The European Union's Markets in Crypto-Assets Regulation (MiCA) stands as the most comprehensive digital asset regulatory framework to date, covering all 27 EU member states and the three European Economic Area (EEA) countries: Norway, Iceland, and Liechtenstein. MiCA's "passporting" regime allows a business licensed in one member state to operate across all 30 participating nations.
Beyond MiCA, the EU's 8th Directive on Administrative Cooperation (DAC8) mandates that all EU-based Crypto-Asset Service Providers (CASPs) report transaction data of their EU-resident clients. This enhances the ability of member states to conduct effective tax oversight and foster a compliant crypto trading environment. Member states must transpose DAC8 into national law by December 31, 2025, with the new rules taking effect on January 1, 2026.
This guide provides a detailed overview of the cryptocurrency tax landscape across key European jurisdictions, offering essential insights for Web3 businesses and individuals aiming to navigate these regulations successfully.
General Principle: VAT Exemption on Crypto Transactions
A foundational ruling by the Court of Justice of the European Union (CJEU) in the 2015 Hedqvist case established that exchanging traditional currency for bitcoin, or other cryptocurrencies, is exempt from Value-Added Tax (VAT). The court reasoned that these currencies act as a means of payment rather than a supply of services, creating a unified legal precedent across the bloc.
Consequently, most member states have aligned their domestic tax laws with this ruling. However, when cryptocurrency is used to purchase goods or services, the underlying supply of those goods or services remains subject to standard VAT rates.
Activities like mining, staking, and lending also receive varied VAT treatment across member states. Mining rewards are often considered taxable income, with allowable cost deductions. Interest or rewards from staking and lending may also be subject to VAT depending on national interpretations.
Germany: A Pioneer with Incentives for Long-Term Holding
Germany was one of the first countries to officially recognize the legal and tax status of cryptocurrencies, classifying them as ‘private assets’ (Privatvermögen).
Income Tax
- Profits from selling crypto held for more than one year are tax-exempt.
- Profits from the sale of assets held for less than one year are subject to personal income tax, with a top rate of 45%, plus a 5.5% solidarity surtax if the profit exceeds €10,908.
- A tax-free allowance of €600 applies to miscellaneous annual income, which can include crypto profits.
- Spending appreciated crypto to buy goods is a taxable event. The capital gain (the difference between the acquisition cost and the fair market value at the time of spending) is taxable unless the crypto was held for over a year.
Value-Added Tax (VAT)
Germany follows the EU Hedqvist precedent, exempting the exchange of crypto for fiat currency from VAT. Businesses that accept crypto as payment must record the transaction value in euros and are subject to standard VAT rules on the sale of their goods or services.
Taxation of Specific Activities
- Mining: Often classified as a commercial activity, subject to trade tax. Miners must report the fair market value of rewards received as income and can deduct operational costs.
- Staking & Lending: Rewards are typically treated as miscellaneous income and are subject to income tax. However, if the underlying staked assets are held for more than one year before the rewards are sold, the subsequent sale may be tax-exempt.
- Airdrops: Airdropped tokens are considered business income if received in a commercial context, taxed at their market value upon receipt. If received for performing a service (e.g., promotional tasks), the value is taxed as "other income."
France: Higher Tax Burden with No Long-Term Exemption
Cryptocurrency adoption is growing steadily in France. The market is projected to have 17.72 million users by 2025.
Capital Gains Tax
Crypto is classified as movable property. For non-professional traders, a flat tax (prélèvement forfaitaire unique) of 30% applies to gains, comprising 12.8% income tax and 17.2% social contributions (CSG). From the 2023 tax year, a progressive scale offers a slight reduction to 28.2% for taxpayers in the lowest income bracket.
Notably, a tax exemption exists for gains under €305 per year. Crucially, France does not offer a long-term holding exemption; the 30% rate applies regardless of the holding period. Tax is only triggered upon sale for fiat currency.
Value-Added Tax (VAT)
Businesses accepting crypto must convert the transaction to euros for accounting purposes and apply standard VAT rules to the sale of their goods or services.
Taxation of Specific Activities
- Mining: Typically taxed as non-commercial profits (BNC) at a 45% rate. Small-scale, occasional miners may qualify for micro-BNC deductions.
- Staking, Lending, NFTs: Income from these activities is taxable. Gains from selling NFTs or providing liquidity are subject to capital gains tax.
Italy: Disclosure Incentives and Rising Rates
Interest in cryptocurrency investment has surged in Italy, with ownership doubling in recent years.
Capital Gains Tax
Since 2023, capital gains on crypto disposals are taxed at a flat rate of 26%. The taxable base is the difference between the disposal value and the documented acquisition cost. If the purchase cost cannot be proven, it is assumed to be zero, making the entire proceeds taxable. Gains from trading, mining, or staking are also taxed at 26% if annual profits exceed €2,000.
The government has announced plans to potentially increase the capital gains tax on crypto to 42%, though this is not yet enacted as of late 2024.
Substitute Tax (Imposta Sostitutiva)
To incentivize voluntary disclosure, Italy offers a "substitute tax" regime. Taxpayers can declare the value of their digital assets as of January 1st and pay a reduced tax rate of 14% on that value, instead of the standard 26% rate on future gains.
