Uniswap Taxes Guide

Your Uniswap transactions might just come with a surprise tax bill. Find out everything you need to know about how different transactions on Uniswap are taxed in our Uniswap Tax Guide 🦄

Do you pay taxes on Uniswap?

Yes. You’ll need to pay tax on your Uniswap trades and transactions.

Crypto is subject to Income Tax or Capital Gains Tax. The tax you’ll pay depends on the specific transaction you’re making  - so let’s take a look at each.

Do you pay tax on trades on Uniswap?

Yes. In the vast majority of countries - trading one token for another is subject to Capital Gains Tax.

For example, if you traded UNI for ETH, you would pay tax on any gain you'd made on your UNI. That's the difference in value from when you got your UNI to when you traded it. 

Do you pay tax on adding and removing liquidity on Uniswap?

As we said above, the IRS and many other tax offices haven't yet issued clear guidance on this. 

This said, when you add liquidity and remove liquidity from a pool on Uniswap, you'll get a liquidity pool token in return. 

This could be seen as a crypto to crypto trade and therefore could be subject to Capital Gains Tax.

Only one tax office so far has issued specific guidance on this - the UK's HMRC. They say they view these transactions as a taxable event and subject liquidity transfers to Capital Gains Tax.

Do you pay tax on liquidity pool tokens on Uniswap?

Again, bar from HMRC, tax offices haven't yet released guidance on liquidity pool tokens. So it all boils down to the way the specific dex you're using works.

On Uniswap, you don't earn new liquidity pool tokens. Instead, the value of your liquidity pool tokens increases based on the fees made in a pool you've added capital to. So you're not earning new tokens - like you might when mining or staking. With this in mind, it's unlikely your liquidity pool tokens would be subject to Income Tax.

It's only when you want to remove your capital from a liquidity pool by exchanging your liquidity pool tokens back that you'll have a realized gain. This transaction could be seen as a crypto to crypto trade and subject to Capital Gains Tax.

Do you pay tax on flash swaps on Uniswap?

Flash swaps work the same as any other trade, despite you not actually providing the capital originally. By the end of the transaction, you’ll be trading one token for another - so you’ll need to pay Capital Gains Tax on any profit as a result.

Do you pay tax on staking UNI tokens and Uniswap liquidity pool tokens?

Yes. But this really depends on where you live and how the specific DeFi protocol you're using works as to the type of tax you'll pay on staking.

If you're staking UNI tokens or Uniswap LP tokens and earning new tokens as a result, you may need to pay Income Tax based on the fair market value of the new tokens at the point you receive them.

If you're using a DeFi protocol where your returns are paid out in one lump sum at the point you remove your staked UNI tokens or LP tokens, then this would be more likely to be subject to Capital Gains Tax instead.

How is the Uniswap airdrop taxed?

This depends on where you live. In the US, the IRS is clear that airdrops are taxable as income upon receipt - so you'd pay Income Tax based on the fair market of your UNI tokens at the point you received them.

Meanwhile, in other countries like the UK and Australia - the rules are a little more complicated. In the UK, you'll generally pay Income Tax upon receipt of your airdrop, if you've done something to earn your tokens, including trading on a specific blockchain or platform. In Australia, again you'll generally pay Income Tax upon receipt of your airdropped tokens - unless you receive tokens as part of an initial allocation airdrop. As the UNI airdrop was an initial allocation airdrop, this event may not have been viewed as income.

In all instances however, if you later sold, swapped, spent, or gifted (depending on where you live) your UNI tokens, any gain would be subject to Capital Gains Tax, regardless of whether you paid Income Tax upon receipt.

What do I need to report to my tax office?

It depends on where you live - each tax office has different reporting requirements for crypto 

In the US, you need to report each taxable crypto transaction on Form 8949, including:

• A description of the asset.
• The date you acquired the asset.
• The date you disposed of the asset.
• The sale price at fair market value.
• The cost basis of the asset at fair market value.
• Your capital gain or loss.

You’ll also need to report your net capital gain and loss on Schedule D and any crypto income on Schedule 1 and potentially Schedule C.

It’s a lot of work. If you’re an active trader or an arbitrage trader on Uniswap and other DeFi platforms, the list of transactions you need to report can quickly ramp up into the thousands per financial year. You’ll need good records of all your Uniswap transactions with all the information - you can do this manually or with a crypto tax app. Let’s look at both.

