A foreign currency windfall is taxed differently in every country, and the difference can cost you six figures. If Iraq's dinar revalues while the US dollar holds, the money lands and your government decides what it keeps. Section 988 in the United States, Division 775 in Australia, the Beckham Law in Spain: five jurisdictions, five outcomes on the same gain. Here is what current law says as of March 2026.

The United States taxes currency gains as ordinary income

In the United States, foreign currency gains fall under Section 988 of the Internal Revenue Code and are taxed as ordinary income, not capital gains. That means your marginal rate: up to 37 percent federal, plus state tax, plus the 3.8 percent Net Investment Income Tax above $200,000. The combined effective rate reaches 40.8 percent. A $200 personal-transaction exemption exists under Section 988(e)(2), but speculative holdings almost certainly do not qualify. The estate exemption sits at $15 million per person under the OBBBA, signed 4 July 2025.

Australia, the UK, and Canada tax it as capital gains

Australia treats foreign currency as a CGT asset under Division 775. Hold it 12 months or more as an investor and the 50 percent discount applies, for an effective rate near 23.5 percent, with no de minimis. The United Kingdom computes the gain in pounds under CGT rules, allows only a GBP 3,000 annual exemption, and charges 18 or 24 percent after 30 October 2024. Canada uses a 50 percent inclusion rate under ITA subsection 39(2), with a $200 CAD de minimis on the annual net.

Spain's Beckham Law can zero the tax

Spain is the outlier. Qualify for the Beckham Law and foreign-source capital gains are exempt for 6 years, with a flat 24 percent on Spanish-source income up to EUR 600,000. Eligibility needs an employment trigger such as a job, a Digital Nomad Visa, or a director role, and the non-residency requirement dropped from 10 to 5 years in 2023. Miss it and the standard savings scale runs 19 to 30 percent, plus wealth tax and Modelo 720 reporting.

What happens at the bank

Iraq left FATF monitoring in June 2018, so compliance is not the obstacle. Your receiving bank is. Any incoming wire over $10,000 triggers a Currency Transaction Report to FinCEN, and a transfer from Iraq brings a source-of-funds request. Without paperwork ready, funds can sit in review for weeks.

IR-001 breaks down all five tax outcomes, the CBI's own exchange-rate signals, and the five-phase windfall playbook every major wealth manager publishes. Read the full currency windfall tax analysis.