Specific Activities and Inheritance
- Mining: Treated as a business activity, subject to corporate income tax (IRES, 24%) and regional production tax (IRAP, 3.9%).
- Inheritance & Gifts: Crypto received via inheritance is subject to inheritance tax, not capital gains tax. For gifts, the recipient assumes the original acquisition cost of the donor for future capital gains calculations. Transfers to non-holders are treated as disposals, triggering the 26% capital gains tax.
Cryptocurrency Tax Overview of Other European Countries
- Denmark: Crypto income is subject to combined taxes (state, municipal, labor market) resulting in an effective rate near 37%. A planned 2026 reform may tax unrealized gains at up to 42%.
- Netherlands: A deemed return on crypto assets held annually is taxed at 36% as part of Box 3 wealth tax.
- Finland: Progressive capital gains tax: 0% (<€1,000), 30% (€1k-€30k), 34% (>€30k).
- Sweden: 30% capital gains tax for individuals; 20.6% corporate tax for business activities like mining.
- Ireland: 33% Capital Gains Tax (CGT) for individuals (€1,270 annual exemption). Corporate trading income taxed at 12.5% or 25%.
- Belgium: 33% tax on miscellaneous income; up to 50% if deemed professional activity.
- Austria: 27.5% capital gains tax, with a €440 annual exemption.
- Luxembourg: No CGT for personal assets held >1 year. Corporate gains taxed at up to 27.5%.
- Spain: Progressive CGT from 19% to 28% for individuals; 25% corporate tax. Wealth tax may also apply.
- Portugal: No CGT on occasional trading. Professional trading taxed as business income (20-25%). Long-term holdings enjoy tax benefits.
- Greece: 15% tax on gains from assets held <1 year.
- Hungary: 15% flat income tax on all crypto transaction profits.
- Estonia: 20% personal income tax on gains. Corporate tax of 20% (or 14%) only on distributed profits.
- Poland: 19% tax on private trading profits. Lower rates for qualifying small companies.
- Slovakia: 19-25% income tax for individuals; 25% corporate tax.
- Latvia: Progressive income tax from 20% to 31% on gains for individuals; 20% for corporate trades.
- Croatia: 0% CGT after 2 years; 10% + local surcharge if held <2 years. Corporate tax 10-18%.
- Czech Republic: 15% tax for individuals; 19% for corporations. No tax on assets held over 3 years.
- Slovenia: 0% on occasional trading. A new 25% tax on disposal gains is planned for 2026.
- Lithuania: 15% flat income tax on crypto profits.
- Bulgaria: 10% flat income tax for individuals; 15% for companies.
- Romania: Temporary tax amnesty on crypto investment profits until July 31, 2025.
Non-EU Jurisdictions with Favorable Regimes
- Montenegro: Personal income tax 9-11%; corporate tax 9%.
- Malta: 0% tax on long-held crypto for private investors. Short-term trading income taxed progressively (15-35%).
- Cyprus: 0% tax for long-term personal holders; 20% for short-term gains.
- Gibraltar: 0% capital gains tax. Corporate trading income taxed at 10%.
- Andorra: A maximum 10% tax rate on all crypto-related income for individuals and corporations.
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Frequently Asked Questions
Q: As an EU resident, do I pay tax when I exchange one cryptocurrency for another?
A: In most EU countries, a crypto-to-crypto swap is considered a taxable disposal event. You must calculate the capital gain or loss based on the euro value of the crypto you disposed of versus its original cost. The new crypto you receive takes on a new cost basis for future calculations.
Q: How is staking income taxed, and when is the tax triggered?
A: Taxation varies. Typically, the fair market value of the staking rewards at the time you receive them is considered taxable income. Later, when you sell those rewarded tokens, any further increase in value is subject to capital gains tax. Some countries may defer taxation until the rewards are sold or disposed of.
Q: I use a hardware wallet. How do tax authorities know about my crypto?
A: Tax authorities primarily learn about crypto holdings through DAC8-mandated reporting by exchanges and service providers. While a hardware wallet is private, your on-ramp/off-ramp transactions (buying crypto with fiat or cashing out) are reported. You are legally obligated to self-report all taxable transactions, including those between private wallets.
Q: Are there any tax-free ways to gift cryptocurrency to family members?
A: Gifting crypto is often treated as a disposal at fair market value for the giver, potentially triggering capital gains tax. The recipient usually inherits the giver's original cost basis. Some jurisdictions have annual gift tax exemptions, but rules vary significantly. It's crucial to check the specific regulations in your country.
Q: What records do I need to keep for crypto tax compliance?
A: You should meticulously record the date, type of transaction, amount in crypto, value in euros (or local currency) at the time of the transaction, and any associated fees for every buy, sell, trade, spend, reward, or gift. This data is essential for calculating gains, losses, and income accurately.
Q: If I trade on a non-EU exchange, do I still need to report it?
A: Yes. Your tax obligations are based on your country of tax residency, not the location of the exchange. You are required to declare worldwide income and gains, including those from all foreign exchanges and platforms. DAC8 is specifically designed to help authorities identify taxpayers using offshore platforms.
This article is for informational purposes only and does not constitute tax or investment advice. Tax laws are complex and subject to change. You should consult a qualified tax professional for advice tailored to your specific circumstances.