As the tax deadline approaches, a crucial question arises for a growing number of individuals: do you need to report your cryptocurrency profits? With the expansion of the Bitcoin and Ethereum markets, understanding your tax obligations is essential. This guide clarifies the key concepts for reporting virtual currency in Taiwan, helping you stay compliant and avoid unexpected inquiries from the tax authorities.
The key to how cryptocurrency is taxed primarily depends on whether the withdrawal platform is based in Taiwan or overseas, classifying the income as either domestic or foreign-sourced.
Is Cryptocurrency Taxable in Taiwan?
Taiwan has not yet enacted specific legislation for cryptocurrency. The Financial Supervisory Commission currently defines it as a "virtual commodity," similar to game points—it is not considered a currency nor a formal payment tool.
Much like exchanging foreign currency at a bank is not a taxable event, buying and selling crypto itself is not subject to a transaction tax and is not within the scope of business tax. However, any profit generated from cryptocurrency transactions must be declared as "Property Transaction Income" under Article 14, Paragraph 1, Item 7 of the Income Tax Act, making it part of your comprehensive income tax.
Statistics reveal the government's active enforcement in this area, with significant back taxes and penalties already collected from unreported virtual currency income.
How Cryptocurrency is Taxed
Crypto taxation can be distinguished by the asset's nature and the location of the transaction: first, whether the virtual asset has security-like properties, and second, whether the income is sourced domestically or overseas.
Classified by Nature
- With Security Properties: Assets like stocks, bonds, and warrants are classified as securities. Taiwan categorizes Security Token Offerings (STOs) as cryptocurrencies with security properties, making them subject to the Securities Exchange Act. Personal investors are exempt from securities transaction income tax on these, while corporations must include gains or losses in their Alternative Minimum Tax (AMT) base. However, STOs in Taiwan are currently only available to professional investors and are not widely traded.
- Without Security Properties: Well-known mainstream coins like Bitcoin and Ethereum fall under "non-security" virtual commodities. If an individual makes a profit from buying and selling Bitcoin, it should be listed as "Property Transaction Income" and declared with their comprehensive income tax. If the activity is deemed frequent and business-like, such as for investors engaged in arbitrage, it might even be subject to business tax.
Classified by Transaction Location
This distinction is primarily based on whether the "withdrawal platform" is in Taiwan or abroad.
- Domestic Sourced Income: Trading on Taiwanese exchanges (such as HOYA BIT, MaiCoin, or ACE) and converting profits into New Taiwan Dollars that are deposited into a local bank account classifies this income as "Domestic Sourced Income." It must be included in your annual comprehensive income tax filing.
- Foreign Sourced Income: If you trade on overseas exchanges (like Binance or Bybit) where the registration and operations are based outside of Taiwan, and you convert crypto into fiat currency (like USD or USDT) that is wired into your Taiwanese bank account, this profit is considered "Foreign Sourced Income."
In simple terms, if your cryptocurrency is "cashed out" and enters a Taiwanese bank account, it must be declared for tax purposes.
Calculating Your Crypto Tax
As mentioned, the calculation method differs for domestic and foreign-sourced income.
Domestic Sourced Income
This is incorporated into your comprehensive income tax and taxed at progressive rates. It is added to your total annual income, which includes salary, dividends, etc., and is subject to tax brackets ranging from 5% to 40%.
Crypto Selling Price − Purchase Cost (including fees) = Property Transaction Income Amount
Property Transaction Income Amount + Other Domestic Income (Salary, Dividends, etc.) = Total Annual Comprehensive Income
It is crucial to keep detailed transaction records to substantiate your purchase costs.
Foreign Sourced Income
Under current 2025 regulations, if the total sum of your foreign-sourced income is less than NT$1 million, you are not required to declare it. If it exceeds NT$1 million, it must be included in your AMT calculation. However, declaration does not automatically mean you owe tax. It is only when your total AMT base exceeds NT$7.5 million that the 20% tax rate is applied.
AMT Amount = (AMT Base − NT$7.5 million) × 20%
After calculating this AMT amount, compare it to your regular comprehensive income tax liability. If your comprehensive income tax is greater than or equal to the AMT amount, you do not owe any AMT (but you still pay your regular income tax). If the AMT amount is greater than your comprehensive tax, you must pay the difference between the two.
