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Ethereum is a blockchain network introduced in 2015, known for its smart contract functionality, which allows users to create decentralized applications. It's the platform behind Ether (ETH), the second-largest cryptocurrency by market capitalization.
Following the significant upgrade to Ethereum 2.0, which transitioned its consensus mechanism from proof-of-work (PoW) to proof-of-stake (PoS), the network has become more energy-efficient, cutting its energy usage by 99%
For those navigating the implications of Ethereum's innovations on tax obligations, our guide offers comprehensive insights into Ethereum taxes, ensuring compliance and optimization.
How are my Ethereum transactions taxed?
Based on your country's tax laws many transactions made via the Ethereum blockchain could be taxable. This includes, staking Ethereum; trading Ethereum for other currencies, tokens and nfts; providing liquidity; earning interest through DeFi platforms; and participating in yield farming.
These activities might generate taxable events such as capital gains or income, depending on your country's approach to crypto assets.
It's important to maintain detailed records of all your transactions, including dates, amounts in both crypto and fiat currencies, and the purpose of each transaction. This documentation is crucial for accurately reporting your taxes and minimizing potential liabilities.
A lot is possible with Ethereum, to see exactly which transactions are taxed in your country please see our country specific tax guides. Each guide covers how cryptocurrencies are taxed in the country as well as how to declare them to your local tax authority.
A few of our tax guides are linked here below.
| Country | How to Declare Crypto Taxes Guide |
|---|---|
| 🇺🇸 | US Crypto Tax Guide |
| 🇸🇪 | Sweden Crypto Tax Guide |
| 🇫🇮 | Finland Crypto Tax Guide |
| 🇩🇰 | Denmark Crypto Tax Guide |
| 🇳🇴 | Norway Crypto Tax Guide |
| 🇪🇪 | Estonia Crypto Tax Guide |
| 🇩🇪 | Germany Crypto Tax Guide |
| 🇬🇧 | UK Crypto Tax Guide |
How do I calculate my cryptocurrency taxes?
There are multiple ways to calculate your Ethereum taxes. You can either do so manually if you're handy with a spreadsheet, hire a specialized crypto account, or can do so with the aid of crypto tax software.
Regardless of your choice there are three main steps to calculating your cryptocurrency taxes.
Step 1: How to export your Ethereum transaction history
If you're declaring your Ethereum taxes the first thing you should do is access your Ethereum transaction history.
I've used an Ethereum Wallet
If you've used an Ethereum cryptocurrency wallet then all of your transactions are already publically stored on the blockchain. To use this information for your taxes all that is needed is your wallet address. If you're using a tax tool, such as Divly, then you can import your wallet address to retrieve your transaction history.
I have Ethereum on an exchange
If you own Ethereum on an exchange then you can retrieve your transaction history directly from them. Not every file provided by an exchange is relevant for your taxes, so we suggest reading our exchange specific guides to make sure you get the correct transaction history files.
| Transaction type | Automatic Import |
|---|---|
| Withdrawals | |
| Deposits | |
| Transfer Fees | |
| Tokens (ERC20) | |
| NFTs (ERC721) | |
| Token Swaps |
Automatic import
Divly has built an integration that lets you automatically import your Ethereum transaction data directly from the Ethereum blockchain. Divly's integration uses your public Ethereum Address to fetch all transactions. Divly will never ask for your private keys, remember to always keep them secret!
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Copy and paste in your Ethereum Address. Make sure the wallet address is correct when pasting it.
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Click the button Save Wallet Address and Divly will import all associated transactions.
Important: Divly attempts to match decentralized trades and swaps automatically (including tokens and NFT trades). However, when there are 3 or more assets in the same transaction, Divly will import them as deposits and withdrawals. If you want to match these trades, please do so manually in Divly on the transactions page.
Step 2: Calculate Your Cryptocurrency Taxes
Once you have your transaction history you can use it to calculate your taxes. If you've used a cryptocurrency tax platform such as Divly, then this step will be automatically done for you.
If you're manually calculating your taxes then the first thing you should do is familarize yourself with your country's tax laws to ensure that you're treating every transaction correctly.
Step 3: Declare Your Cryptocurrency Taxes
Each country has it's unique reporting requirements. This means that the process to declare as well as exactly what you need to declare can vary greatly between countries. Our tax guides also cover how to navigate your tax declaration for your country.
If you've used Divly for your taxes, then you can also benefit from Divly's tax reports which help you navigate your cryptocurrency declaration in your declaration country.