Before we start, we just want to say that this is a very complex subject but we felt that we have had to write about it to help others understand POTENTIAL Pitfalls or indeed opportunities.
. The date is October 2021 and everything found here is:
a.) **Not Financial advice**
b.) Correct at the time of writing but many govts are still trying to grapple with how to regulate and indeed tax such assets.
Taxation is something that is a more localised issue from country to country or state to state. So it may be that you don't have to pay taxes at all. in which case, feel free to move on from here and buy yourself a Spacebud or Unsig in a care free manner.
For some of us, the tax and when we trigger it is a very important aspect that needs to be considered.
In short, in every country we have looked at, you don't pay tax on the NFT when buying it.
When purchasing an NFT, you actually incur a tax "Consideration" based on the increase/decrease in value of Crypto that you used to buy the NFT. Instead of thinking of it as "Buying an NFT" think of it as "Selling the Crypto". (When buying the NFT)
No, far from it.. A lot of countries are still trying to grapple with NFTs and crypto from both a taxation and a regulatory standpoint. So all information we provide here is based on where we stand today. (October 2021). Some countries like the UK have just attached Crypto and NFTs onto existing taxation rules for Shares, this is something that will definitely evolve over time.
Depending on the country you are in, there are ways in which you could actually use these tax rules to your advantage. We will get into that in more detail on each countries page. But lets just say that the ways they work out gains are potentially going to cost them in tax revenue during the bear market periods.