Cryptocurrency traders prefer not to pay taxes

Every year, the popularity of cryptocurrency trading grows exponentially, with more and more people making money through speculative trading using digital assets.

The profit is calculated in millions, and sometimes tens of millions of American dollars.

It would seem that large earnings suggest a desire to share the money and pay taxes on the excess profits received.

However, according to a study conducted by Swedish company Divly, only 0.5% of cryptocurrency traders paid taxes on their profits in 2022.  

That is, it can be said that 99.5% of those who earn money in the digital market prefer not to pay taxes.

According to the study, the highest number of law-abiding citizens are found in countries such as Finland and Australia, with 4.09% of citizens in Finland and 3.65% in Australia declaring their digital income.

While the United States of America, with its strict controls on residents' incomes, was only in 10th place with a rate of 1.62%:

Traditionally, third-world countries such as Indonesia, the Philippines, Brazil, and Nicaragua have the lowest tax rates. Here, the share of people reporting cryptocurrency income in their tax returns was less than 0.5%.

Why don't traders and investors want to pay taxes?

The main reason for this phenomenon was the ability to anonymously cash out cryptocurrency without revealing one's identity.

For example, in EU countries, it's legal to withdraw up to 1,000 euros in cash from Bitcoin ATMs without providing identification. Alternatively, you can exchange cryptocurrency for cash through a shadow scheme, in virtually unlimited amounts.

These transactions are not tracked, unlike if the exchange occurs with the currency being credited to a bank account.

Moreover, the commission for exchanging for cash is sometimes completely absent, and sometimes positive. This means that by exchanging $1 in stablecoins, you receive $1.01 in cash.

There are also quite a few places where you can pay directly with cryptocurrency when purchasing goods or services.

However, if you declare profits from cryptocurrency trading, you will have to pay between 13 and 45 percent, depending on the country of residence of the trader.

That's why many people choose not to report this type of income in their tax returns, knowingly taking a risk.

Read more about cryptocurrency taxation at https://time-forex.com/kriptovaluty/nalogi-kriptovaluty

Cryptocurrency brokers - https://time-forex.com/kriptovaluty/brokery-kriptovalut