Taxation on crypto currencies - please read before asking

241 posts in this topic

3 hours ago, karmakoma said:

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??

 

The more documentation you have the better, so get into the habit of doing screen-shots/pdf print-outs  (= CTRL/STRG+P, then print to destination "Save as PDF") of all your transactions, which you will later print out on paper and submit to the Finanzamt attached to your tax return.

0

Share this post


Link to post
Share on other sites

For now I solved: I decided to sell before reaching 600 euro...:)

 

But Thank you for all the information!!!

 

One more question: the 600 euro limit are within the solar year (1jan->31december) and then they reset or since the receiving them on the bank account??

 

Thank you!!

0

Share this post


Link to post
Share on other sites

Important is the date the money comes within your sphere, i.e. the date you can use it, no matter on which account.

0

Share this post


Link to post
Share on other sites

Ok so phisically 1 year is counted (365days) from the day the money are available in my bank account, if I have understood well :)

0

Share this post


Link to post
Share on other sites

Just use common sense: only give the order to convert the Bitcoin more than a year after the Bitcoin appeared in your wallet, that way you're safe.

0

Share this post


Link to post
Share on other sites

Can you check whether my understanding of this law is correct?

 

I will first describe my situation and then I will try to calculate the tax.
I recently opened a trading account, to which I deposited some of my money from a German bank account. The amount on this trading
account was displayed in dollars. To deposit the money I used Paypal, which I guess used some current value of the EUR/USD.
Let say my deposit was 300EUR or 350USD.
On the same day I used 300USD and bought a cryptocurrency. If I understand correctly, I generated a currency gain/loss at the time
that I bought crypto. So to calculate the gain I need to convert USD at the TIME of the DEPOSIT to EUR and subtract this from the 300USD in EUR at
the time of buying the crypto.
OK.
Then I deposited additional 150EUR or 170USD. At that moment the hierarchy of the currency on my account is the following:
50USD leftover from the first deposit (priority 1)
170USD second deposit (priority 2).

Then I decide to buy a different cryptocurrency with 200 USD. That means I will at the same time sell all my (priority 1) USD
and additionally 150 (priority 2) USD. From that I generate currency gain/loss, but this time I have to use two different EUR/USD
values since these dollars were "different".

After some time (less than a year) I decide to sell both cryptocurrencies. From that I generate "crypto-capital"-gain, which
is not considered in the Anlage KAP, but in the Anlage SO.

If I made less than 600EUR (total sum of crypto-capital gain and currency gain) I will not pay any taxes.
If I made more than 600EUR (total sum of crypto-capital gain and currency gain) I will be taxed by my personal income tax.

Does this sound right?

 

 

My questions are the following:

 

1) Do I have to report to the Finanzamt that I have a trading account (oppened this December)?
2) If I made less than 600EUR, do I have fill in the Anlage SO anyway, or not.
3) If I made more than 600EUR, which lines in the Anlage SO do I have to fill in. If I understood correctly for the
"crypto-capital" gain I have to fill in the lines 41-46 (what exactly are lines 47 and 48 .. the gains from your wife if you are married?)
Which lines are for the currency gain?

4) How will the Finanzamt check my trading account and see that I really (in the case 2)) didn't receive more than 600EUR. (Note: The account is regulated by CySEC, the operations of which comply with the MiFID, an EU law)

5) If I operated with financial derivatives, this would go into Anlage KAP and be taxed 25%? (is in the Anlage KAP 800EUR of allowance?)


Thanks.

 

0

Share this post


Link to post
Share on other sites

Hi,
Thanks for your very instructive thread.
I have a question:

 

Let's say that I bought X bitcoins on 2010 in a UE country where I'm still living. I plan to move in Germany for 2 years on the 5th of January 2018, I understood that I have to declare the X bitcoins  as a pre-move income, but what would be the tax on benefits if:


I sell  X bitcoins on the 6th of January 2018
I sell X bitcoins on the 6th of january 2019

 

In any case, what price would be used to determine the benefits I could make by selling them:
The buying price in 2010 or the bitcoin price at the rate of the moving date?

 

Thanks

0

Share this post


Link to post
Share on other sites
On 12/15/2017, 3:23:08, tireno said:

Does this sound right?

 

Yes.

 

On 12/15/2017, 3:23:08, tireno said:

1) Do I have to report to the Finanzamt that I have a trading account (oppened this December)?
2) If I made less than 600EUR, do I have fill in the Anlage SO anyway, or not.
3) If I made more than 600EUR, which lines in the Anlage SO do I have to fill in. If I understood correctly for the
"crypto-capital" gain I have to fill in the lines 41-46 (what exactly are lines 47 and 48 .. the gains from your wife if you are married?)
Which lines are for the currency gain?

