Crypto taxation varies significantly by country, but the core principles are similar worldwide. This article covers the key concepts every ETH holder should understand. It does not replace professional tax advice.
General Principle: Capital Gains Tax
In most jurisdictions, selling ETH for more than you paid creates a taxable capital gain. The tax rate and rules differ by country. In the United States, crypto is treated as property — held over one year qualifies for long-term capital gains rates (0–20%), while short-term gains are taxed as ordinary income.
In the United Kingdom, crypto gains above the annual Capital Gains Tax allowance (currently £3,000) are taxable at 10–20% depending on your income bracket. In Germany, gains are tax-free after a one-year holding period. In Australia, holding over 12 months qualifies for a 50% CGT discount.
Many countries have minimum thresholds or allowances below which gains are tax-free. Research your local rules or consult a tax professional.
Staking Rewards
Staking rewards are generally treated as taxable income in most countries. In the US, staking rewards are taxed as ordinary income at the time of receipt, based on fair market value. The cost basis for future sales is set at this value.
In the UK, staking rewards may be treated as income or miscellaneous income depending on the nature of your staking activity. In Germany, staking rewards are taxed as "other income" with a €256 annual exemption.
Important: the tax treatment of staking is still evolving. New guidance may be issued as regulators catch up with the technology.
DeFi Tax Implications
DeFi is the most complex area for crypto taxes. Every token swap on Uniswap or SushiSwap is a taxable event — a crypto-to-crypto trade. This means: track the holding period and document gains/losses for each swap.
Liquidity providing, lending, and yield farming can create additional tax consequences. If you're active in DeFi, you should use a crypto tax tool like CoinTracking, Koinly, or TaxBit and consult a tax professional when in doubt.
Reporting Requirements
Regulatory requirements are tightening globally. In the US, the IRS requires reporting crypto transactions on Form 8949 and Schedule D. The EU's DAC 8 directive (effective 2026) requires crypto platforms to report transaction data to tax authorities across all EU member states.
In the UK, HMRC has been issuing "nudge letters" to crypto holders. In Australia, the ATO matches exchange data against tax returns. The era of unreported crypto gains is ending worldwide.
Practical Tips
- Document everything from day one. Date, amount, price, platform — for every buy, sell, and swap.
- Use a crypto tax tool. CoinTracking, Koinly, and TaxBit can automatically import from wallets and exchanges.
- Track your holding period. Long-term holding often qualifies for lower tax rates.
- Track staking rewards separately. Note the ETH price at the time of receipt.
- When in doubt: consult a professional. Crypto-specialized tax advisors exist in most major cities.
Last updated: February 2026. Not tax advice. Consult a qualified professional for your specific situation.