Cryptocurrency Taxation in Estonia

Starting a crypto exchangecryptocurrency taxation — a common way of investing in cryptocurrency in Estonia. Here the cryptocurrency is strictly regulated by the authorities. First of all, you need to obtain a license, open a banking account, and follow other legal procedures regarding crypto exchange/fund.

There are two different possibilities for crypto activity in Estonia. Please find the information on crypto taxes in Estonia below.

Private person’s crypto earnings

According to the Estonian Tax and Customs Board, income of an individual can be generated in several ways:

  • price changes of virtual currency when buying and selling/exchanging virtual currency
  • mining of the virtual currency
  • renting out the cloud storage capacity
  • receiving salary in virtual currency

It is essential to note that in Estonia, income received by investing in virtual currency is taxed as income received in traditional cash. Speaking of the taxation of virtual income, the purchase or sales price or received income must be converted into euros at the exchange rate of virtual currency established on the market applying on the date of receipt of the income or costs.

Purchase, sale or exchange

There are taxes on cryptocurrency gains in Estonia.

If an individual gets income from purchasing and selling cryptocurrency online or from the exchange of crypto money for another type of money, then an individual needs to declare that income, where the income is the difference between what an individual has sold and bought or, in the case of an exchange, between the price of a received property and the purchase price of the virtual currency. Estonia taxes on cryptocurrency gains

Mining

An individual who independently deals with cryptocurrency mining and does not pay income tax, then a private person has to declare his income as business income and pay taxes on crypto.

Moreover, an individual continuously mining virtual currency must register himself in the Business register as a sole proprietor. When registered as a sole proprietor, a private person can declare business-related expenses and deduct them from income.

Renting out the cloud storage capacity

Gains received from renting out the storage capacity of a private person’s computer must be declared as rental income. If cryptocurrency mining and renting out storage capacity is a business activity, the income from such business has to be declared according to government regulation.

Salary in virtual currency

All employers paying salaries in virtual currency within Estonia have to convert it into euros according to the market price and pay labour taxes before making payments to employees.

VAT

Exchanging virtual currency for traditional payment methods is exempt from VAT. Consequently, if an individual is dealing with cryptocurrency, he does not need to register a VAT number.

Company taxation

There is no specific tax on cryptocurrency. Crypto businesses follow the same rules as other types of companies in Estonia.

Taxation of Estonian companies is the most profitable in the European Union.

There is 0% corporate tax in Estonia. The tax on dividends or tax on profit distribution is 20/80. The tax rate for paying dividends is 25%. To pay dividends, a member of the company’s Management Board will need to make a profit statement for the current period.

The Estonian VAT rate is 20%. Companies are obliged to register a VAT number in a case when sales in Estonia exceed 40,000 EUR from the beginning of the calendar year. A company can also apply for VAT registration before this threshold value is reached.

The specialists of Company in Estonia OÜ will be happy to assist you with accounting services for your crypto company.

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