4) How will the Finanzamt check my trading account and see that I really (in the case 2)) didn't receive more than 600EUR. (Note: The account is regulated by CySEC, the operations of which comply with the MiFID, an EU law)

5) If I operated with financial derivatives, this would go into Anlage KAP and be taxed 25%? (is in the Anlage KAP 800EUR of allowance?)

 

  1. if you have an account outside Germany, you have to answer "Ja" in line 108 of the Mantelbogen ESt1A.
  2. No.
  3. Officially, you would have to use lines 41 to 47 for your first transaction, i.e. your first profit that year, and then list all your other transactions (transaction 2 to n) on a separate piece of paper (which you submit together with your tax return) and transfer the sum of these other profits into line 48. The columns Ehemann and Ehefrau in both line 47 and 48 are to split up the joint family profit into profit the husband had and profit the wife had.
    However, you could also simply list all your transaction on that separate piece of paper and fill in the total profit (for transactions 1 to n) into line 48 of Anlage SO.
  4. This is an honour system (= they believe that you will tell them is the truth), backed up by nasty criminal sentencing for cases they do find out about. And they have a good chance of finding out about it, a lot of countries already exchange account information with Germany, see here: https://www.toytowngermany.com/forum/topic/361434-taxation-of-currency-transactions/?do=findComment&comment=3477275
  5. Yes, yes and yes - until the Bundesfinanzministerium (BMF = German Ministry of Finance) publishes a letter with instructions telling us otherwise.
0

Share this post


Link to post
Share on other sites
25 minutes ago, MartineD said:

Let's say that I bought X bitcoins on 2010 in a UE country where I'm still living. I plan to move in Germany for 2 years on the 5th of January 2018, I understood that I have to declare the X bitcoins  as a pre-move income

 

No, you simply own bitcoins that you have owned for longer than 1 year --> you can sell them wherever you want and do not own any income tax on that profit, nor do you mention that profit in your tax return.

2

Share this post


Link to post
Share on other sites

Hello,

 

I wanted to thank You for such a great thread with extremely cleared and understandable answers.

 

I have the following situation and I would really like to hear your comments.

 

I am citizen of Latvia and have a German Residency from May 2017, living in Germany and employed with 50k Salary income.

I am trading crypto-currencies from 2016 as a hobby. I have about 5-7 exchange platform, move crypto in-between, also a lot of fiat movements to EUR bank account and from it. Turnover is quit high, therefore bank initiated AML check. I passed it.

Number of transactions is huge. Generated PDFs are also large and “barely” trackable. To make it worst my exchange accounts received cryptocurrencies from other sources (invested through some friends in some shity cryptocurrencies and he sent some profit back. Most probably from law perspective it looks bad).

If I will send out from my exchange platform all “suspicious” funds, which i don’t have proofs, that I bought them. Will it be OK to report then?

And also i have some wallet that received Bitcoins on it. No proofs, that I bought them with my funds. I can’t report this wallet at all? Even in one year?

Or I will report it in one year, no taxes and everyone is happy?

 

Question is quite easy. What to do…. And how to report this?

I was thinking of reporting based on in/out of my bank account and current asset evaluation. But after reading the thread it sounds as a bad idea.

 

Bonus question:

How to report, if I invested together with friends in ICO. Sending Ethereum to his wallet. He currently holds this investment. After he will sell coins, he will send profit back.

This is not acceptable?

What if he will sends tokens, we bought and I will sell them? Could i report than this transaction as crypto-crypto and then crypto-crypto?

 

 

0

Share this post


Link to post
Share on other sites

Hi Guys,
Thank you Panda Munich for the great information. I have a couple of questions more :

 

1- I received a Bonusauszahlung (bonus at the end of the year) in the beginning of this year in bitcoin and I started from them. How shall I declare them? through my trading report or salary income?

2- How about the coins I received from hard forks like bitcoin cash?
3- I sent sometimes some money to my Xapo cards and pay some expenses with them (travels basically,..), how are they calculated in the taxes?

4- Finally if I send those coins to my relative's (parent or sister) wallet to help them, so they spend them in my country (Tunisia), which is much more cheaper in term of transaction costs. How those transactions are taxed?

Thank you very much in advance.

0

Share this post


Link to post
Share on other sites
10 hours ago, Robertcron said:

I have the following situation and I would really like to hear your comments.

