- MetaMask’s new tax clause only applies to users who engage in transactions involving the purchase of goods or services from the wallet service provider, not those using it purely as a crypto wallet.
- The taxes refer to the sale of services between MetaMask and its users, not customers’ capital gain tax, implying the tax payment responsibility rests with the service provider.
Misconceptions Surrounding MetaMask’s New Tax Policy
In light of recent concern about MetaMask’s updated tax clause in its terms of service, Accointing, a crypto portfolio tracking firm, has provided clarity to dispel misunderstandings. According to Accointing, MetaMask’s tax clause solely affects users who engage in transactions involving the purchase of goods or services from MetaMask. Consequently, individuals using MetaMask strictly as a crypto wallet or for other non-commercial applications, devoid of transactions with the wallet service provider, will not be subjected to the stated taxes.
1/ The tax clause is located in the "Fees and Payment" section of MetaMask's TOS. It states that MetaMask may withhold taxes on certain products and services that they offer: https://t.co/lOSUFkKWgY
— Accointing by Glassnode (@accointing) May 21, 2023
Accointing further explained that the tax does not relate to customers’ capital gain taxes. Instead, it concerns taxes levied on the sale of services between MetaMask and its users. These taxes are typically handled by the service provider that collects them, suggesting that MetaMask, as the service provider, should be the one accountable for managing and paying the taxes on services sales facilitated through its platform.
Clarifying Crypto Tax Policies
Tax authorities traditionally deem certain activities taxable, like the sale or exchange of cryptocurrency for fiat currency or other digital currencies. Certain jurisdictions may also include instances where crypto is received as payment for goods or services.
Gains or profits generated from the sale or exchange of cryptocurrencies are often subject to capital gains tax in some jurisdictions. The tax burden is usually determined based on the disparity between the acquisition cost and the sales proceeds.
For instance, Italy’s proposed 2023 budget includes a 26% tax on capital profits from crypto trading, applicable only when the profit exceeds 2,000 euros.
Additionally, crypto mining and staking activities may incur tax consequences. In some jurisdictions, the value of the newly minted or staked coins is deemed income and therefore, subject to taxation. The White House is reportedly urging Congress to impose a 30% tax on the cost of electricity needed for crypto mining in the forthcoming federal budget.