Crypto Tax In 2021: Will It Increase And How Much?

The latest cryptocurrency news bring us the topic of crypto tax in 2021, which is a very popular one on forums and dashboards. What many don’t know is that the US Internal Revenue Service (IRS) recently introduced a new tax form which requires all taxpayers to declare whether they bought or sold crypto in the past tax year.

The above mentioned changes were made at the end of 2020 in the US. However, the UK’s HMRC was not exempt from new rules – it began developing a system that will monitor the activities of crypto traders. The goal, obviously, is to make the crypto tax in 2021 more transparent and urge traders to pay it.

A variety of tax experts are now vocal in the Bitcoin news, saying that 2021 will bring more charges and increase the raft of tax-reporting measures for the industry. One of them is Niklas Schmidt, who works as a lawyer and tax adviser with Wolf Theiss (Austria). He said that while most tax authorities lag when it comes to crypto tax in 2021, the situation will change.

“The most important crypto-related tax news that we can expect in 2021 is the extension of CRS to crypto exchanges,” Schmidt said.
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The topic of tax evasion is also present all of the time, and as Schmidt said, CRS stands for Common Reporting Standard and is a system that would combat tax evasion through the use of offshore bank accounts.

“Basically, if an investor opens a bank account in say Switzerland or Panama, the bank will ask the investor for proof of residency and in particular for his taxpayer identification number. Then, on a yearly basis, the bank will report the amount of interest, dividends, etc. earned by the investor as well as the total holdings to its local tax authority, which in turn will automatically transmit this information to the tax authority of the home country of the investor (which can then check whether the investor filed a correct tax return),” he said.

Schmidt also added that crypto tax in 2021 is not a topic that the European Union (EU) is finalizing things on. However, the EU began a consultation to fasten the process and extend CRS to crypto exchanges, formulating a version of CRS for cryptocurrency assets in 2021.

The way we see things, 2021 is going to be a year of changes, where taxing income and capital gains will get new formats and crypto buying and selling might become a bit more transparent than it already is.