I have no information about the tax situation in other countries, but I would honestly be heavily surprised if it was as bad as the crypto taxes in Sweden. Long story short, crypto taxes in Sweden is a disaster for authors or curators on Hive and Steem.
I will try to walk you through this mess, but it will be difficult. Well, probably not difficult, just a bit mesmerizing, confusing and extremely awkward. You see, tax fraud is (almost) worse than murder in Sweden judging by the prison time.
We have Skatteverket in Sweden. That's the Tax Agency. Here's the first thing you'll see if you search for "crypto" on the website:
If you have sold, exchanged or paid with a cryptocurrency, you need to report this to the Swedish Tax Agency in connection with your declaration. If you have made a profit, you will have to pay tax on your profit, and if you have made a loss you will have to deduct part of it. Crypto currency is also called virtual currency or digital currency.
- So far so good.
Here's the second paragraph, and this is also where things are starting to spiral out of control for many: (Sorry I've just used google translate for these parts.)
When should I declare bitcoin and other cryptocurrencies?
You, as a private individual, must declare your cryptocurrencies if you have, for example:
- sold cryptocurrency
- exchange a cryptocurrency with or or several other types of cryptocurrencies
- exchange a cryptocurrency against a FIAT currency, ex USD
- paid with cryptocurrency when purchasing an item (for example, a pair of shoes) or a service (for example, a taxi ride)
- lent cryptocurrency
- used cryptocurrency as a bet.
It continues like this:
If you have lost control of your cryptocurrencies so that you do not automate that you are entitled to loss withdrawals. An example of such a situation might be that you have lost your private key to a virtual wallet and thus no longer have access to the crypto currency.
Another example is that you lose access to your cryptocurrencies in connection with a hacker attack on a trading site. If you have lost your private key or you have lost access until your cryptocurrencies in connection with a hacker attack on trading venues, then you are not entitled to make loss withdrawals
So, now they're telling me that I can't deduct the loss if I lose access to my accounts.
Anyhow, let's just assume that we can all live with the things I've stated above, what's coming next is probably the most crucial, important and terrifying thing:
You who have acquired or received cryptocurrency on several different occasions
If you have acquired or received cryptocurrency on several occasions, you should calculate an average cost amount. The standard method, which uses 20 percent of the sales price as a cost amount, must not be used when reporting cryptocurrency.
And why is this so terrifying, vital and crucial?
On Hive (and Steem), we have authors and curators. Which in reality becomes two different types of incomes. On top of that, we also have the whole thing about APR. That is 3 types of income.
Content creators, or authors earn crypto for each upvote they receive, but they haven't earned anything until the pending rewards have been paid out. The same goes for curators. They earn something for voting on content, and they earn that something once the pending rewards have been paid out.
However, according to our tax agency we need to calculate an average cost amount whenever we received cryptocurrency on several occasions, so we need to do things in different steps.
- Wait until the pending rewards pays out.
- Check the price of the cryptocurrency at the time the rewards reach our wallet.
- Calculate an average cost amount. Which would be something like: price of crypto x the rewards we made.
Now, we have our profit. The rather confusing part about this is that we cannot calculate the profit due to the fact that we have not spent money or crypto, which is stated here:
Here's how to declare cryptocurrency
First, find out your sales price and cost amount (usually the amount you bought the cryptocurrency for).
So, what they've been telling me to do is this:
- Check the price of the currency whenever I receive or make a transfer from my account.
- Calculate the % of increase or loss in total amount.
- Count each transfer that raised the worth on my account, or my holdings.
- Pay taxes on everything that increased my total worth, in one payment with documents that proves that my calculations are correct. (Which basically means that I have to prove that the price of the cryptocurrency was at this or that upon payout of my pending rewards, for each transfer.)
So, the last thing is overwhelming to say the least. Especially as I earn curation rewards and authors rewards. So, in a nutshell, this basically means that the more I curate, the more transfers I need to calculate, remember and document... And the same thing goes for content creation.
Just imagine if I had a BOT setup to send me 0.000001 Hive regularly. What a total shitshow.
On top of all that, it doesn't become much easier when we also have to pay taxes if we are:
Influencers, bloggers or streamers.
According to some, and especially our tax agency, I am all three things. I stream, I write and I share content with my audience.