Bitcoin hodlers – the main reason for wealth taxes in other countries?

Robin Singh CEO of Koinly shares his opinion.

Has the price of Bitcoin risen over 6000% since 2013’s beginning? 

Perhaps — if governments keep waking up to Bitcoin’s value, the whole “you only pay tax when you sell” In the near future, mantra may be an obsolete term.

If revenue-hungry agencies are in a hurry, what if wealth taxes were the solution? It’s a yearly tax on a person’s total net worth — cash, investments, property and other assets — minus any debts, applied whether or not those assets are sold or generating income. Taxing ultra-rich people is a way to increase revenue for the government and reduce inequality. The wealth tax deducts a portion of your assets, rather than what you make.

Countries such as Belgium, Norway and Switzerland have had wealth taxes baked into their tax systems for ages, yet some of the world’s biggest economies — like the US, Australia and France — have largely steered clear. 

It could change. A growing number of governments are looking at wealth taxes to be applied to crypto. The French senator Sylvie vermeillet went a step farther in December 2024 and suggested Bitcoin.BTCLabel a. “unproductive,” which would mean taxing its gains every year — whether or not it’s ever sold. 

Yes, unrealized gains are the favourite word of all asset holders. You would be wrong to assume that other countries don’t have similar ideas. 

Cathie wood, ARK Invest CEO and Cathie Wood of ARK Invest are looking to the future with Bitcoin. $1.5-million price tag by 2030I bet that a Magic 8 Ball would tell me. “Signs point to yes.”

Growing global interest in wealth taxes

Even though it may seem impossible, the profits are too great to ignore. Bitcoin holders who have held their coins for a long time are already making significant gains.

Incentives are obvious. The Swiss wealth tax can reach 1%, which is a lot.

Countries catch on — sooner or later. Take the example of capital gains taxes becoming commonplace.

In 1913 the US introduced capital gain tax. The UK followed 52 years later, in 1965. Australia did so in 1985. 

The wealth tax may be considered by governments

Governments are likely entertaining the idea — whether they admit it or not. Germany is a possible candidate if any country takes it seriously, even though they abolished their wealth tax way back in 1997.

Recent: Ukraine floats 23% tax on some crypto income, exemptions for stablecoins

In July 2024, offloading 50,000 seized BTC at $58,000 might have seemed The German government made a good decision. But when Bitcoin hit $100,000 in just a few months, they were left with a lot of money. 

In retrospect, a costly mistake…

Will this mistake be compared to Gordon Brown selling the UK’s half-reserves of gold at $275 for an ounce in 2008? 

It is risky to impose such a regulation on the rich.

To understand the real effect of taxation on a country, just follow the money — specifically, where millionaires are moving. Recent data indicates that wealthy individuals like those in the United Kingdom are fleeing to tax-friendly countries such as Dubai.

Potential repercussions from a wealth-tax

Can nations afford to lose these people in order for them to reap the benefits of unrealized Bitcoin or other assets?

Bitcoin is volatile with many unknowns. Even though some events may result in massive losses, the government might still pursue policies that drive millionaires away, only to find out it wasn’t worth their time. 

Conversely, US President Donald Trump recently signed an executive order establishing a Bitcoin Strategic Reserve — a clear nod to the hodl mentality. This has no doubt led to other countries considering similar moves.

Can this mean that the wealth tax is off the table for these nations? Time will tell.

Bitcoin investors have amassed a lot of wealth, and they are now on the radar for tax authorities. The crypto community will not sit back and do nothing, whether this leads to fundamental policy shifts or just political sloganeering.

Robin Singh is the CEO of Koinly.

The article does not provide legal advice or investment recommendations and it is intended only for informational purposes. This article is solely for informational purposes. It does not represent or reflect Cointelegraph’s views.