Washington and Pennsylvania are the first American states to tax NFT sales. State officials made the decision at the beginning of the summer. Notably, collectors might have to pay for their NFT sales retroactively too. The move comes after several other countries across the globe started taxing NFT trading too.
When did Pennsylvania and Washington introduce NFT taxation laws?
Today, Americans are more interested in NFTs than ever before – and so is the government. This summer, Pennsylvania and Washington became the first US states to tax NFT trading. However, their move still needs clarification.
To put it simply, the Department of Revenue in Pennsylvania decided that NFTs are taxable back in June. However, state officials didn’t release any details or explanations.
One month later, the Washington Department of Revenue issued a statement on taxation guidance. Accordingly, NFT sellers should document where each digital purchase happens.
As a result, the two states will be able to collect part of the proceeds of NFT sales. In fact, they might even request NFT-related taxation retroactively going back several years. That’s because their new taxation guidelines are actually based on existing financial law.
Which countries already tax NFT sales?
After the NFT boom in 2021, many collectors could no longer fly under the radar. Countries such as India, South Korea, and Singapore have been taxing NFT sales for months.
The new laws affected NFT whales the most. For example, Bollywood film icon Amitabh Bachchan paid a whopping $131,000 tax after his NFT collection sold out.
What’s more, this might be just the beginning. European Union’s legislators have been discussing NFT and crypto taxation for months. Accordingly, one of their options is to implement NFT market regulations across all EU states.