I am citizen of Latvia and have a German Residency from May 2017, living in Germany and employed with 50k Salary income.

 

I am trading crypto-currencies from 2016 as a hobby. I have about 5-7 exchange platform, move crypto in-between, also a lot of fiat movements to EUR bank account and from it. Turnover is quit high, therefore bank initiated AML check. I passed it.

 

Number of transactions is huge. Generated PDFs are also large and “barely” trackable. To make it worst my exchange accounts received cryptocurrencies from other sources (invested through some friends in some shity cryptocurrencies and he sent some profit back. Most probably from law perspective it looks bad).

 

If I will send out from my exchange platform all “suspicious” funds, which i don’t have proofs, that I bought them. Will it be OK to report then?

 

And also i have some wallet that received Bitcoins on it. No proofs, that I bought them with my funds. I can’t report this wallet at all? Even in one year?

 

Or I will report it in one year, no taxes and everyone is happy?

 

Question is quite easy. What to do…. And how to report this?

 

I was thinking of reporting based on in/out of my bank account and current asset evaluation. But after reading the thread it sounds as a bad idea.

 

Sorry, but nothing of what you describe is acceptable, your situation sounds a mess.

Keep your financial house in order.

 

Every time you have a transaction crypto/€, or crypto/other_crypto you have a taxable transaction that's either "buying" or "selling".

Sorry if the number of transactions was huge, you will just have to sit down with an Excel spreadsheet and list all of them - everything has to be transparent and easy to understand for the Finanzamt.

 

10 hours ago, Robertcron said:

To make it worst my exchange accounts received cryptocurrencies from other sources (invested through some friends in some shity cryptocurrencies and he sent some profit back. Most probably from law perspective it looks bad

 

Yes, that looks bad.

 

10 hours ago, Robertcron said:

Bonus question:

How to report, if I invested together with friends in ICO. Sending Ethereum to his wallet. He currently holds this investment. After he will sell coins, he will send profit back.

This is not acceptable?

What if he will sends tokens, we bought and I will sell them? Could i report than this transaction as crypto-crypto and then crypto-crypto?

 

Keep your money in your own accounts, any profit generated on a account of yours has to be declared by you, in your income tax return.

Any profit generated on your friend's account is his to declare.

 

As things are you made a gift of these Ethereums to your friend (which will mean gift tax if they were worth more than 20,000€!).

He then makes a profit (you also "gifted" him your buying price, so his profit will have to be calculated based on your buying price).

That he gives you part of that profit afterwards is irrelevant for income tax purposes, it's seen as a gift, which will entail additional gift tax if that amount is over 20,000€: https://www.steuertipps.de/steuererklaerung-finanzamt/themen/freibetraege-bei-der-erbschaftssteuer-und-schenkungssteuer

0

Share this post


Link to post
Share on other sites
7 hours ago, kouki said:

1- I received a Bonusauszahlung (bonus at the end of the year) in the beginning of this year in bitcoin and I started from them. How shall I declare them? through my trading report or salary income?

 

Salary income, in Anlage N.

 

For the later Bitcoin profits you made selling these Bitcoins again within a year, your "buying" price is the Bitcoin/€ exchange rate from the day you got that bonus. 

 

7 hours ago, kouki said:

2- How about the coins I received from hard forks like bitcoin cash?

 

Income from a gewerbliche self-employed activity, in Anlage G:

 

7 hours ago, kouki said:

3- I sent sometimes some money to my Xapo cards and pay some expenses with them (travels basically,..), how are they calculated in the taxes?

 

As soon as you spend the Bitcoins, you are "selling" them at whatever their exchange rate was to the €.

If that "sale" took place more than a year after you bought these Bitcoins then you don't have to declare the profit - if it was less than a year then you have to declare the profit in Anlage SO:

 

7 hours ago, kouki said:

4- Finally if I send those coins to my relative's (parent or sister) wallet to help them, so they spend them in my country (Tunisia), which is much more cheaper in term of transaction costs. How those transactions are taxed?

 

Not at all in the German income tax area, though depending on the tax legislation in Tunisia, your relative may have to tax the profit that is calculated using your initial buying price, because along with the Bitcoins you also "gifted" them your buying price.

 

However, there may be an additional problem: if you gifted them more than a certain amount, an additional tax, called Schenkungssteuer (= gift tax) is due.

