A study by Hjalte Fejerskov Boas and Mona Barake indicates over 90% of Danish crypto traders did not report gains or losses. Many traders shift from regional to offshore exchanges to avoid taxes.
Advantages of Offshore Exchanges
As crypto taxes rise, traders turn to offshore exchanges to evade taxes. These exchanges help avoid regulatory scrutiny, leading to a drain on tax revenues.
Crypto Tax Rates
In Denmark, capital gains tax on crypto can reach up to 42%. Japan has rates from 15% to 55%. In countries like Germany, taxes apply only if assets are sold within a year.
Consequences and Prospects
The tax shift may necessitate policy revision by governments. Countries like Japan and Denmark face tax revenue losses, while enforcement agencies clamp down on tax evasion. During this period, countries like Egypt and China have initiated complete bans on crypto activities.
The prevalence of crypto tax evasion presents challenges for tax authorities worldwide. Changing the tax approach may make markets more transparent and legitimate.
