How to pay taxes on cryptocurrencies?
The Estonian case anno 2021
Cryptographic money trading is gaining more and more popularity, and buyers may wonder if and when they need to pay taxes on cryptocurrency. In summary, a tax liability arises in three cases: by converting cryptocurrency into a common currency, exchanging cryptocurrency for another cryptocurrency, or using cryptocurrency to pay for goods or services.
In the case of cryptocurrency, only those transactions from which income is earned are taxed, and each transaction must be assessed separately. For example, if a person bought one Bitcoin for 18,000 euros and sold it for 10,000 euros, he or she does not have to declare the transaction because the person did not earn any income from it. However, if the situation is the opposite, ie a person bought one Bitcoin for 10,000 euros and sold it for 18,000 euros, then the 8,000 euros earned must be declared on the personal income tax return and 20% income tax must be paid.
Thus, the income earned is the difference between the acquisition cost and the sale price of cryptocurrency. The purchase price or income received must be converted into euros, taking into account the cryptocurrency exchange rate valid on the date of receipt of income or expense. If the transaction is made on market terms, it is possible to use the exchange rate of the environment in which the…