The gift-tax-free limit is (source):

  • 20,000€ for a sibling (= brother or sister)
  • 100,000€ for a parent
0

Share this post


Link to post
Share on other sites

Hi guys,

 

Just wanted to firstly say that this thread has been a really great resource to help me learn about taxes around cryptocurrency! The tax advisors I've contacted so far seemed to have very little knowledge of how cryptocurrency earnings should be taxed.

 

I am here for a bit of advice myself and if there are paid tax advisors here, feel free to drop me a PM!

 

Background - I am a salaried employee here in Germany and started trading some cryptocurrencies last October.

 

I've tracked all my transactions and initially I was just exploring and buying and selling quite often. In November, I sold quite a lot of the cryptocurrency at under €600 profit in fiat. I used some of the remaining cryptocurrency to diversify the portfolio, spreading across 12 coins. Most of the new coins I bought, I purchased Bitcoin or Litecoin and instantly bought the altcoin (with no profit from the BTC or LTC). However, some of the new coins were bought with the coins I had from my original investment in October. If buying the new coin with an increased € value compared to the original purchase of the LTC/BTC, this would take the profit way over €600. If I understand correctly, would this mean I'm liable for tax on the entire profit, calculated in Euros at the time of every trade?

 

Using the profit that I withdrew in Euros plus additional funds, I bought back in to Bitcoin, Ethereum, Litecoin and others in November. Can I offset any of the profits with this spending in any way?

 

I plan to hold all the cryptocurrency I have at this time for a year before withdrawing.

 

To add another complication - I purchased cryptocurrency on behalf of my brother who lives in the UK (he simply asked me to because I already had verified accounts with the exchanges). He plans to hold for 1yr+, as do I with my current portfolio, so I assume any profits from this would be tax-free, although a bit of research tells me the rules are different in the UK, where the profits would be taxed as capital gains? When and how is it best to transfer the funds to him? If I move the cryptocurrency into a hardware wallet and give it to him, declaring a tax gift (as long as the portfolio at the time is under €20000), there wouldn't be any tax liabilities attached to this right?

 

Final complication - I also got a cash gift from my parents in 2017 that is way under the tax-free allowance, but I haven't declared it - is declaration necessary if it is under the allowance? I declared the movement of funds into the country to the Bundesbank, as I believe is necessary for transfers over €10k.

 

Sorry for the long post. I feel like this is a bit of a minefield and have really struggled to find a knowledgable tax advisor who can help me.

0

Share this post


Link to post
Share on other sites
49 minutes ago, NathanCPFCD said:

I've tracked all my transactions and initially I was just exploring and buying and selling quite often. In November, I sold quite a lot of the cryptocurrency at under €600 profit in fiat. I used some of the remaining cryptocurrency to diversify the portfolio, spreading across 12 coins. Most of the new coins I bought, I purchased Bitcoin or Litecoin and instantly bought the altcoin (with no profit from the BTC or LTC). However, some of the new coins were bought with the coins I had from my original investment in October. If buying the new coin with an increased € value compared to the original purchase of the LTC/BTC, this would take the profit way over €600. If I understand correctly, would this mean I'm liable for tax on the entire profit, calculated in Euros at the time of every trade?

 

Yes, every time you "change" something within the 1 year holding period, you have to go back to the reference currency € and declare that profit.

And with every "change" the 1 year minimum holding period starts anew.

 

49 minutes ago, NathanCPFCD said:

Using the profit that I withdrew in Euros plus additional funds, I bought back in to Bitcoin, Ethereum, Litecoin and others in November. Can I offset any of the profits with this spending in any way?

 

No, you could only offset the profit with a loss, i.e. if you had sold a crypto currency for less than you bought it for.

 

49 minutes ago, NathanCPFCD said:

To add another complication - I purchased cryptocurrency on behalf of my brother who lives in the UK (he simply asked me to because I already had verified accounts with the exchanges). He plans to hold for 1yr+, as do I with my current portfolio, so I assume any profits from this would be tax-free, although a bit of research tells me the rules are different in the UK, where the profits would be taxed as capital gains? When and how is it best to transfer the funds to him? If I move the cryptocurrency into a hardware wallet and give it to him, declaring a tax gift (as long as the portfolio at the time is under €20000), there wouldn't be any tax liabilities attached to this right?

 

Yes.

And if you gift him the money, neither would he owe UK income tax - after all, it's just a gift.

 

49 minutes ago, NathanCPFCD said:

Final complication - I also got a cash gift from my parents in 2017 that is way under the tax-free allowance, but I haven't declared it - is declaration necessary if it is under the allowance? I declared the movement of funds into the country to the Bundesbank, as I believe is necessary for transfers over €10k.