For instance, if Ming earned NT$3 million from Bitcoin on an overseas exchange last year, and his total AMT base was NT$9 million, his AMT would be (NT$9M - NT$7.5M) × 20% = NT$300,000. If Ming's comprehensive income tax was NT$400,000, he would owe no AMT. If his comprehensive tax was only NT$100,000, he would need to pay the difference: NT$300,000 - NT$100,000 = NT$200,000.
Can Crypto Trading Losses Be Used to Reduce Taxes?
Paper losses don't count; only realized losses from selling assets at a loss can be used for tax deduction. These are declared as "Property Transaction Losses," and the rules differ for domestic and foreign transactions.
Losses from crypto traded on domestic platforms can be listed as a "Special Deduction" on your tax return, offset against your property transaction income for that year. The annual deduction cannot exceed that year's property transaction income. Any unused loss can be carried forward to offset against gains in the next three years. For example, if David reports an Ethereum loss of NT$100,000 but only has NT$70,000 in gains that year, he can offset NT$70,000 now and carry forward the remaining NT$30,000.
Losses realized on overseas platforms and wired back to a Taiwanese account are declared as foreign property transaction losses within the AMT section, under the category "76 Property Transaction Income," where related costs and losses are reported. Unlike domestic losses, foreign property transaction losses can only be offset against foreign property transaction gains from the same year. They cannot be carried forward to future years nor offset against domestic income. This means if you have no foreign-sourced gains in a given year, the loss cannot be claimed.
Most importantly, you must provide relevant transaction records and proof of cost to support your claims during declaration.
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Common Tax Reporting Mistakes to Avoid
"This is a Capital Gain, So It's Tax-Free, Right?"
Currently, only gains from buying and selling listed stocks are considered tax-free capital gains in Taiwan. Cryptocurrency is not listed as a tax-exempt capital gain; it is classified as "Property Transaction Income," which must be declared with your comprehensive income tax or AMT.
"I'm Not a Big Player, the Tax Office Won't Check Me!"
The National Taxation Bureau has mandated that virtual currency service providers in Taiwan strengthen their Know Your Customer (KYC) procedures. User transactions are recorded, and anyone with questionable tax reporting can become subject to audit.
"The Tax System Doesn't Show It, So I Don't Need to Report It?"
Taiwanese crypto exchanges are not yet强制 required to report users' annual asset details to the tax authority. Therefore, your crypto data will not be pre-filled in the tax system. Investors must take the initiative to declare their profits; otherwise, it will be considered an underreporting.
"If My Overseas Income is Under NT$7.5 Million, I'm Definitely Exempt, Right?"
Foreign-sourced income is calculated together with other items in your "AMT Base." If you have profits from other sources like US stock investments or annuity insurance payouts, they must also be declared and could push your total base over the threshold.
Frequently Asked Questions
Q: Do I need to pay tax if I only trade between different cryptocurrencies and never cash out to fiat?
A: In most cases, no. A taxable event in Taiwan is typically triggered only when you realize a gain by converting your crypto into fiat currency (like NTD, USD) and depositing it into a bank account. Pure crypto-to-crypto trades are generally not considered a taxable disposal. However, you should still keep meticulous records of all transactions to calculate cost basis for when you eventually do cash out.
Q: How do I prove my cost basis and calculate profit if I've been DCAing (Dollar-Cost Averaging) for years?
A: This requires detailed record-keeping. You need the date, amount, and price in NTD for every purchase. When you sell, you can use methods like FIFO (First-In, First-Out) to match your sales with specific purchase costs and calculate the gain or loss. Using a portfolio tracker or spreadsheet is highly recommended to simplify this process.
Q: Are gas fees and other transaction costs deductible?
A: Yes. When calculating your net gain or loss on a transaction, you can include the costs directly associated with acquiring and disposing of the asset. This includes purchase fees, trading fees, and network/gas fees paid for the transaction. These costs are subtracted from your proceeds to determine your taxable profit.
Q: What happens if I receive cryptocurrency from staking or as a reward?
A: Rewards from staking or other activities are typically considered income at the fair market value of the crypto on the day you received it. This value must be declared as income. Your cost basis for this new income becomes the value at the time of receipt. When you later sell it, you will calculate capital gain or loss based on this new cost basis.
While Taiwan lacks a dedicated crypto tax law, existing regulations are actively applied to virtual asset income. Whether you are an occasional buyer, an arbitrage trader, or a long-term holder, you have a reporting obligation once you realize a profit. Stay informed and compliant to ensure your investments remain secure and successful.