Cross-Border · October 2, 2026 · 12 min read · By CryptoTaxCalc Team

I Paid Tax on One Bitcoin Sale in Two Countries. Nobody Voluntarily Fixed It for Me.

I sold the year I moved. My old country said the gain was theirs, my new country said the same, and both were technically right. Relief exists — foreign tax credits, treaty tie-breakers, unilateral relief — but only if you know to claim it, on the right form, with the right paperwork. Here's the seven-country guide I needed.

Image: Illustrative purposes. Rules cited from IRC §901/904 and Form 1116, TIOPA 2010 (UK FTCR), §34c EStG and German DBA practice, Canadian ITA §126 and Forms T2209/T2036, the Australian foreign income tax offset rules, Japan's 外国税額控除, and Indian IT Act §§90–91 with Rule 128/Form 67.

Here's the exact trap, because versions of it happen to every friend who moves with crypto. I left one country in late August and sold a long-held position in November, believing I now lived entirely under my new tax system. My old country taxed the gain because under their split-year rules I was resident there for the part of the year that generated... actually, it was subtler than that, and both returns arrived showing tax. Two governments, one sale, no letter between them saying "hang on, he already paid."

The double-tax system is opt-in by effort. Treaties decide who gets first bite, and foreign tax credits stop the second bite exceeding the difference — but you file the claim, you prove the tax, and you do it country by country. The residency mechanics of when a country starts taxing your crypto are in the moving-abroad residency guide; this is the companion piece about what happens after both countries have already put out their hands. Note this is different from the foreign-exchange reporting guide — FBARs and Schedule FA are information forms that stop you being fined for silence; this is about recovering real tax money.

Why double tax happens to crypto people specifically

Three patterns produce almost every claim:

1. The move-year disposal. You change residency in the same tax year as a sale. Split-year regimes (the UK SRT is the cleanest example), calendar-versus-fiscal-year misalignment (Australia and the UK don't even share your December 31), and departure-year rules can allocate the same gain to both sides.
2. Dual residency. Long enough presence in both places that each claims you until the treaty tie-breaker — permanent home, centre of vital interests, habitual abode, nationality — settles it. Being a dual resident isn't illegal; failing to apply the tie-breaker is just expensive.
3. American citizenship. The big one. The US taxes citizens and green-card holders worldwide regardless of residence, so an American in Berlin, Tokyo or Melbourne files both systems forever; the treaty doesn't cure citizenship taxation, the foreign tax credit and FEIE merely manage it.

United States: Form 1116 and the sourcing surprise

The US credit (IRC §901) lets you subtract qualifying foreign income tax you actually paid from your US tax on the same income, in the same basket — capital gains of an individual sit in the passive category with dividends and interest, so the limit is computed as a pool. If your creditable foreign tax is $300 or less ($600 joint), you can skip Form 1116 entirely and claim it directly; above that, the form carries the limit math. Credits above the limit carry back one year and forward ten.

The surprise is sourcing. The credit only offsets US tax on foreign-source income, and the US domestic rule generally treats a non-resident alien's capital gains as foreign-source while a US person's gains on intangible property are usually US-source regardless of where the sale occurred. An American citizen living abroad whose gain was taxed by the host country can therefore find the host tax exceeding the creditable limit with no refund for the difference — you pay the higher of the two rates, not both. Treaty sourcing and the savings clause determine the outcome; this is precisely why Americans abroad shouldn't self-prepare a move year. The US page has the baseline rates so you can see the gap in advance.

United Kingdom: FTCR, cap included

The UK gives foreign tax credit relief under TIOPA 2010: treaty relief where the applicable double-tax treaty covers the income, and unilateral relief where there's no treaty but the foreign tax corresponds to UK income or capital-gains tax. You claim it on the self-assessment foreign pages (SA106) with the gain and foreign tax shown. The cap is straightforward — the credit cannot exceed the UK tax on the same slice of foreign gain — and there is no carryforward of excess; if the other country charged more than the UK would, the difference is simply your cost. Splitting the gain correctly under the SRT in a move year is most of the battle, because only the gain properly chargeable by both countries is relievable. One practical point: the UK will require evidence the foreign tax was actually paid, not merely withheld provisionally.

Germany: §34c and the per-country ceiling

Germany credits foreign tax under §34c EStG and the specific DBA, up to the Anrechnungshöchstbetrag — the German income tax attributable to the foreign income, calculated per source country. If, say, Japan took 45% and Germany's effective rate on the same gain is 35%, only 35 points are credited; the excess typically becomes deductible as a Sonderausgabe-style expense rather than carried forward, which softens but doesn't cure it. The claim is made in the income-tax return with the foreign assessment attached, and the treaty's allocation article must support the position. For German residents who are not American, the treaty usually gives the residence country the gain cleanly and the source country little — clean residency timing (selling after the departure-year allocation) often prevents the overlap better than any credit does.