How to find your Uniswap transaction history

To get started with your Uniswap taxes - you need your complete Uniswap transaction history. There’s two ways you can do this.

1. Use crypto tax software and connect to the Ethereum blockchain via API. You can take your ETH public address or key from the wallet you use to interact with Uniswap and input it straight into a crypto tax app which will automatically import your Uniswap transaction history to your app, identify your taxable transactions and calculate your capital gains, losses and income.
2. Export your Uniswap transaction history in a CSV file. You can’t download a CSV file from the Uniswap platform directly, but you may be able to export a CSV file of your transaction history from the wallet you use - for example, Coinbase Wallet. You may also be able to use a third party service like Etherscan to get a CSV file of your transaction history on Uniswap. You can then use this CSV file to identify your taxable transactions, capital gains, losses and income yourself.

Does Uniswap provide a tax report? 

No. Uniswap doesn't provide any kind of tax report for users. But you can get a tax report by importing your Uniswap transaction history to a crypto tax app using API. 

Does Uniswap supply a financial statement?

No. Uniswap doesn’t supply a financial statement.

How to generate a Uniswap tax form

There are two ways to generate a Uniswap tax form, depending on whether you're using crypto tax software or not. We'll look at both. 

If you’re doing your taxes yourself, you need a complete transaction history from Uniswap for the financial year. You can get a CSV file of this using the methods above. You’ll then need to identify each taxable transaction, the subsequent income or capital gain/loss and report this to the IRS using Form 8949 for capital gains and losses, Schedule D for net capital gains and losses and Schedule 1 for crypto income (and potentially Schedule C too for income).

If you're using a crypto tax app to generate your Uniswap tax form, this is much simpler. All you need to do is sync your Uniswap transactions using the tax report API. Your crypto tax app will then identify your taxable transactions and calculate any capital gains, losses and income for you. You can then download a tax report specific to your location to hand over to your tax office - for example, you can download a pre-filled Form 8949 and Schedule D.

Uniswap CSV export

Uniswap doesn’t offer an option within the platform to download a CSV file of your transaction history. However, you can use a service like Etherscan to generate and download a CSV file of your Uniswap transaction history to do your taxes manually. You may also be able to download a CSV file from the Web3 wallet you're using to interact with Uniswap.

Uniswap tax API

The easier option is to use an API to get your Uniswap transaction history automatically imported into a crypto tax app.

All you need to do is sync the wallets you use to interact with Uniswap. So for example, if you use MetaMask to trade on Uniswap, you'd get your ETH mainnet public address from MetaMask. Once you've got your API keys, enter them into your chosen crypto tax app and it’ll calculate your Uniswap taxes for you and generate your tax report. 

We’ve got instructions on our integration pages on how to connect the most popular Uniswap wallets with Koinly.

Does Uniswap report to the IRS?

Anonymity is a key tenet of the DeFi market. Trading is done directly from your chosen wallet, so there's no KYC verification necessary to use Uniswap. 

Most Web3 wallets - excluding Coinbase Wallet - don't require KYC, but some require you to link a debit or credit card. If you've got funds going out of your bank account or money coming back in - the IRS is going to want to know why. Similarly, if you’re moving Uniswap tokens into centralized exchanges, many of these exchanges have faced pressure from the IRS to share KYC data.

Uniswap hasn't announced if they've seen any pressure from the IRS to amend KYC processes - but with the impending new legislation around cryptocurrency imminent, there's a chance they have.

The best way to stay tax compliant is to report your crypto taxes accurately. 

Koinly is a Uniswap tax calculator & reporting tool

If you’ve been wondering is Koinly a Uniswap tax calculator tool, the answer is, yes! Not only can Koinly import Uniswap transaction history, but Koinly can also calculate your Uniswap taxes in a format that makes sense for your country’s tax office. As a Uniswap tax calculator, Koinly is able to do a bunch of impressive tasks that save you time and can even save you from paying too much taxes.

• Koinly will import all your Uniswap trades including purchases, sales, swaps, income and more!
• Koinly will then convert your Uniswap transactions into your country’s currency, at fair market value. This in itself is a massive time saver.
• Finally, Koinly works out which of your Uniswap trades are taxable, and which are not - calculating your Uniswap gains/losses, crypto income and more. All of this is really important for being able to submit an accurate Uniswap tax return to your tax office.

Sign up free and try our DeFi tax software today.