<h2 id="header-0">USA</h2>Cryptocurrency in the USA - legal means of payment. Since 2022, individuals and legal entities are required to declare income from transactions with cryptocurrencies.Cryptocurrency in the USA is considered property. Taxation depends on the investment period, the amount of profit or loss that the user got. So, income from the use of cryptocurrencies by a legal entity may be subject to the following taxes:1. Tax on legal entities’ income from transactions with cryptocurrencies (corporate tax) (mining, purchase and sale of crypto assets as the main activity).Since 2018 as a result of the tax reform, the corporate income tax rate has been reduced to 21%. At the same time, a large number of exceptions, benefits and exemptions are provided, which make possible a lower effective tax rate.The tax base is determined in US dollars, therefore, the concept of fair market value is used to determine the amount of income from crypto assets for tax purposes. There is no detailed algorithm for calculating fair value in the tax legislation. In accordance with the explanations of the US Internal Revenue Service in 2014, if a virtual currency is listed on an exchange and the exchange rate is determined by market supply and demand, then the fair market value of the virtual currency is determined by converting the virtual currency into US dollars (or into another fiat currency convertible into US dollars) at the exchange rate the course in a reasonable way.The 2019 clarification adds that for virtual currencies that are not listed on the exchange, the fair market value can be calculated on the basis of global cryptocurrency indices.At the taxation, transactions involving crypto assets in the United States should be recorded in US dollars at fair market value on the date of payment or receipt of payment. Companies that receive crypto assets as payment for goods, work or services, as well as as a result of mining, must include crypto assets in gross income at fair market value at the date of receipt of payment. To account for losses on crypto assets, the general rules of the US tax legislation apply: the possibility of transferring losses on ordinary activities to a reduction in the corresponding profit, except certain cases (for example, when losses are incurred on transactions with related parties).2. Corporate capital gains tax.The application of the usual rules to the financial results of transactions of companies with crypto assets for capital gains tax from long-term ownership of crypto assets by US corporations, which is taxed at the same level as the ordinary income of companies - 21%.3. Sales tax is the main indirect tax that is charged on transactions with crypto assets in the United States, the rate of which varies depending on the state.The circulation of crypto assets is not subject to VAT.<h2 id="header-1">UK</h2>Not so long ago, HMRC (HM Revenue &amp; Customs) published a revised guide on cryptocurrencies, consisting of two parts: “Crypto Assets: tax for individuals” and “Crypto Assets: business tax”.The guide sets out HMRC&#39;s views on the proper tax treatment of crypto assets in the UK, based on current legislation. It also contains a definition of the concept of “crypto asset”, including the difference between exchange tokens (exchange tokens), utility tokens (utility tokens) and security tokens (security tokens).The company is obliged to pay tax on income from crypto assets in the UK, if it is engaged in:<ul><li>purchase and sale of exchange tokens;</li><li>exchange of tokens for other assets;</li><li>mining;- provision of goods and services for exchange tokens.Those wishing to establish a crypto business in the UK should know that according to the HMRC decision, crypto assets are not money or currency. </li></ul>Currency exchange using Bitcoin is exempt from VAT. At the same time, when delivering any goods or services in exchange for crypto assets, VAT is charged in the usual manner. The basic VAT rate in the UK is 20% (reduced 5% and 0%).The basic corporate income tax rate in the UK in 2019 is 19%, capital gains tax is levied at the same level.<h2 id="header-2">UAE</h2>Cryptocurrency or crypto asset in the UAE is recognized as property (as a commodity for VAT purposes). General rules on the legal status of crypto assets have been developed, for example the Regulation on Virtual Assets of the UAE Securities and Commodities Authority (SCA) (The Chairman of the Authority&#39;s Board of Directors’ Decision No. (23/ Chairman) of 2020 Concerning Crypto Assets Activities Regulation).Crypto assets are subject to VAT, the interest rate of which in the UAE is 5%.Companies must register as a VAT payer, if their taxable shipments and imports exceed 375,000 UAE dirhams (approximately 103,000 US dollars) per year. Companies that reach the threshold of UAE dirhams 187,500 (approximately 51,000 US dollars) can voluntarily join the registry. Usually companies registered as VAT payers must: <ul><li>collect VAT on taxable goods that they supply;</li><li>refund VAT on any purchased business goods and services;</li><li>keep records for government purposes. At the same time, foreign companies can reimburse VAT expenses while in the United Arab Emirates.