Recently, many people have been asking me about cryptocurrency taxation, especially whether they need to report taxes when withdrawing funds. To be honest, the regulations in Taiwan are a bit complicated, but once you understand a few key points, it’s not too difficult.

First and foremost: profits from virtual currency trading in Taiwan are taxable. According to the Income Tax Act, when you exchange Bitcoin, Ethereum, or other cryptocurrencies into New Taiwan Dollars or US Dollars, that profit is considered "property transaction income" and must be included in your annual income declaration. In other words, as long as you withdraw funds, you need to consider cryptocurrency taxation.

But here’s an important distinction: are you trading on a domestic exchange or an overseas exchange? Because this determines whether you need to report "domestic income" or "overseas income," and the taxation methods are completely different.

If you are using a Taiwanese exchange (like HOYA BIT, MAX, etc.) and converting cryptocurrencies into New Taiwan Dollars to withdraw to a Taiwanese bank account, that is considered domestic income. This amount will be directly added to your annual comprehensive income and taxed at progressive rates. For example, if last year you earned a salary of NT$1.2 million, received NT$800,000 in dividends, and made NT$500,000 profit from cryptocurrencies, your total annual income would be NT$2.5 million, and taxes will be calculated based on this amount.

Conversely, if you are trading on an overseas exchange and transferring US Dollars back to a Taiwanese bank account, that is considered overseas income. This should be included in your "personal basic income" for tax calculation. The rule is: overseas income under NT$1 million does not need to be reported; income exceeding NT$1 million must be reported. If your domestic plus overseas income exceeds NT$7.5 million, the excess amount is taxed at 20% as a "basic income tax."

A special reminder: many people think that if withdrawal amounts are below NT$50,000, they won’t be investigated, but that’s not true. NT$50,000 is the reporting threshold for banks to report to the Tax Authority, but tax authorities have other channels to access transaction information. Honest reporting is always the safest approach. According to recent statistics, the National Taxation Bureau uncovered over NT$1 billion in unreported cryptocurrency income in December 2024, with additional taxes and penalties exceeding NT$34 million, showing that enforcement is indeed strengthening.

When calculating taxes, remember to keep proof of your deposit costs. For example, if you bought Bitcoin for NT$1 million and later sold it for NT$1.5 million, the taxable profit is NT$500,000. Therefore, it’s crucial to keep all transaction records and purchase receipts, as this is very important for accurate tax reporting on cryptocurrencies.

Regarding withdrawal methods: for small amounts (under US$50,000), you can consider transferring US Dollars via overseas exchanges to a US Dollar account in Taiwan. The handling fee is usually around US$13, and it takes 1-2 business days to arrive. For larger amounts, some exchanges may offer lower fees but might require proof of fund sources.

Finally, my advice is to keep all transaction and deposit/withdrawal records properly. This is not only for easier tax filing but also for protecting yourself. If you’re unsure about the details of cryptocurrency taxation, it’s recommended to consult a professional accountant or tax advisor, as each person’s situation is different and tax planning will vary accordingly.