2026 Cryptocurrency Investment Tax Reporting: Domestic vs. Offshore Income, Can Virtual Currency Losses Be Deducted? Tax Audits Expected to Intensify

The tax filing deadline for 2026 is May 31. With the global implementation of OECD CARF and the draft of the Virtual Asset Service Act submitted for review, what should cryptocurrency investors in Taiwan pay attention to? (Previous coverage: Multiple banks in Taiwan blocked from piloting "cryptocurrency custody"; Financial Supervisory Commission (FSC) rejected the proposals due to excessive flagged accounts.) (Background: FSC emphasizes "Taiwanese exchanges must thoroughly investigate money laundering" and expands inspections; industry associations urge compliance with regulations.) There are three differences in the 2026 tax season compared to last year: the deadline is May 31 (last year it was extended to June 30 due to the impact of US reciprocal tariffs), the global data collection OECD CARF has officially launched, and the draft of Taiwan's special law has entered the legislative process. At this time every year, the community begins to discuss whether cryptocurrency traders actually need to pay taxes. This article summarizes the current relevant legal information in Taiwan for readers. As the competent authorities, the Central Bank and the FSC, have positioned cryptocurrencies as "virtual assets" and consider them highly speculative digital "commodities," any profit from trading can be deemed as income from the sale or exchange of property and rights. This is subject to income tax under Article 14, Paragraph 1, Category 7 of the Income Tax Act, which is based on the profit calculated by subtracting the cost price from the transaction price. However, it must be emphasized that the current scenario requiring tax reporting occurs when you decide to realize profits and "withdraw funds to a Taiwanese bank account." If you are only operating on exchanges or on-chain, you do not need to pay taxes at this time. The Ministry of Finance's regulations on the taxation of virtual asset income are as follows: - **Virtual assets with securities nature:** If individuals or enterprises trade such virtual assets, the trading gains or losses fall under "securities transaction gains or losses" in the Income Tax Act. Currently, Taiwan has suspended the securities transaction income tax, but enterprises are still required to include these gains or losses in the calculation of their basic income in accordance with the "Income Basic Tax Act." - **Virtual assets without securities nature:** - **Individuals:** If the trading is not frequent, the income falls under "property transaction income" in the Income Tax Act. The taxation method is: the balance after deducting the purchase cost and related expenses from the transaction price is included in the consolidated income tax calculation. - **Enterprises:** Gains and losses should be calculated in accordance with the "Income Tax Act": revenue minus related costs and expenses, and the income amount is included in the profit-seeking enterprise income for taxation according to law. On the other hand, factors that may affect whether taxes need to be paid also include whether the cryptocurrency income is offshore or onshore: - **Based on the trading platform:** If the trading platform is overseas, it is considered offshore income; if the trading platform is domestic, it is onshore income. - **Based on the withdrawal channel:** Withdrawing funds in TWD from a Taiwanese exchange is considered onshore income, while wire transfers from an overseas exchange back to Taiwan are considered offshore income. Example: If you buy Bitcoin on an overseas exchange, sell it all later, and wire the proceeds back to Taiwan in USD, this is considered offshore income. Withdrawing funds from a domestic exchange in Taiwan (such as MAX, BitoGroup, HOYA BIT, etc., which are compliant platforms) is considered domestic property transaction income and must be included in the annual consolidated income tax filing. The total income is calculated as: (Amount withdrawn – original cost of purchasing the coins) + other income. This amount will be included in the total consolidated income to calculate the consolidated income tax, which can be estimated using the website provided by the Ministry of Finance. According to the Money Laundering Control Act: For single withdrawals exceeding 500,000 TWD, banks are legally required to proactively report to the National Taxation Bureau. This does not mean that amounts under 500,000 TWD are tax-exempt; it simply means the National Taxation Bureau already has your data. Lawyers suggest that even if the amount is below the reporting threshold, you should proactively keep transaction records. Once audited, having complete cost records is the only way to claim reasonable gains or losses. If you trade on overseas exchanges such as Binance, Coinbase, or Bybit, according to official data from the National Taxation Bureau, offshore income needs to be reported if it meets the following 3 thresholds: - The total offshore income of a tax filing household is 1 million TWD or more. - The basic income of a tax filing household (net consolidated income + offshore income + specific added items) exceeds 7.5 million TWD. - The basic tax amount [(Basic Income – 7