Freelancer guide: tax implications on Crypto payments

Some freelancers are moving to crypto payments, mostly for the freedom it provides them, the speed, security, and global accessibility. Unlike traditional bank payments, transfers through cryptocurrency remove geographical barriers, allowing freelancers to work with clients from any corner of the world without worrying about hefty fees or exchange rate fluctuations.

As governments worldwide implement more regulations on the matter, freelancers need to keep an eye out for their tax regulations. Failing to comply can result in hefty penalties, audits, or worse.

What do crypto taxes mean?

First, what we need to understand is that cryptocurrency is a convertible virtual currency. This means that they act as a medium of exchange, a store of value, and can be substituted for real money. In the same way, any profit from your cryptocurrency is taxable. However, you may or may not owe taxes in given situations.

How do we proceed?

Simply put, crypto payments are treated similarly to fiat income. That being said, you should determine the fair market value of the received tokens at the exact time of payment. This value, converted into your local currency, represents your taxable income.

While taxes are often owed on cryptocurrency transactions, not every situation triggers a taxable event. Therefore, it's essential to understand your transactions' context and your country's tax regulations.

What countries are friendly towards crypto taxes?

🇦🇪United Arab Emirates (UAE): The UAE, particularly Dubai, has established itself as a crypto-friendly jurisdiction. As of November 15, 2024, the UAE has exempted all cryptocurrency transactions from Value Added Tax (VAT), with retroactive adjustments applicable from January 1, 2018.

Additionally, Dubai imposes zero percent personal income tax and capital gains tax on individual cryptocurrency activities, including trading, holding, mining, and staking.

You can legally request your salary to be paid in cryptocurrency in the UAE, making it one of the friendliest destinations for freelancers and solopreneurs interested in crypto payments.

🇵🇹Portugal: Historically, Portugal has been a tax-free country for crypto activities. Starting in 2023, it introduced a 28% short-term capital gains tax on crypto held for less than a year.

However, long-term holdings remain tax-free. Crypto income is categorized into capital gains, self-employment, and capital income, each with different tax rates. Despite this change, Portugal remains favorable for long-term crypto investments.

🇸🇬Singapore: Singapore does not tax crypto profits for individuals unless derived from trading activities. The country has a well-developed crypto ecosystem, with many local exchanges, start-ups, and communities.

🇸🇻El Salvador: In September 2021, El Salvador became the first country to adopt Bitcoin as legal tender, making it a crypto tax haven and a significant attraction for crypto companies, nomads and investors.

How HYVE simplifies crypto payments

Our platform provides freelancers with solutions to the common pain points they face when dealing with crypto payments, with a user-friendly interface that will make financial management seamless. Let's take a look at our features:

Escrow Now

We are taking security to the next level with our escrow-integrated payments. This way, we ensure that funds are securely held in an escrow account until all agreed-upon project milestones or deliverables are met. For freelancers, this means no more chasing payments or worrying about disputes over deliverables.

Our escrow system benefits both freelancers and clients by:

• protecting freelancers from non-payment risks;
• giving clients confidence that their funds are securely held and only released when the work is completed to their satisfaction;
• providing a verifiable transaction history that is invaluable for tax reporting and resolving disputes.

Read more about details on how this feature works, clicking the link down below:

Instant Pledge

We acknowledge the fact that freelancers don’t always work exclusively through platforms, that's why we extend the benefits of HYVE’s secure escrow system to transactions outside the platform. For freelancers working on ad-hoc or repeat projects with clients outside HYVE, Instant Pledge offers a flexible and reliable solution for securing payments.

Here are some key benefits of this feature:

• fast and secure set-up - freelancers and clients can create an escrow account in moments without the need for full onboarding or creating listings on HYVE.
• smart contract backing - every Instant Pledge transaction is secured through a blockchain-based smart contract, ensuring automated, tamper-proof processes.
• traceability - payments are fully trackable, making them easy to report for tax purposes and providing clarity for both parties.

Our Invoicing System

Designed to handle the complexities of cryptocurrency payments with ease, freelancers can generate professional invoices in just a few clicks, eliminating the tedious process of manual invoice creation.

This way, we remove the need for freelancers to manually convert currencies or calculate exchange rates when billing international clients. Whether a client prefers stablecoins like $USDT or more volatile tokens like $ETH or $BNB, HYVE’s system ensures smooth, accurate transactions.

Coming soon...

We are focused on refining every aspect of the HYVE platform, for building a stronger, more unified identity. Our goal is to create the most trusted and collaborative Web3 freelancing ecosystem, but we can’t achieve this without you.

We recently improved our landing page, simplifying the browsing experience and navigation. In addition, we implemented user roles and created implemented various bug fixes and platform optimizations.

Support HYVE by sharing your experience, posting about us online, or recommending the platform to other freelancers. Every contribution helps us grow and bring our vision to life. Together, let's redefine freelancing!