 

Well, officially yes, since if one of your parents die within 10 years, the amount they already gifted you now would count towards the tax-free amount for inheritance tax of 400,000€ (per parent).

 

Example: Your mum gave you 15,000€ on 1.10.2017.

If she dies by 30.9.2027, your tax-free amount for inheritance tax is only 385,000€ (= 400,000€ - 15,000€)

If she dies after 1.10.2027,  your tax-free amount for inheritance tax is 400,000€

 

So ideally the Finanzamt would like to keep an account of all your gifts.

 

*************************************

 

Inofficially: nobody cares as long as you correctly declare that old gift in the inheritance tax return should a parent of yours die within the next 10 years.

2

Share this post


Link to post
Share on other sites

I am enjoying reading such great info here. I want to make sure I understand correctly. If someone is a day trader from home (no other job) in Germany and decides to hold one of his cryptocurrencies for over a year without trading than there is no tax due?

My situation is I bought an ico a few months ago and now it has done a 30x currently. I have day trades that will be taxed but this one I want to hold for a year since the number is very big. I am actually quite nervous because the number in a year has a potential of 100x which would be an incredible amount of money. I have a hard time believing it will all be tax free and want to know if this is a solid rule or are there any loopholes? Will it matter if it is 1 euro or 10 million euro? thank you

0

Share this post


Link to post
Share on other sites
19 minutes ago, cryptofun said:

I have a hard time believing it will all be tax free

 

Believe it.

 

Or just read up on it yourself, it's §23 Absatz 1 Satz 1 Nr. 2 EStG, the profit is only taxable if you keep them for less than 1 year:

(1) 1Private Veräußerungsgeschäfte (§ 22 Nummer 2) sind

1.
Veräußerungsgeschäfte bei Grundstücken und Rechten, die den Vorschriften des bürgerlichen Rechts über Grundstücke unterliegen (z. B. Erbbaurecht, Mineralgewinnungsrecht), bei denen der Zeitraum zwischen Anschaffung und Veräußerung nicht mehr als zehn Jahre beträgt. 2Gebäude und Außenanlagen sind einzubeziehen, soweit sie innerhalb dieses Zeitraums errichtet, ausgebaut oder erweitert werden; dies gilt entsprechend für Gebäudeteile, die selbständige unbewegliche Wirtschaftsgüter sind, sowie für Eigentumswohnungen und im Teileigentum stehende Räume. 3Ausgenommen sind Wirtschaftsgüter, die im Zeitraum zwischen Anschaffung oder Fertigstellung und Veräußerung ausschließlich zu eigenen Wohnzwecken oder im Jahr der Veräußerung und in den beiden vorangegangenen Jahren zu eigenen Wohnzwecken genutzt wurden;
2.
Veräußerungsgeschäfte bei anderen Wirtschaftsgütern, bei denen der Zeitraum zwischen Anschaffung und Veräußerung nicht mehr als ein Jahr beträgt. 2Ausgenommen sind Veräußerungen von Gegenständen des täglichen Gebrauchs. 3Bei Anschaffung und Veräußerung mehrerer gleichartiger Fremdwährungsbeträge ist zu unterstellen, dass die zuerst angeschafften Beträge zuerst veräußert wurden. 4Bei Wirtschaftsgütern im Sinne von Satz 1, aus deren Nutzung als Einkunftsquelle zumindest in einem Kalenderjahr Einkünfte erzielt werden, erhöht sich der Zeitraum auf zehn Jahre;
0

Share this post


Link to post
Share on other sites
24 minutes ago, cryptofun said:

Will it matter if it is 1 euro or 10 million euro?

 

Nope.

 

Read what PandaMunich posted above. I  love the german tax system. :D

0

Share this post


Link to post
Share on other sites

wow very cool!! Just to be sure. This applies as well for pro traders and investors? My partner who is german had reason to believe that the tax free after a year could be denied if they believe this is your job? I will have her translate the above tonight for me. Thank you so much

0

Share this post


Link to post
Share on other sites
12 minutes ago, cryptofun said:

This applies as well for pro traders and investors?

 

No.

If you read the heading of §23 EStG, it clearly says "Private Veräußerungsgeschäfte" = "private sales".

So only if you only invest your own money (= private Vermögensverwaltung), do §23 EStG and its 1-year-exemption apply.

 

If you do the buying and selling as a business, i.e. using other people's money, all profit is taxable, there is no 1-year-exemption.

1

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!


Register a new account

Sign in

Already have an account? Sign in here.


Sign In Now