With cryptocurrency playing an increasingly significant role in global finance, understanding tax obligations has become crucial for investors in Taiwan. While the country currently lacks a dedicated tax framework specifically for crypto withdrawals in 2025, profits from virtual asset transactions are still subject to income taxation under existing regulations.
Cryptocurrency is classified in Taiwan as a "virtual currency"—a speculative digital commodity rather than legal tender or a regulated payment instrument. As such, gains from trading or selling digital assets are treated as property transaction income under Article 14, Paragraph 1, Category 7 of the Income Tax Act. This means any profit realized when converting crypto to fiat currency (e.g., BTC to TWD or USD) must be reported and may incur tax liability.
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Recent guidance issued by Taiwan’s Ministry of Finance in January 2025 clarifies that transactions involving security-like tokens are temporarily exempt from taxation, while non-security digital assets remain taxable. Individuals must report gains as property transaction income, while businesses must include these earnings in their business income for profit tax purposes.
According to official data, as of December 13, 2024, tax authorities had identified over NT$129 million in unreported crypto gains, resulting in NT$34 million in back taxes and penalties. With the Financial Supervisory Commission expected to propose a Virtual Asset Management Act by mid-2025, regulatory oversight—and tax enforcement—is set to strengthen significantly.
Understanding Taxable Events: When Does Crypto Trigger Tax?
The key principle is this: tax liability arises when cryptocurrency is converted into fiat money, not when it's merely held. Simply owning Bitcoin or Ethereum on an exchange does not trigger a tax event. However, once you sell or withdraw crypto as cash (TWD, USD, etc.), the gain becomes reportable income.
There are two main categories of taxable income based on where the transaction occurs:
Domestic Income (Taiwan-Based Transactions)
Gains from trading or selling crypto on Taiwan-based exchanges that result in fiat deposits into local accounts fall under domestic income.
Examples include:
- Selling Bitcoin for TWD via HOYA BIT, MAX, or MAOER (Bitopro) and withdrawing to a Taiwanese bank.
- Converting crypto to USD through XREX and receiving funds in a local foreign currency account.
These proceeds are added to your annual comprehensive income and taxed progressively under personal income tax rules.
Foreign-Sourced Income (Overseas Transactions)
Profits earned through overseas platforms—such as Binance, Kraken, or Bitfinex—and later transferred to Taiwan via wire transfer are considered foreign-sourced income.
Example:
- Trading Ethereum on Kraken (U.S.-based), converting it to USD, and transferring the proceeds to your Taiwanese dollar-denominated account.
While transfers below NT$1 million annually are not taxed under the Basic Taxation Act, they **must still be reported** if they exceed NT$1 million. If your total basic income (domestic + foreign + other specified sources) exceeds NT$7.5 million, the excess is taxed at a flat rate of 20% under the Minimum Tax System.
⚠️ Important: Attempting to bypass reporting by moving funds directly from domestic wallets to overseas addresses may raise red flags and could constitute tax evasion—a serious offense with potential civil and criminal consequences.
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How to Calculate Your Crypto Tax Liability
For Domestic Gains
Your net profit from crypto sales is included in your total annual comprehensive income, calculated as:
(Withdrawal amount – acquisition cost – transaction fees)
This amount is then combined with other income sources like salary and dividends and taxed according to progressive rates.
Example:
Mr. Lin earned:
- Salary: NT$1.2 million
- Dividends: NT$800,000
- Net crypto gain: NT$500,000
Total comprehensive income: NT$2.5 million
He will pay personal income tax based on this total. However, he must retain proof of purchase cost (e.g., deposit records, trade history) to substantiate his reported gains.
For Foreign-Sourced Income
Foreign gains are aggregated into your basic income, which includes:
- Comprehensive income
- Overseas income over NT$1 million
- Certain insurance payouts
- Gains from unlisted stocks and investment trusts
Tax implications:
- Below NT$1 million: No reporting required
- Above NT$1 million: Must be declared
- Total basic income above NT$7.5 million: Excess taxed at 20%
Example:
Ms. Chen earned:
- Salary: NT$1.5 million
- Overseas crypto gains: NT$3 million
Her total basic income: NT$4.5 million
Since this is below the NT$7.5 million threshold, she owes no additional minimum tax—but she **must still report** the NT$3 million foreign gain due to exceeding the NT$1 million reporting threshold.
When wiring funds back to Taiwan, use code "268 Purchase/Sale of Foreign Virtual Assets" for proper classification.
Frequently Asked Questions (FAQ)
Q1: Do I only need to report if my withdrawal exceeds NT$500,000?
A: No. While banks must report single transactions over NT$500,000 to the Investigation Bureau, all taxable gains must be reported regardless of amount. Smaller transactions can still be audited if patterns suggest undeclared income.
Q2: How should I report crypto income on my tax return?
A:
- Domestic gains: Report under “Property Transaction Income” (for non-real estate assets).
- Foreign gains: List under “Overseas Property Transaction Income” using category code 76 and itemize costs and fees.
Q3: What records should I keep?
A: Maintain detailed logs including transaction dates, amounts, exchange rates, platform records, deposit/withdrawal confirmations, and wallet addresses. These are essential for audits and cost basis verification.
Q4: Can I deduct losses against gains?
A: Yes. Unreported losses from previous years cannot be carried forward, but current-year losses can offset gains within the same tax year—provided they’re properly documented.
Q5: Are there legal ways to reduce my tax burden?
A: Absolutely. Strategies include:
- Timing sales to spread gains across multiple years
- Offsetting gains with verifiable losses
- Holding long-term to potentially qualify for favorable treatment (if future policies allow)
Always consult a licensed accountant for personalized planning.
Q6: Will transferring crypto between wallets trigger tax?
A: No—as long as no sale or conversion occurs. Moving assets between personal wallets or exchanges is not a taxable event in Taiwan.
Final Tips for Compliance and Peace of Mind
As regulatory scrutiny increases, especially with the anticipated 2025 Virtual Asset Management Act, now is the time to establish clean financial habits. Use compliant exchanges, document every transaction, and consider using portfolio trackers that support tax reporting formats accepted by Taiwan’s National Taxation Bureau.
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Remember: Tax avoidance through legal optimization is smart financial planning—but tax evasion carries severe penalties. Stay informed, stay compliant, and invest responsibly.