As we enter the May tax season (this year, due to the U.S. tariff impact, the income tax settlement and reporting period has been extended to 6/30), we remind readers who haven't completed their filing to take advantage of the time to avoid personal rights losses (potential delayed tax refunds) or the need to pay fines and late payment interest.
Every year around this time, the community begins discussing whether cryptocurrency traders need to pay taxes. This article will organize the current legal information for readers in Taiwan.
Cryptocurrency Withdrawal Requires Tax Reporting
As the competent authorities, the Central Bank and Financial Supervisory Commission, have positioned cryptocurrencies as "virtual currencies" and consider them a highly speculative digital "commodity", profits from trading can be considered as income from selling or exchanging property and rights, subject to income tax under Article 14, Paragraph 1, Item 7 of the Income Tax Act, based on the profit calculated by subtracting the cost price from the transaction price.
However, it's important to emphasize that the current taxable scenario occurs when you decide to realize profits and "withdraw to a Taiwanese bank account". If you're only operating on exchanges or on-chain, you currently do not need to pay taxes.
[The rest of the translation continues in the same manner, maintaining the structure and translating all text while preserving any HTML tags.]- Cryptocurrency losses can be included in the "Property Transaction Loss Deduction" in comprehensive income tax and deducted from property transaction income.
- When reporting this deduction, relevant proof documents must be attached.
- Within the year, the deduction cap is the property transaction income of the same year; if the current year's property transaction income is insufficient to cover the loss, the undeducted loss can be deducted within the next three years.
For example, if there is a property transaction loss of 100,000 and property transaction income of 70,000 in a year, 70,000 can be deducted that year, and the remaining 30,000 can be deducted in the next three years.
Overseas Income:
- According to the Ministry of Finance regulations, to deduct overseas cryptocurrency losses, the trading platform must provide clear transaction cost and price data.
- Additionally, overseas income must exceed 1 million and the basic income amount must be above 7.5 million to be exempt from the tax threshold (as those below 7.5 million are directly tax-exempt).
However, in practice, the government finds it difficult to obtain data from overseas trading platforms. Although overseas investment losses can theoretically be used for tax deduction, practical implementation may be challenging.
Cai Kunzhou: The National Tax Bureau has not excluded anyone from the taxation scope
Previously, when BlockTempo interviewed Cai Kunzhou, the managing lawyer of Shang Cheng Law Firm, about cryptocurrency tax issues for Taiwanese individual investors, he stated that while Taiwan currently lacks very clear regulations on cryptocurrency taxation, this does not mean cryptocurrency transactions will not be taxed. He suggested:
For annual withdrawals or large trading volumes, it is best to actively report to the National Tax Bureau, with assistance from lawyers and accountants.
Moreover, the source of cryptocurrency profits (whether in Taiwan or overseas) and the holder (individual or company) will also affect tax treatment. Therefore, investors facing such concerns can actually handle it properly early on, rather than rushing to explain to the National Tax Bureau after being fined.
Additionally, Xiong Quandi, a partner at Lee and Li Law Firm, pointed out that defining cost is quite difficult:
If withdrawing from a Taiwanese exchange, it is likely to be considered a property transaction in Taiwan, which involves capital gains tax.
Capital gains are essentially "selling price minus cost", but proving cost can be quite difficult, especially when you lack clear transaction records to prove where, when, and at what price you purchased the cryptocurrency.
In practice, if cost cannot be proven, the National Tax Bureau may not rule out using estimated calculation methods. For example, they might estimate an average transaction cost ratio (a price) based on past experience, such as 70%, and then levy tax on the remaining 30%. This method is a solution for those unable to provide specific cost proof, but may seem less advantageous for those with actually higher costs.