Canada: federal and provincial credits in two forms

Section 126 gives a federal foreign tax credit for non-business income tax paid abroad, computed on Form T2209, with a parallel provincial credit on T2036 for provinces that levy their own (most do). Small amounts — under C$200 of foreign tax — can be claimed without the federal form. The credit is limited to Canadian tax on the foreign income; unused excess can be carried back three years and forward ten against the same category. Crypto gains of a new Canadian resident generally have a step-up on arrival (departure/arrival rules), which often prevents double tax structurally — but only if you document the arrival-day FMV at the time. Retrospective valuation is miserable; if you're moving to Canada, screenshot and export the market value of every position on landing day. The Canada page covers ACB from that point.

Australia: one offset, a hard cap, no carryforward

Australia's mechanism is the foreign income tax offset (FITO): foreign tax paid on foreign income is credited against Australian tax, subject to a limit that's effectively the Australian tax on the foreign income plus the notional deductions attributable to it — for most individual crypto cases it means you pay the higher of the two rates, same principle as the UK. Offsets of A$1,000 or less don't require detailed substantiation or a limit calculation; above that, keep the foreign assessment and the math. Excess FITO is not refundable and does not carry forward, so an Australian move year is where timing matters most — Australia taxes residents on worldwide gains from residency start, and a pre-arrival step-up plus careful sale sequencing around June 30 is worth more than any credit claimed afterward.

Japan: a credit that travels three years

Japan's 外国税額控除 directly credits qualifying foreign tax against both national income tax and the local inhabitant tax, within the limit of Japanese tax on the foreign income. The useful feature is that excess foreign tax above the limit can be carried forward three years, so a big one-off foreign tax charge isn't simply lost. The claim goes on the 確定申告 with the foreign assessment, and as everywhere the tax must be an income tax in substance and actually paid. A wrinkle for crypto: Japan treats gains as miscellaneous income at up to ~55%, which is usually higher than the other country's crypto rate — meaning Japan often has the primary-rate advantage anyway and the credit simply cleans up withholding or source-country residue. Timing residency to make the sale clearly Japanese (after arrival, post any split allocation) keeps the position simple.

India: real relief, but Form 67 is the gate

India grants double-tax relief under section 90 via treaty, or section 91 unilaterally where there is no treaty — crediting the lower of the foreign tax and the Indian tax on the doubly taxed income. The procedural trap is famous: the credit is allowed only if you file Form 67 online before submitting the income-tax return for the year, with the foreign tax statement or certificate. File the ITR first and the credit is effectively blocked until you untangle it. Convert foreign tax and income in INR at the prescribed rates, keep the tax residency certificate from the other country's authority, and note a substantive limitation: where the other country's tax on the same VDA gain exceeds India's flat 30%+cess, the excess isn't refunded. If the other country charges less, you pay the balance to India. The India page covers the flat regime; the foreign-account piece (Schedule FA) runs in parallel and is explained in the foreign-account reporting guide.

What I'd do in any move year

1. Draw the timeline before trading. Mark residency start/end in both countries, the treaty tie-breaker, and both tax-year boundaries. In most cases the cheapest planning is choosing when the sale happens, not arguing credits afterward.
2. Freeze values on the boundary. Export cost basis and FMV for every position on departure day and arrival day. The step-up or split allocation is built from these snapshots; they are nearly impossible to rebuild later.
3. Pay the foreign tax first, cleanly. Credits require tax actually assessed and paid in the other country. Withholding that gets refunded does not qualify.
4. File in the right order. Usually the source/first country first, then the residence country with the certificate and credit attached. India's Form 67 deadline makes ordering mandatory rather than advisable.
5. Model the higher-of rule. A credit means you pay max(rate A, rate B), never zero in both. Run the combined position — foreign tax plus residual home tax — with the calculator before assuming a move is tax-neutral.
6. Keep a two-country file forever. Both returns, assessments, payment proofs, residency certificate, treaty article, and FX rates. CARF now makes the two tax authorities' data converge; your file should converge too.

Treaties are laws, not shields

My own case ended well: the treaty split the gain by residency period, and the old country issued the assessment my new country needed to give the credit. Net result, the higher of the two rates. That's the system working as designed — but it worked only because I filed both returns, translated the assessment, and made the claim in writing. Nobody had flagged it, and the software in either country certainly didn't know about the other. If you're newly international, assume double tax until your paperwork proves otherwise.

General information, not tax advice. Treaty positions, tie-breakers and credits depend on your exact residency dates and the specific bilateral treaty; US citizens face the savings clause and need country-specific advice; India's Form 67 ordering and state/provincial taxes in the US and Canada add further layers. Use a cross-border specialist for the move year itself.

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