Taxation on crypto currencies - please read before asking

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Hi all,

 

Another question on this topic; I saw a tax account recently and got a lot of good information. Still waiting to clarify a few things. One thing he mentioned a lot is tax categories. As far as I can see, sale of Crypto is not in the same category as sales of "traditional" investments, eg. stocks. Therefore it's not possible to offset in different categories. Also, I'm wondering if the €801 allowance applies to the crypto sales at all. It seems like it does not.

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5 hours ago, itsthejb said:

Also, I'm wondering if the €801 allowance applies to the crypto sales at all. It seems like it does not.

 

Since the 801€ tax free allowance (= Sparer-Freibetrag) is for capital income like interest, dividends and profit from the sale of shares/funds, and profit from cryptocurrency is another income category entirely, sonstige Einkünfte, no, it doesn't.

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Hi @PandaMunich,

 

Ah I see! Well this is highly relevant to me. So I'm looking at a flat 25% (plus solidarity tax) on a recent (somewhat accidental sale). Hmm, well that's a pity, but good to know for the future.

 

Following that, I assume there's no allowance at all on sonstige Einkünfte?

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No, I'm afraid you still don't understand.

 

At the risk of repeating myself:

  1. The 25% flat tax (= Abgeltungsteuer) only applies to capital income.
  2. Profit from a cryptocurrency sale that took place within a year of the date you bought it is not capital income, but "sonstige Einkünfte" and is therefore taxed with your own personal, variable income tax rate.
  3. Profit from a cryptocurrency sale that took place more than a year after the date you bought it is not taxable income, no matter how high the profit is.
  4. If your total "sonstige Einkünfte" in a year are below 600€ they are tax-free - if they are more, the entire amount is taxable income, there is no allowance.
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Hi @PandaMunich,

 

My apologies, I've done so now. Hmmm certainly seems my tax liability for crypto is much higher than I'd previously thought. Good that I'm learning this early and the amounts involved aren't huge. My understanding:

 

Profit from crypto sales, about €1k, no allowance (more than €600), held for less than a year, taxable at earned income rate (in my case 42%), so that means €420 or so to pay.

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Lol I meant "nothing short of"... Just realized that I apparently mistyped my response and I don't seem to be able to edit my post now.

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So I bought some crypto in 2013 in the UK in £, as it's risen quite a bit if I transfer it back to Euro now, I dont need to pay taxes on it? 

 

Also, if you move coins from say an online wallet to a hardware wallet does the 1 year reset?

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Sorry but it is not clear: if I have btc and some other crypto currencies and I spent 1000 euro to buy them, and After 2/3 months, I sell them and I earn 1599 euro...even if I am a employee with a fix yearly gross, but I realized less than 600 euro income...do I need to declare them or not??

If it is over 600? When might be declared??

 

Thank you.

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9 hours ago, Adem137 said:

So I bought some crypto in 2013 in the UK in £, as it's risen quite a bit if I transfer it back to Euro now, I dont need to pay taxes on it?

 

Correct.

 

9 hours ago, Adem137 said:

Also, if you move coins from say an online wallet to a hardware wallet does the 1 year reset?

 

No.

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14 minutes ago, karmakoma said:

Sorry but it is not clear: if I have btc and some crypto and I spent 1000 euro. After 2/3 month I sell them and I earn 1599 euro...even if I am a employee with a fix yearly gross, but I realized less than 600 euro income...do I need to declare them or not??

 

If you don't make more than that 599€ profit the whole calendar year, then no.

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...ehm other option...I sell the entire portfolio but I send the sepa to my parents: who pays the taxes? Let imagine that subject a (german fiscal resident) buy 1 btc, and sell it after 3 month erarning more then 600 euro and charge the money from the wallet to a sepa bank account owned by a relative, in another European country (Spain or Italy or French): who needs to declare the capital gain? The relativies who received the money or the sender who opened the crypto wallet and did the purchase??

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18 minutes ago, karmakoma said:

But do I have to notify it as well?

 

You notify the Finanzamt of income by declaring it in a tax return. 

Since my last answer was "no", why would you think you would have to?

 

14 minutes ago, karmakoma said:

...ehm other option...I sell the entire portfolio but I send the sepa to my parents: who pays the taxes? Let imagine that subject a (german fiscal resident) buy 1 btc, and sell it after 3 month erarning more then 600 euro and charge the money from the wallet to a sepa bank account owned by a relative, in another European country (Spain or Italy or French): who needs to declare the capital gain? The relativies who received the money or the sender who opened the crypto wallet and did the purchase??

 

Don't pretend to be stupid, you know the answer to that as well as I do.

If, on the other hand, I overestimated your mental facilities: You have to declare that profit.

 

Since you're evidently the one planning on committing tax evasion, I think you need to take a good hard look at the criminal penalties for tax evasion: https://www.gesetze-im-internet.de/englisch_ao/englisch_ao.html#p2206

Also remember that Germany is the country that sent even Steffi Graf's father to prison for tax evasion: https://mobile.nytimes.com/1997/01/25/sports/peter-graf-is-sentenced-to-prison-in-tax-case.html

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Cmon I am not planning any tax evasion: I just prefer doing things in my mother tongue so if there is the legal possibility to make parents declaring the capital gain (taxed like here) why not? Just keep in mind that Italy is not "Africa" and if an income arrive in sepa must be declared as well...but I would like to understand who pays what and where. Thank you again to clarify :)

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There is no legal possibility.

 

What you're planning to do is tax evasion, since you're planning to defraud the German state of the income tax it's entitled to.

Your motivation is that your personal German income tax rate is higher than your parents' Italian income tax rate, i.e. it would cost you less.

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9 hours ago, PandaMunich said:

 

Correct.

 

 

No.

 

Thank you. I'm just wondering - Will I need to prove that I bought them in 2013? Not sure how I will do that. All I would have is a bank statement with the outgoing amount from 2013. My btc wallet no longer shows the transactions from 2013.

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10 hours ago, PandaMunich said:

There is no legal possibility.

 

What you're planning to do is tax evasion, since you're planning to defraud the German state of the income tax it's entitled to.

Your motivation is that your personal German income tax rate is higher than your parents' Italian income tax rate, i.e. it would cost you less.

 

 

Clear so not admitted. What might be brought to the fiscal advisor in Germany in term of proof of transaction? Can be enough the PDF of sepa to wallet and from the wallet or other documents are required??

 

 

Thank you @PandaMunich for the clear explanation

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7 hours ago, Adem137 said:

I'm just wondering - Will I need to prove that I bought them in 2013? Not sure how I will do that. All I would have is a bank statement with the outgoing amount from 2013. My btc wallet no longer shows the transactions from 2013.

 

The outgoing statement would help.

 

What would also help are print-outs from your Bitcoin wallet showing no such transactions as far back as you can go, to prove that this buying transaction took place longer than a year ago by showing that there were no such transactions within the last year, i.e. that this buying transaction had to have taken place before that period.

 

And while you're at it, get into the habit of doing screen-shots/print-outs in pdf format (= CTRL/STRG+P, then print to destination "Save as PDF") while you still can, and archive them for later use in your tax return.

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