Michelle Legge
By Michelle Legge • Head of Crypto Tax Education
Updated Feb 1, 2024
This article has been fact checked and reviewed as per our editorial policy.

PancakeSwap Tax Guide

Let them eat CAKE... but you might need to pay tax on it. If you're using PancakeSwap to trade, stake, yield farm, or more, you'll need to pay tax on any gains or income. Learn how your PancakeSwap transactions are taxed in our ultimate PancakeSwap tax guide.

Do you pay taxes on PancakeSwap?

Yes. You’ll need to pay taxes for your PancakeSwap trades and earnings.

Crypto is subject to either Income Tax or Capital Gains Tax. The tax you’ll pay depends on the specific transaction you’re making - so let’s break them down.

PancakeSwap Taxes

Do you pay tax on trades on PancakeSwap?

Yes - depending on where you live. In most countries, you'll pay Capital Gains Tax on any capital gain you make from trading one token for another. So for example, say you traded BNB for BUSD, you would pay tax on any gain you've made on your BNB - that's the difference in value from when you got the asset to when you traded it.

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

As we said, there's no clear guidance from the IRS or any other tax office just yet on adding and removing liquidity. However, when you add liquidity and remove liquidity from a pool on PancakeSwap you receive a liquidity pool token in return. This could be seen as a crypto to crypto trade and therefore it would be subject to Capital Gains Tax.

Do you pay tax on liquidity pool tokens on PancakeSwap?

Like the above, there’s no clear guidance on liquidity pool tokens so it all comes down to the way the specific DeFi protocol you’re using works and how you interpret the current crypto tax guidance.

You don’t earn new liquidity pool tokens on PancakeSwap - instead, the value of your liquidity pool token increases whenever someone makes a trade in the pool you’ve contributed to. So you’re not earning new tokens. With this in mind, it’s very unlikely that you’d pay Income Tax on PancakeSwap liquidity pool tokens as you’re not earning new tokens.

It’s only when you remove your liquidity that you’ll have a realized gain. This means when you remove liquidity and exchange your liquidity pool tokens back for your original asset, you’re making a crypto to crypto trade which would be subject to Capital Gains Tax.

Do you pay tax on staking liquidity pool tokens on PancakeSwap?

The IRS hasn't issued clear guidance on staking rewards tax yet. However, as this is a means of earning new tokens, it's likely this could be seen as income. So, if you’ve staked your liquidity pool tokens to earn CAKE, you’ll need to pay Income Tax on the fair market value of your CAKE at the point you receive it.

Do you pay tax on staking cake in SYRUP pools?

Yes. Like above, earning rewards from staking a token (any token) is subject to Income Tax. You’ll pay Income Tax on the fair market value of your new tokens at the point you receive them.

Do you pay tax on PancakeSwap IFOs?

The IRS has no real guidance on IFOs - so we need to interpret the way this protocol works under the current crypto tax rules.

You stake cake and you earn IFO credits (based on the amount of CAKE you commit) as a reward. However, these IFO credits have no value outside of the PancakeSwap platform. They're not a token or a coin and you couldn't sell or trade them. They're more akin to utility tokens - which are commonly utilized in ICOs.

Arguably, when you commit your staked CAKE to an IFO, it is at this point that there is a gained value. We could perhaps liken this to a token spent on goods or services, which could be a Capital Gains Tax event.

If you're participating in PancakeSwap IFOs, we recommend you speak to an experienced crypto accountant for bespoke advice on how to report your IFO activities to ensure you remain tax compliant.

Do you pay tax on the PancakeSwap lottery?

Again, tax offices have released very little guidance on crypto gambling and lotteries. However, they have extensive guidance on lottery winnings - and it'll all depend on where you live.

If you hit it big in the PancakeSwap jackpot and live in the US, the US charges both Federal and State Income Tax on winnings.

Meanwhile, if you live in the UK, lottery winnings are tax free. Similarly, in Canada and Australia lottery winnings are tax free.

You should check the specific lottery and gambling tax rules where you live.

Do you pay tax on PancakeSwap NFTs?

NFTs are treated like any other coin or token from a tax perspective, so when you sell an NFT, you'll pay Capital Gains Tax on any capital gain made.

