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Taxing Cryptocurrencies

Author

Listed:
  • Katherine Baer
  • Ruud A. De Mooij
  • Shafik Hebous
  • Michael Keen

Abstract

Policymakers are struggling to accommodate cryptocurrencies within tax systems not designed to handle them; this paper reviews the issues that arise. The greatest challenges are for implementation: crypto’s quasi-anonymity is an inherent obstacle to third-party reporting. Design problems arise from crytocurrencies’ dual nature as investment assets and means of payment: more straightforward is a compelling case for corrective taxation of carbon-intensive mining. Ownership is highly concentrated at the top, but many crypto investors have only moderate incomes. The capital gains tax revenue at stake worldwide may be in the tens of billions of dollars, but the more profound risks may ultimately be for VAT/sales taxes.

Suggested Citation

  • Katherine Baer & Ruud A. De Mooij & Shafik Hebous & Michael Keen, 2023. "Taxing Cryptocurrencies," CESifo Working Paper Series 10372, CESifo.
    • Handle: RePEc:ces:ceswps:_10372
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    File URL: https://www.cesifo.org/DocDL/cesifo1_wp10372.pdf
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    References listed on IDEAS

    as
    1. Igor Makarov & Antoinette Schoar, 2022. "Cryptocurrencies and Decentralized Finance (DeFi)," NBER Working Papers 30006, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Álvaro Hernández Sánchez & Beatriz María Sastre-Hernández & Javier Jorge-Vazquez & Sergio Luis Náñez Alonso, 2024. "Cryptocurrencies, Tax Ignorance and Tax Noncompliance in Direct Taxation: Spanish Empirical Evidence," Economies, MDPI, vol. 12(3), pages 1-25, March.

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    More about this item

    Keywords

    cryptocurrency; virtual assets; tax evasion; tax compliance; Bitcoin;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm

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