything because you haven't sold yet. They're only going to be losing money if you sell and you don't declare the capital gain THIS IS TAX FRAUD, JUST SO YOU ALL KNOW So based on just putting money into bitcoin years ago and not selling, that's NOT the government losing money. The equivalent in stocks would be buying a stock and not selling it-- like many Americans do.

Starting from that premise, when you take money from your bank account to turn it into Cryptocurrencies, that money, even if you do not have it, will be subject to taxes.

Not until you sell that Cryptocurrency if you hold it you're subject to nothing.

In summary, whenever you use cryptocurrencies in conversion between Cripto and FIAt you will be paying taxes, directly or indirectly, for governments it is not a problem, it is for us, that unless we develop, more than technology and the trading market, we develop everything a consumer market without having to go to FIAT, we will be being punished twice.

Well yes, this portion is true.

I just want to stress that the entire crypto community thinks that they're being taxed more than any other investment and this just isn't true if you buy a crypto and sell it within a week you're going to be subject to the same short-term capital gains (which is a much higher rate than the long-term capital gains) which a person who did the same exact thing with a stock would be subject to.

[Quickseller]

I think there is decent evidence that many people have not disclosed all their crypto related income.

There is also anecdotes implying that some people are hiding assets/income (via crypto) in order to maintain eligibility for welfare programs. 

[Edward_Ray]

This is actually a question that has indeed crossed my mind. Sadly, I don't think your post has answered it sufficiently. On a basic level, I think cryptocurrencies do not affect taxation much. And I believe I am right in thinking so. Because as long as there's a continuous Fiat-crypto exchange, taxation is bound to still be realized. Especially in buying, the government has nothing to lose whatsoever. Since the currency used in buying Bitcoin was already in the Fiat system. There might be a little loophole though when one sells Bitcoins (especially after making profits). The government might look to close this loophole by tracing cryptocurrency transactions.

[becak mesin]

For some countries that apply and legalize cryptocurrency probably lose the income from the taxes in any transaction, because cryptocurrency is decentralized and free. Of course it decreases the state income indirectly. There much speculation of it because not all state apply it, it only short analysis of impact cryptocurrency. It is really interesting to study and research about the impact of cryptocurrency to the government income.   

[PrinceKael]

I'm not sure to which degree, but I definitely believe that governments are missing out on some taxes.

It is illegal to not declare them, however many people still don't declare capital gains on their cryptos - at least not until they ramp up pressure with mass audits.

It is partly their own fault though, some countries have insanely over-complicated the reporting procedures as they require you to report every little thing so if you trade multiple currencies per day then you're going to be knee-deep in paperwork and a tonne of shit-slinging.

[MbyzIco]

Not until you sell that Cryptocurrency if you hold it you're subject to nothing.

if what you keep is for example the mined, we could say that it is, but it happens that everything depends on where the story begins, if we start from the fact that you already have the cryptocurrency, it is true, you are not taxable until your conversion to FIAT, but if we start the story since you have the FIAT money to acquire the cryptocurrency, and that money will be subject to taxes as part of your income when you invest or spend it.

Now, the declaration of investment falls into a duality, because it is an investment in shares or speculative, in any case the recognition or not of the governments of the figure, it is after you declare the FIAT money in your account and you must pay for that income obtained.

For all the above, it is not worth mentioning tax frauds, or tax returns not presented, and those are particular cases subject to persecution and particular analysis. It is as if we talk about someone who receives regular income and decides not to declare taxes, is it possible? Yes, but that is punishable by law, and this will take care of the situation.

[Owen_Smith]

It's so interesting that everybody here is talking about tax laws. Some are talking about tax fraud. Squatz1 is the only one that mentioned anything about a country, when he said "Americans". Don't you guys realize that every country has it's own laws? There are actually countries with no capital gains taxes. I think it's key to point out what country you're talking about when you start talking about laws. Of course all governments would love to have some more money, but they can't lose something they never had.

[Chestt]

I'm just going to try to pick apart each thing of what you've said.

The question and the fear are recurrent. If the government loses money from the collection of taxes, because people are saving in BTC or another Altcoin, will it stimulate the states to regulate the issue?

If you're saving money (or investing) by putting money into an altcoin and not selling it, the government isn't losing anything because you haven't sold yet. They're only going to be losing money if you sell and you don't declare the capital gain THIS IS TAX FRAUD, JUST SO YOU ALL KNOW So based on just putting money into bitcoin years ago and not selling, that's NOT the government losing money. The equivalent in stocks would be buying a stock and not selling it-- like many Americans do.

Starting from that premise, when you take money from your bank account to turn it into Cryptocurrencies, that money, even if you do not have it, will be subject to taxes.

Not until you sell that Cryptocurrency if you hold it you're subject to nothing.

In summary, whenever you use cryptocurrencies in conversion between Cripto and FIAt you will be paying taxes, directly or indirectly, for governments it is not a problem, it is for us, that unless we develop, more than technology and the trading market, we develop everything a consumer market without having to go to FIAT, we will be being punished twice.

Well yes, this portion is true.

I just want to stress that the entire crypto community thinks that they're being taxed more than any other investment and this just isn't true if you buy a crypto and sell it within a week you're going to be subject to the same short-term capital gains (which is a much higher rate than the long-term capital gains) which a person who did the same exact thing with a stock would be subject to.

