Austria has said that it wants to increase confidence in cryptocurrencies by taxing the tokens like mainstream stock and bond investments. The country has recently unveiled plans to apply a 27.5% capital gains tax on digital tokens including Bitcoin and Ethereum. The tax will take effect from March 2022.
The new crypto tax comes as part of a wide-ranging tax overhaul that is currently happening in Austria. Jurisdictions have been examining the implementation of taxes as the market cap of the crypto market recently surged over $3 trillion. The proposed tax could raise billions for the EU.
Austria has said that its tax framework would be the first of its kind among the European Union and that it has the potential to improve fairness among investors. This would be done by streamlining conditions between different classes of assets.
In a statement on Tuesday, the Finance Ministry said “We are taking a step in the direction of equal treatment, to reduce mistrust and prejudice toward new technologies.”
Holdings that are purchased before the tax takes place will not be subject to the levy. The new tax will only apply at the time that tokens are sold. There is already a tax in place for tokens that are held for less than a year (speculative investments). These investments are taxed at the standard rate, which can reach up to 55% depending on their value. However, the income from speculative investments is currently tax free for profits under 440 euros per year.
According to the new rules, traders who sell one digital token to buy another won’t be subject to tax liability and investors can receive compensation calculated against potential losses when they sell. This will protect investors who sell as a loss.
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