Latest in 2025: Do crypto asset investors need to pay taxes? What are the differences between domestic and foreign income, and can virtual money losses be recognized?

This year's tax season will be extended to June, and this article will provide readers with frequently asked questions about whether cryptocurrency traders need to file tax returns. (Summary: Financial Regulatory Commission: Virtual asset exchanges prohibit "cash transactions"!) Only traceable cash flows such as bank remittances are allowed) (Background supplement: The FSC stressed that "Taiwan exchanges should thoroughly investigate money laundering" and expand financial inspections; The association urges cooperation with regulation ) and the May tax filing season (this year, due to the impact of reciprocal tariffs in the United States, the income tax settlement filing and payment period has been extended to 6/30), reminding readers who have not yet completed the declaration to seize the time to complete the declaration to avoid the loss of personal rights and interests (tax refunds may be delayed), or the need to pay penalties and late payment fees. Every year at this time, the community starts to discuss whether cryptocurrency traders pay taxes or not. This article will sort out the current legal information related to Taiwan for readers. Cryptocurrency withdrawals need to be taxed As the competent authority, the Central Bank and the FSC, have positioned cryptocurrencies as "virtual currency" and considered them highly speculative digital "commodities", if the transaction is profitable, it can be regarded as the income from the sale or exchange of property and rights, and it is necessary to levy income tax under Article 14, Item 1, Type 7 of the Income Tax Law, that is, the profit from the transaction price minus the cost price. However, it should be emphasized that the current situation of tax filing occurs when you decide to take profits and "withdraw funds to a bank account in Taiwan", if you only operate on the exchange and chain, you do not need to file taxes at present. Taxation of Virtual Currency Income The Ministry of Finance's taxation requirements for virtual currency income are explained as follows: Virtual currency in the nature of securities If an individual or enterprise buys or sells such virtual currency, its transaction profit or loss is "profit or loss on securities transactions" under the Income Tax Law. At present, Taiwan has ceased to collect tax on the stock market, but enterprises still need to include this part of the profit and loss in the calculation of basic income in accordance with the provisions of the Basic Tax on Income Ordinance. Non-securities virtual currency Individual: If it is not a recurring transaction, the income is classified as "property transaction" under the Income Tax Law. The tax method is to use the transaction price after deducting the purchase cost and related expenses to incorporate the balance into the comprehensive income tax calculation. Enterprises: Profits and losses should be calculated in accordance with the provisions of the Income Tax Law: the income should be subtracted from the relevant costs and expenses, and the income should be incorporated into the income of profit-making undertakings and taxed according to law. On the other hand, the factors that may affect whether or not to pay tax also include whether the cryptocurrency income is overseas or domestic: the trading platform is the standard: the trading platform is overseas, even if the overseas income, if the trading platform is domestic, it is domestic income. Based on the withdrawal channel: transfer back to Taiwan exchange for withdrawal is domestic income, and wire transfer from overseas exchange to Taiwan is overseas income. Domestic income tax return If it is domestic income, the total amount of income is calculated as the money remitted back ( the withdrawal – the cost of buying the currency in the first place ) + other income. This amount will be consolidated into the total comprehensive income to calculate the comprehensive income tax, which can be calculated on a trial basis using the website provided by the Ministry of Finance. According to the Money Laundering Prevention Act, banks are obliged to voluntarily report to the IRS if the transaction amount exceeds NT$500,000, so this threshold deserves special attention. Foreign income tax return According to the official information of the IRS, foreign income needs to be filed if it meets the following 3 thresholds at the same time: The total overseas income of the reporting account is more than NT$1 million (inclusive). First, the basic income of the reporting household (net comprehensive income + overseas income + specific super-counting items) exceeds 7.5 million yuan. The basic tax amount [( basic income – 7.5 million yuan )× 20%] is greater than the general income tax amount of comprehensive income tax. The so-called one-filing household, which refers to "two husband and wife" and "dependents and dependents", needs to file tax returns together. The above rules are simple: less than 1 million: no declaration, no tax. Over 1 million, basic income less than 7.5 million: It is recommended to declare, but no tax is required (so there is no penalty for failure to declare) Basic income over 7.5 million: need to declare, depending on whether to pay tax. Are cryptocurrency trading losses tax deductible? In addition, the question of whether the loss of cryptocurrencies can be used for tax deduction can also be divided into two scenarios: domestic income and foreign income: Domestic income: Losses of cryptocurrencies can be included in the "property transaction loss deduction" in the comprehensive tax, which is deducted from the property transaction proceeds. The relevant supporting documents must be attached to the declaration of this deduction. During the year, the deduction amount is capped at property transactions in the same year; If the property transaction in the current year is not sufficient to cover the loss, the undeducted loss can be deducted for the next three years. For example, if there is a $100,000 property transaction loss and $70,000 in property transactions in a given year, $70,000 can be deducted for that year, and the remaining $30,000 can be deducted for the next three years. Overseas income: According to the regulations of the Ministry of Finance, in order to offset the loss of overseas cryptocurrencies, the trading platform must provide clear transaction cost and price information. In addition, overseas income must exceed $1 million and the basic income must be above the tax exemption threshold of $7.5 million (because if it is lower than $7.5 million, it is directly tax-free). However, in practice, it is difficult for the government to obtain information on overseas trading platforms, and although overseas investment losses can theoretically be used for tax deduction, in practice there may be certain difficulties. Cai Kunzhou: The IRS does not exclude anyone from being taxed When interviewing Cai Kunzhou, the lead lawyer of Shang Cheng Law Firm, on the issue of cryptocurrency taxation for individual investors in Taiwan, he said that although there are no very clear regulations on cryptocurrency taxation in Taiwan, this does not mean that cryptocurrency transactions will not be taxed. He suggested: For annual withdrawals or large trading volumes, it is best to take the initiative to report to the IRS, with the assistance of lawyers and accountants. In addition, the source of profit of cryptocurrencies (whether they are in Taiwan or overseas) and the holders (individuals or companies) also affect tax treatment. Therefore, investors who have this problem can actually be dealt with as soon as possible, rather than rushing to explain it to the IRS after being punished. In addition, Xiong Quandi, a partner at Law & Law Firm, points out that defining costs is actually quite difficult: if you withdraw money on an exchange in Taiwan, it is likely to be considered a property transaction in Taiwan, which involves the taxation of capital gains. Capital gains are nothing more than "ask price minus cost," however, proving costs can be quite difficult, especially if you don't have a clear record of transactions proving where, when, and at what price you bought cryptocurrency. In practice, if costs cannot be proved, it is not excluded that the IRS may use an estimate to calculate the tax. For example, they might estimate the average cost ratio (one price) of a transaction based on past experience, such as 70%, and then tax the remaining 30%. Such an approach is a solution for those who cannot provide proof of specific costs, but may feel less cost-effective for those with higher actual costs. Related reports Taiwan's Financial Regulatory Commission opens "custody of bitcoin in the financial industry": 5 banks have expressed interest, and applications will be accepted on New Year's Day next year MaiCoin and Currency Depository Exchange were each fined 1.5 million yuan by the FSC for violating the Money Laundering Prevention Law Combating Fraud" online "advertising real-name system" will be implemented on New Year's Day next year, FSC: VASP registration system will be on the road at the end of the year 〈2025 Newest》Do cryptocurrency investors need to file taxes? What is the difference between onshore/foreign income, and virtual currency losses can be recognized as losses? This article was first published in BlockTempo's "Dynamic Trend - The Most Influential Blockchain News Media".