Thanks! That really makes sense. Very useful.

[Bugsy22]

I'm just going to try to pick apart each thing of what you've said.

The question and the fear are recurrent. If the government loses money from the collection of taxes, because people are saving in BTC or another Altcoin, will it stimulate the states to regulate the issue?

If you're saving money (or investing) by putting money into an altcoin and not selling it, the government isn't losing anything because you haven't sold yet. They're only going to be losing money if you sell and you don't declare the capital gain THIS IS TAX FRAUD, JUST SO YOU ALL KNOW So based on just putting money into bitcoin years ago and not selling, that's NOT the government losing money. The equivalent in stocks would be buying a stock and not selling it-- like many Americans do.

Starting from that premise, when you take money from your bank account to turn it into Cryptocurrencies, that money, even if you do not have it, will be subject to taxes.

Not until you sell that Cryptocurrency if you hold it you're subject to nothing.

In summary, whenever you use cryptocurrencies in conversion between Cripto and FIAt you will be paying taxes, directly or indirectly, for governments it is not a problem, it is for us, that unless we develop, more than technology and the trading market, we develop everything a consumer market without having to go to FIAT, we will be being punished twice.

Well yes, this portion is true.

I just want to stress that the entire crypto community thinks that they're being taxed more than any other investment and this just isn't true if you buy a crypto and sell it within a week you're going to be subject to the same short-term capital gains (which is a much higher rate than the long-term capital gains) which a person who did the same exact thing with a stock would be subject to.

Thanks! That really makes sense. Very useful.

Agree. Thank you for your great explanation. It wasn't so evident to me before. Thanks again!

[Tornadocrazy]

I'm just going to try to pick apart each thing of what you've said.

The question and the fear are recurrent. If the government loses money from the collection of taxes, because people are saving in BTC or another Altcoin, will it stimulate the states to regulate the issue?

If you're saving money (or investing) by putting money into an altcoin and not selling it, the government isn't losing anything because you haven't sold yet. They're only going to be losing money if you sell and you don't declare the capital gain THIS IS TAX FRAUD, JUST SO YOU ALL KNOW So based on just putting money into bitcoin years ago and not selling, that's NOT the government losing money. The equivalent in stocks would be buying a stock and not selling it-- like many Americans do.

Starting from that premise, when you take money from your bank account to turn it into Cryptocurrencies, that money, even if you do not have it, will be subject to taxes.

Not until you sell that Cryptocurrency if you hold it you're subject to nothing.

In summary, whenever you use cryptocurrencies in conversion between Cripto and FIAt you will be paying taxes, directly or indirectly, for governments it is not a problem, it is for us, that unless we develop, more than technology and the trading market, we develop everything a consumer market without having to go to FIAT, we will be being punished twice.

Well yes, this portion is true.

I just want to stress that the entire crypto community thinks that they're being taxed more than any other investment and this just isn't true if you buy a crypto and sell it within a week you're going to be subject to the same short-term capital gains (which is a much higher rate than the long-term capital gains) which a person who did the same exact thing with a stock would be subject to.

Appreciate your comments on that.
I never thought about it that way...

[thebanker28]

Any government is free to tax crypto in exactly the same way as they tax any other currency or asset. They will probably claim that tax evasion ios riffe with crypto but most countries have self reported taxes in the majority of cases and its up to each individual to stay ion the right side of this.

[PrinceKael]

Well in Australia the tax law for crypto is crazy, you have to declare every trade and conversion and record each price and date. If you trade a lot this is a pain. Not only that, but they tax it as capital gains. IMO capital gains tax is unfair for low income individuals since they're income tax is lower, but that doesn't work for capital gains.

However in Netherlands they use the income tax rate which is great. In Slovenia and Singapore I'm not sure exactly but they either tax the profits requiring no capital gains tax or no tax at all which is great either way and how the rest of the world should structure it. Oh and I just read that Denmark doesn't tax cryptos at all for individuals, only for businesses - even better!

[squatz1]

It's so interesting that everybody here is talking about tax laws. Some are talking about tax fraud. Squatz1 is the only one that mentioned anything about a country, when he said "Americans". Don't you guys realize that every country has it's own laws? There are actually countries with no capital gains taxes. I think it's key to point out what country you're talking about when you start talking about laws. Of course all governments would love to have some more money, but they can't lose something they never had.

While most countries do have their own laws, and when I was talking I was talking about the United States most countries tax laws are going to be pretty similar when it comes to short term capital gains vs long term capital gains. Most countries do have their own sort of capital gains, and long term is the best capitals gains to have (speaking on a tax savings way of thinking here)

But yes, some countries don't charge capital gains tax at all - though typically this is done for people that are foreigners to the country, and not the people living in the country itself. I don't know of many countries which have no capital gains tax for their own citizens and for foreigners.

Back on topic here, don't take tax advice from some random guy on the internet. Read into stuff yourself and consult a tax professional in your area.

[Mometaskers]

If you managed to store it in a fully-anonymous account and all transactions made are also fully-anonymous then yes, they could be losing money. Though I prefer to think of it more as a lost opportunity. 

They can definitely "force" you to declare all your cryptoassets by a law but there's definitely ways to avoid that, especially is said crypto are stored in a wallet that have not transacted with exchanges.