The birth of crypto assets has led, among other things, to considerations on how to approach their taxation. Should we treat crypto assets like other types of assets for tax purposes? Is it an asset comparable to stocks, bonds, or real estate? And how should their holding and sale be taxed? Should crypto assets be subject to a tax test like, for example, stock trading? Different countries have different approaches to the taxation of digital assets and their income. So let’s take a look at how crypto assets are taxed in the world’s most important economies.

United States: capital gains rules and income tax

U.S. taxpayers are required to report crypto sales, conversions, payments, and income to the IRS (Internal Revenue Service) and state tax authorities, where applicable, and each of these transactions has different tax implications. [1]

In the United States, a crypto asset is considered a digital asset, and the IRS generally treats it like stocks, bonds, or other capital assets. That means money gained from crypto is taxed at different rates—either as capital gains or as ordinary income—depending on how the crypto was acquired and how long it was held.

If you get paid in crypto, or if you mine crypto, that crypto income is treated like any other type of income and is subject to ordinary income tax. The amount of tax owed depends on your total income and your tax bracket.

On the other hand, when you buy and sell crypto assets to earn a return from the price difference (that is, you speculate on price changes over time), your income is treated as capital gains.

In this case, the tax you pay depends on how long you held the crypto assets. Short-term means a holding period of one year or less; long-term means more than one year. Short-term gains are taxed at ordinary income rates (up to 37%). [2] Long-term gains are taxed at capital gains rates, which are lower than ordinary income rates.

For long-term gains, the applicable rates are 0%, 15%, or 20%, depending on your income level and filing status (for example, married couples filing jointly generally face lower effective rates).

Germany: progressive rates and a one-year exemption

Germany’s approach to taxing crypto assets is similar in certain respects to that of the United States. [3] The key factor is how long you hold the assets before selling at a profit. If you hold crypto for less than a year and realize a profit, the gain is taxed at your progressive income tax rate. Depending on your income, you may pay between 0% and 45%. There is one exemption: if your total profit from private sales (including crypto) is less than €1,000 per year, you do not owe tax on those gains.

Conversely, if you hold crypto assets for more than one year and sell at a profit, your gain is completely tax-free. This period is also known as the one-year speculative period. For example, if you purchased bitcoin on January 1, 2024, a tax-free sale would be possible starting January 2, 2025.

Japan: current rules and a possible shift in 2026

In Japan, crypto assets are considered property by the National Tax Agency (NTA) and are subject to taxation. [4] They fall under miscellaneous income, and treatment is aligned with the Payment Services Act (PSA) and the Financial Instruments and Exchange Act (FIEA). Miscellaneous income covers earnings that do not fit categories such as interest, dividends, real estate, business, salary, retirement, forestry, capital gains, or temporary income.

There is an exemption: if total annual profit from such transactions is under 200,000 JPY (about USD 1,350), no tax is due. If profit exceeds this level, it is treated as miscellaneous income and taxed at rates from 5% up to 45%.

In June 2025, the Financial Services Agency (FSA) proposed reclassifying crypto assets as traditional financial products, subject to a new tax regime. If approved, starting in 2026 profits from crypto assets would be taxed at a flat 20%. [5]

United Arab Emirates: crypto gains are tax-free, spending is not

The United Arab Emirates (UAE) remains one of the most crypto-friendly jurisdictions in 2025. Across all seven emirates, including Dubai and Abu Dhabi, individuals pay zero personal income tax on crypto trading, staking, mining, or selling—there is no capital gains tax on digital assets for individuals. [6]

However, if you use crypto to pay for goods or services in the UAE, your purchase is still subject to 5% VAT. In addition, the UAE encourages foreign investment by offering residency visas by investment. [7]

Sources:

[1] https://www.coinbase.com/learn/crypto-basics/understanding-crypto-taxes

[2] https://www.nerdwallet.com/article/investing/crypto-tax-rate

[3] https://www.blockpit.io/tax-guides/crypto-tax-germany

[4] https://www.koinx.com/tax-guides/crypto-taxes-japan-guide

[5] https://cointelegraph.com/explained/japans-crypto-tax-overhaul-what-investors-should-know-in-2025

[6] https://cointelegraph.com/news/countries-where-crypto-is-tax-free

[7] https://immigrantinvest.com/blog/crypto-tax-havens/