- Brazil has ended its tax exemption on small crypto gains and now imposes a 17.5% capital gains tax on all crypto profits.
- Other countries, like Portugal and the United Kingdom, have also increased taxes on crypto in recent years.
- Governments worldwide are starting to target crypto assets for increased tax collection.
- Changes mostly affect everyday investors, with larger institutions better able to absorb costs or shift operations.
- The global trend suggests the era of low-tax or tax-free crypto investing may be coming to an end.
In June, the Brazilian government removed its previous tax exemption for minor gains from cryptocurrencies, introducing a flat 17.5% capital gains tax on all digital asset profits. This measure forms part of a broader effort to boost government revenue by tightening regulations on financial markets.
According to Robin Singh, CEO of Koinly, this is not a small local adjustment but reflects a global pattern where policymakers see cryptocurrencies as a new source of public funds. In 2023, Portugal shifted from treating crypto assets as tax-free to imposing a 28% tax on crypto gains held for under one year, signaling a major change in approach.
Germany currently allows tax-free crypto gains if the assets are held for more than a year. For holdings under a year, yearly gains up to about $690 remain untaxed. In the United Kingdom, investors receive an annual allowance of $3,976 on capital gains, including crypto, which was halved from $7,953 last year. This cut may indicate possible future reductions, especially with government debt on the rise.
Singh stated that the retail investor “gray zone”—where small crypto investors faced little regulation—may be ending as authorities notice the rapid growth of crypto markets. He notes, “The era of retail crypto investors enjoying a gray zone of regulatory leniency is closing.” Data from the Financial Conduct Authority shows that 12% of UK adults now hold cryptocurrency, showing broad exposure to possible new taxes.
Taxing crypto is easier for governments, according to Singh, since it is often viewed as risky or favoring the wealthy. Brazil’s tax structure, however, has hit small traders hardest, while large companies can often shift to more favorable jurisdictions or absorb the new costs more easily. Everyday users, including those saving in countries with high inflation, feel the greatest impact.
With increased focus on closing budget gaps, especially in emerging markets, Singh concludes, “The question isn’t whether other crypto-friendly nations will tighten their grip on crypto taxation; it’s how fast and hard it is.”
For more region-specific insights, read about Japan’s recent moves in its crypto tax overhaul.
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