Quick answer
NFT royalties paid in crypto are taxable income every time a secondary sale triggers a payment to the original creator.
Income Tax
Australia
United Kingdom
United States
Royalty Income from NFTs
Ongoing crypto payments received by NFT creators each time their work is resold on a secondary market.
AustraliaUnited KingdomUnited StatesUnderstanding Royalty Income from NFTs on crypto
NFT royalties are ongoing payments — typically 2–10% of the sale price — that flow automatically to the original creator each time an NFT is resold on a secondary marketplace. These royalties are paid in cryptocurrency and represent income to the creator. Most tax authorities treat NFT royalty income as ordinary income at fair market value at the time of receipt. Creators must track each royalty payment — which may be frequent and in small amounts — and report the cumulative income. The crypto received as royalties also has a cost basis equal to the income value at receipt, relevant when the crypto is later sold.
NFT royalties are ongoing payments — typically 2–10% of the sale price — that flow automatically to the original creator each time an NFT is resold on a secondary marketplace. These royalties are paid in cryptocurrency and represent income to the creator. Most tax authorities treat NFT royalty income as ordinary income at fair market value at the time of receipt. Creators must track each royalty payment — which may be frequent and in small amounts — and report the cumulative income. The crypto received as royalties also has a cost basis equal to the income value at receipt, relevant when the crypto is later sold.
What this means for your crypto activity
Each sale triggers income
Every secondary sale that triggers a royalty payment creates a taxable income event for the creator.
Fiat valuation required
Royalty income must be valued in fiat at the time of each payment.
Popular collections add up
The cumulative royalty income can be substantial for popular NFT collections.
Business income for pros
If operating as a professional creator, royalty income may be business income enabling expense deductions.
Cost basis on receipt
The crypto received as royalties has a cost basis equal to its value at receipt — important for subsequent CGT.
- Every secondary sale that triggers a royalty payment creates a taxable income event for the creator.
- Royalty income must be valued in fiat at the time of each payment.
- The cumulative royalty income can be substantial for popular NFT collections.
- If operating as a professional creator, royalty income may be business income enabling expense deductions.
- The crypto received as royalties has a cost basis equal to its value at receipt — important for subsequent CGT.
Seeing it in action
Example scenario
Artist Cleo mints an NFT collection with a 5% royalty. Over the year, her collection generates 50 secondary sales averaging 0.1 ETH each. She receives 5 × 0.05 ETH = 0.25 ETH in royalties per sale, totalling 2.5 ETH across all sales. At an average ETH price of $2,000, she has $5,000 in ordinary royalty income to report for the year.
How this works across jurisdictions
- Australia
The Australian Taxation Office firmly classifies cryptocurrency royalty commissions as assessable ordinary income at fair market value on the receipt date, adding the baseline fiat value straight into the taxpayer's standard income pool.
- United Kingdom
HMRC assesses incoming artist royalties as taxable trading income if the project matches the systematic scale of a commercial art business, routing smaller individual creator rewards directly to miscellaneous income.
- United States
The IRS treats recurring NFT creator royalties as ordinary income under Internal Revenue Code Section 61, requiring professional artists to file via Schedule C to claim creative business expense write-offs and manage self-employment tax.
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