Cryptocurrencies, blockchain, NFT and new trends

MetaMask Tax Clause: Debunking Major Misconceptions

Following the recent uproar in the crypto community over MetaMask’s new tax clause in its terms of service, a recent update has been released to address a number of inaccuracies. 

Crypto portfolio tracking firm Accointing highlighted on Twitter that the MetaMask tax clause is only applicable to users who purchase products or services from the wallet service provider.

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In other words, if customers use MetaMask as a crypto wallet or for other non-commercial purposes, and are not involved in any transactions involving the purchase of goods or services from the wallet, they will not be subject to the taxes mentioned in the tax clause.

Furthermore, Accointing established that the tax is not applicable to customers’ capital gain tax, but the taxes on the sale of services between users and MetaMask, usually paid by the service that collects the tax.  

Simply explained, the statement suggests that the responsibility for paying these taxes rests with the service that collects them. It implies that MetaMask, as a service provider, would be responsible for handling and paying the taxes on the sales of services facilitated through its platform.

Various Aspects of Crypto Tax Policies

Tax authorities typically consider specific events as taxable, such as the sale or exchange of crypto for fiat currency or other cryptocurrencies. Some jurisdictions may also include other events like receiving crypto as payment for goods or services.

Additionally, profits or gains made from the sale or exchange of cryptocurrencies in certain jurisdictions are often subject to capital gains tax. The tax liability is generally based on the difference between the acquisition cost and the sale proceeds. 

For instance, a provision in Italy’s 2023 budget has proposed a 26% tax on capital profits from crypto trading. However, this tax will only apply if the profit from crypto is above 2,000 euros.

Furthermore, crypto mining and staking activities may also have tax implications. In some jurisdictions, the value of the newly minted or staked coins is considered income and subject to taxation. Notably, the White House is urging Congress to put a 30% tax on the cost of electricity needed to mine crypto in the upcoming federal budget.