NFTs are classified as a service for GST and being in the trade of NFTS is a taxable activity. Selling NFTs is subject to GST so you need to register for GST if you sell more than $60,000 worth of NFTs in a 12-month period. If the NFTs are sold to people outside of New Zealand the sales are zero-rated for GST purposes.
Any profit you make from royalties and from selling NFTs is income. Under the smart contracts that establish NFTs, the creator may earn royalties each time their NFT is sold. The royalties are income at the time they receive them. You'll have an income tax liability on the sale of NFTs if:
- your business creates NFTs
- you buy and sell NFTs to make a profit
- you acquired NFTs for the purpose of disposal.
For more specific advice regarding your NFTs, get in touch below.
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