When it comes to buying NFTs, because you almost always purchase them with crypto - this is seen as a crypto to crypto trade and any capital gain is subject to Capital Gains Tax.

Banner prompting investors to read the Koinly updated defi tax guide

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

An infographic highlighting information on uniswap taxes records for crypto taxes, presented by Koinly, a crypto tax softwareYou’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 on PancakeSwap 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 transactions on PancakeSwap with all the information - you can do this manually or with a crypto tax app. Let’s look at both.

How to do your PancakeSwap taxes

To get started with your PancakeSwap taxes - you need your complete PancakeSwap transaction history. There are two ways you can do this.

  1. Use crypto tax software and connect to the Binance Smart Chain via API. You can take your BSC public address or key from the wallet you use to interact with PancakeSwap and input it straight into a crypto tax app which will automatically import your PancakeSwap transaction history to your app, identify your taxable transactions and calculate your capital gains, losses and income.

  2. Export your PancakeSwap transaction history in a CSV file. You can’t download a CSV file from the PancakeSwap platform directly, but you can use third-party services like BSCscan to get a CSV file of your transaction history on PancakeSwap. You can then use this CSV file to identify your taxable transactions, capital gains, losses, and income yourself.

Does PancakeSwap provide a tax report?

No. PancakeSwap doesn't provide any kind of tax report. But you can get a tax report by importing your PancakeSwap transaction history to a crypto tax app using API or CSV file import.

Does PancakeSwap supply a financial statement?

No. PancakeSwap doesn’t supply a financial statement.

How to generate a PancakeSwap tax form

There are two ways you can do this depending on whether you’re using crypto tax software or not so we’ll look at both.

If you’re doing your taxes yourself, you need a complete transaction history from PancakeSwap for the financial year. You can get a CSV file of this using the method 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).

Alternatively, save yourself hours and use a crypto tax app to do all this for you. All you need to do is sync your PancakeSwap transactions using 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.

PancakeSwap CSV export

As we said above, PancakeSwap doesn’t offer an option within the platform to download a CSV file of your transaction history. However, you can use a service like BSCscan to generate and download a CSV file of your PancakeSwap transaction history to do your taxes manually.

PancakeSwap tax API

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

All you need to do is sync the wallets you use to interact with PancakeSwap. So for example, if you use Trust Wallet to trade on PancakeSwap - you’d use the Binance Smart Chain API to integrate your Trust Wallet. We’ve got instructions on how to get your API keys for the most popular PancakeSwap wallets including MetaMask and Trust Wallet. Once you’ve got your API keys, enter them into your chosen crypto tax app and it’ll calculate your PancakeSwap taxes for you and generate your tax report.

Does PancakeSwap report to the IRS?

Anonymity is important on PancakeSwap - we don’t even know who the founders are! In the DeFI space, anonymity is a huge part of the appeal.

PancakeSwap themselves likely haven’t seen any pressure from the IRS just yet - mostly because they seem to have no idea what DeFi is. However, it all depends on the wallet you’re using as to whether the IRS would be able to track your transactions.

Most Web3 wallets don’t require KYC, but many of them require you to link a debit or credit card. If you’ve got expenses going out of your bank account, or money coming back in - you better believe the IRS is going to want to know about it. Similarly, if you’re earning and moving assets into centralized exchanges, many of these exchanges have faced pressure from the IRS to share KYC data. If you don't want to do KYC then read our expert guide on the best no KYC crypto exchanges.

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

Use Koinly to label your transactions accurately for correct tax treatment

Koinly is a PancakeSwap tax calculator & reporting tool

If you’ve been wondering if Koinly is a PancakeSwap tax calculator, the answer is, yes! Not only can Koinly import PancakeSwap transaction history, but Koinly can also calculate your PancakeSwap taxes in a format that makes sense for your country’s tax office. As a PancakeSwap 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 PancakeSwap trades including purchases, sales, swaps, income, and more!

  • Koinly will then convert your PancakeSwap 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 PancakeSwap trades are taxable, and which are not - calculating your PancakeSwap gains/losses, crypto income, and more. All of this is really important for being able to submit an accurate PancakeSwap tax return to your tax office.

Sign up free and try our DeFi tax software today.

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