</li></ul>In the UAE, there is no federal income tax, capital gains tax, corporate tax is only charged by oil companies and branches of foreign banks.<h2 id="header-3">Japan</h2>Japan is one of the first countries to adopt cryptocurrency as a legal means of payment, which allows it to pay for various goods and services throughout the country. The National Tax Agency of Japan states that income from virtual currency is taxable. Virtual currency is defined as a means of payment, that has intellectual value. Taxation for legal entities related to obtaining profits from the use of cryptocurrencies has a multidimensional nature:<ol><li>Tax on legal entities’ income from transactions with cryptocurrencies (corporate tax) (mining, purchase and sale of crypto assets as the main activity).</li></ol>It is taxed in the usual manner, as with any other activity. The national corporate income tax rate in Japan is 23.4%. For corporations with a capital of no more than 100 million yen (about 940 thousand US dollars), a 15% rate is applied to the first 8 million yen of taxable profit. Companies also pay a local tax on business and personal income with an average rate of about 10%. As a result, the effective tax rate for companies, that subject to the base rate of 23.4%, is approximately 34%; for medium-sized businesses, the effective rate is reduced to 30%. Since 2017 after the explanations of the National Tax Agency of Japan, income arising in connection with the use of crypto assets is taxed by analogy with income related to foreign currency, and refers to «miscellaneous income».2. Tax on income from the increase in the value of crypto assets from legal entities. The increase in the value of crypto assets received by legal entities in Japan is taxed at the basic corporate income tax rate.3. Sales tax.The main indirect tax in Japan is the sales tax, which is set at the central level and is 10%. Due to the recognition of the status of an official means of payment for cryptocurrencies in Japan, on the one hand, and the peculiarities of the sales tax model, on the other hand, transactions with crypto assets are not subject to indirect taxes in Japan. That is, the circulation of crypto assets is not subject to value added tax, due to the interpretation of the crypto asset as a currency. <h2 id="header-4">Germany</h2>In Germany, the attitude towards taxation of cryptocurrencies remains quite liberal up to the present time. This is confirmed by the latest guidance of the Federal Ministry of Finance (ge. Das Bundesministerium der Finanzen, hereinafter BMF) for national authorities and financial authorities for the payment of VAT. February 27, 2018 BMF has published a guide for national authorities and financial authorities on the VAT collection regime for bitcoins and other cryptocurrencies. BMF ruled that transactions for the exchange of traditional currency for bitcoin and other virtual currencies, as well as vice versa, constitute a taxable provision of paid services, but are exempt from VAT.BMF explained that bitcoin and other virtual currencies that are used exclusively as a means of payment are equated with traditional means of payment. Therefore, the use of bitcoins or other virtual currencies only as a means of payment is not subject to VAT. As a result, the purchase of goods or services using bitcoin or other cryptocurrencies, i.e. using them as a means of payment, is not subject to VAT. In turn, virtual game money, that is in-game currencies, especially in online games, are not exempt from VAT (19%), since they are not a means of payment, according to the law on value added tax. These changes were made to the Order on the application of value added tax from the turnover of Germany (ge. Umsatzsteuer-Anwendungserlass, UStAE).BMF has ruled that mining is also exempt from VAT. According to the ministry, miners perform key services to maintain the cryptocurrency system. They provide the computing power of their computers for mining pools, recording transactions in a &#34;block&#34; and then adding it to the &#34;blockchain&#34;. Therefore, the transaction fee that miners receive from other users of the system is paid on a voluntary basis and is not directly related to the services provided by miners. In addition, receiving new bitcoins from the system cannot be qualified as a payment for mining, since there is no exchange of services in this transaction, and, therefore, VAT is also not subject.Transactions with cryptocurrencies which are part of business assets usually lead to income from commercial transactions in accordance with the Income Tax Law in Germany. In this case, there is no minimum period of ownership after which tax exemption occurs. Depending on the organizational and legal form of the company, the profit received in this way is taxed in each case:<ul><li>income tax (income tax is charged at a rate of 15%.), trade tax (from 12% to 20%) - the total rate of income tax and trade tax can be about 30% in Berlin and 33% in Munich; </li><li>corporate tax (ranges from 23% to 37%);</li><li>capital gains, received from the sale of a German or foreign subsidiary are exempt from 95% tax.</li></ul>

How to pay taxes? Cryptocurrency in the USA, UK, UAE, Japan and Germany.

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