Crypto Yield Farming Tax
Calculate your taxes on DeFi yield farming gains: rewards, swap fees and LP tokens.
How is yield farming taxed?
Yield farming generates several types of taxable income: farming rewards (tokens received), swap fees collected, and gains/losses on LP tokens. Each type may be treated differently depending on your country of residence. Taxes Crypto automatically analyzes your DeFi transactions and applies the appropriate tax treatment.
LP tokens and impermanent loss
When you provide liquidity, you receive LP tokens representing your share of the pool. Entering and exiting the pool are taxable events. Impermanent loss may in some cases be deducted from your gains. Taxes Crypto automatically calculates the value of your LP tokens and associated capital gains.
Yield farming tax return
Yield farming gains must be reported in your annual tax return. Taxes Crypto generates a detailed report with each DeFi transaction, the euro value at the time of the operation, and the amounts to report on your tax forms.
Frequently asked questions
Is yield farming taxable?
Yes, yield farming income is taxable in all European countries. Rewards received are generally treated as income, while gains on LP tokens are treated as capital gains.
How to calculate yield farming gains?
Taxes Crypto imports your DeFi transactions and automatically calculates your gains. It takes into account the token values at the time of deposit and withdrawal, rewards collected, and LP token price variations.
Is impermanent loss deductible?
The tax treatment of impermanent loss varies by country. In some cases, it may be considered a deductible capital loss. Taxes Crypto calculates this loss and includes it in your tax report.
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