Austria plans to launch a tax reform to see only certain crypto transactions be subject to a 27.5% capital gains levy by treating them like stocks and bonds.

Recently, Austria announced that it wants to tax cryptocurrencies by taxing them like stock and bond investments. The country wants to apply a 27.5% capital gains levy on digital tokens from March 2022 as part of a wider tax reform.

Austria claims that its new framework stands to be the first of its kind in the European Union. Crypto holdings purchased before the new tax rules take effect will be unaffected by the levy. The levy will apply when the event of selling the tokens takes place. Selling one token to buy another won’t attract tax and investors compensation for potential losses when they sell.

Austria has made strides in the area of crypto tax. A company called Blockpit provides automated tax calculations for crypto trades, incomes generated from staking, and other crypto activities. The company runs its platform in five European countries and in the U.S.

Estimated Bitcoin capital gains tax, according to an empirical study done by the European Commission, sat at 12.7B EUR in 2020, including 3.6B EUR of realized gains. According to the report, most Organisation for Economic Co-operation and Development (OECD) countries do not seem to consider cryptocurrencies equal to the currencies of sovereign nations but as intangible property.

Other EU countries do not provide clear tax guidance. What constitutes a taxable event differs from country to country. For France, only transfers of crypto-to-fiat may be a taxable event. In Italy, Netherlands, or Portugal, no capital gains tax is payable from cryptocurrencies unless they are deemed speculative. This is far from being a unified picture.

Tax practitioners bemoan that rules designed for a pre-internet day are challenging to apply in the digital age. The crypto industry is moving so fast that tax officials are forced to play catchup. The U.S. tax man is seen by many to be particularly aggressive to ensure entities pay all required taxes on cryptocurrencies. Unresolved issues about jurisdiction for a currency that appears that have no jurisdiction pose challenges for tax bodies.

One of the challenges in the taxation of crypto is knowing who crypto belongs to. The Internal Revenue Service once issued legal summonses to procure investor information from exchanges like Coinbase and Kraken. This data has been used to identify any discrepancies between tax information submitted by crypto investors to the IRS and exchange activity. In the United Kingdom, the tax body HMRC has demanded lists of crypto exchanges over the past couple of years.

Part of U.S. President Joe Biden’s $1T tax infrastructure bill includes plans to make into law the reporting of capital gains made on digital assets directly to the IRS. Also, Congress recently sought to expand the definition of a “broker” to include any entity that affects the transfers of digital assets on behalf of another person in its infrastructure bill, which drew ire from crypto miners.

The post Austrian Crypto Tax Will Treat Tokens Like Stock appeared first on BeInCrypto.

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