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Crypto Tax Reporting

Which accounting method is used for crypto in Georgia (FIFO/LIFO)?

Georgian tax law does not explicitly mandate a specific method for crypto. However, International Financial Reporting Standards (IFRS) are generally applied. Most companies and individuals use the FIFO (First-In, First-Out) or Weighted Average Cost method to calculate realized gains. Consistency is key; you cannot switch methods arbitrarily to lower taxes.

Do I need to report crypto-to-crypto trades?

For individuals under the 0% regime, reporting is not required. However, for entities or "Small Business" entrepreneurs, crypto-to-crypto trades can be considered taxable events (barter transactions) depending on interpretation. We recommend reporting realized gains when converting to fiat or stablecoins to maintain a clean audit trail.

What reporting obligations do VASPs have?

Virtual Asset Service Providers (VASPs) have strict reporting duties. They must submit regular reports to the National Bank of Georgia regarding transaction volumes, customer data, and suspicious activities (SARs). Failure to report can lead to the revocation of VASP registration and heavy fines.

How do I prove the value of an airdrop or staking reward?

Airdrops and staking rewards are considered income at their fair market value at the time of receipt. You need to record the price of the token on the day it landed in your wallet using historical data from aggregators like CoinMarketCap. Our reporting service automates this valuation process.

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Tax reporting for crypto asset trading is one of the most complex procedures, especially when dealing with thousands of transactions across different exchanges and wallets. Although crypto income is often exempt from income tax for individuals, the obligation to declare may still exist in certain cases, and for companies, it is a mandatory procedure. An incorrectly filled declaration or concealment of income can be grounds for substantial fines. The Crypto Tax Reporting service ensures your financial statements are in full compliance with Georgian legislation, which is crucial for both the tax authority and banking relationships.

What Does Crypto Reporting Service Cover?

This service focuses on technical and accounting support:

  • Transaction Aggregation: Collecting data from various sources (exchanges, wallets, DeFi protocols) and creating a unified registry.
  • Profit and Loss Calculation: Determining the taxable base using FIFO, LIFO, or weighted average methods (for companies).
  • Monthly Declarations: Preparing and submitting income, VAT, and profit tax declarations on RS.ge.
  • VASP Reporting: Preparing special reports for the National Bank (if the client is a VASP), including reports on suspicious transactions.
  • Source of Funds Documentation: Preparing a "Source of Wealth / Source of Funds" package for banks when cashing out.
  • Audit Opinion: Verification of financial statements by licensed auditors.

Common Real-World Scenarios

Reporting services are essential in the following cases:

  • When a company (LLC) holds assets in cryptocurrency and needs correct accounting for exchange rate differences.
  • When an individual is registered as a "Small Business" and receives crypto income for services — they need to file a monthly 1% declaration.
  • When a person sells cryptocurrency to buy real estate — the Public Registry and the bank require proof of the legal origin of funds.
  • When converting large volumes of crypto assets into fiat, raising questions from the bank's monitoring department.
  • For VASPs, who are obliged to regularly submit reports to the National Bank and the Financial Monitoring Service.

Georgian Legislation and Regulations

Reporting rules are regulated by the Tax Code of Georgia, which defines deadlines and forms for filing declarations. For crypto asset accounting, International Accounting Standards (IAS/IFRS) are important, as Georgian legislation does not explicitly define crypto accounting rules, and companies rely on international practice (mainly treating it as intangible assets or inventory). For VASPs, the Law on Facilitating the Prevention of Money Laundering and Terrorism Financing and Normative Acts of the National Bank of Georgia on reporting forms additionally apply. Incorrect reporting leads to sanctions according to the Tax Code (fines up to 50% of the tax reduction).

Service Process

The process with Legal.ge specialists involves:

  1. Data Export: Assisting the client in providing CSV files and API keys from exchanges.
  2. Processing: Processing and classifying transactions using specialized software.
  3. Draft Preparation: Preparing a draft declaration and agreeing on the payable amount with the client.
  4. Submission: Uploading the declaration to the RS.ge portal.
  5. Archiving: Storing all supporting documents (invoices, blockchain hashes) for future audits.

Why Legal.ge?

Crypto accounting and reporting require specific knowledge that ordinary accountants often lack. Legal.ge features accounting and law firms specializing in the fintech sector. They ensure that your declarations are accurate, timely, and in full compliance with regulatory requirements, protecting you from unnecessary fines.

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