Taxation on crypto currencies - please read before asking

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what if I buy 5000 euro of bitcoins and in some months the 5000 euro is worth 6000 euro. Then I buy some stuff with 1000 euro worth of bitcoins or withdraw some money from a bitcoin ATM and exchange my bitcoins back to euros (5000 euro). At the end I made 1k benefits but exchanged back the same amount that I bought. Do I still have to pay taxes?

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36 minutes ago, AlexBlomkvist said:

1.  Although I went to his office prepared with documents from a lot of Internet pages mentioning proper cryptoconcurrency taxation he kept saying that §23 Absatz 1 Nr. 2 has been removed completely since 2010 and it has been replaced with  §20 Absatz 2 (or something like that). Because of that, he said, even if i hold my crypto for more than one year and sell it after I still have to pay 25% tax.

This does not affect me yet since I should not have any gains from crypto in 2017 but I'd like to avoid paying taxes next year because of his stubbornness. This being said, is it possible for you to let me know what is the exact article of law that covers this or what should I tell him to look for? He is a tax adviser from vlh.de.

 

He's not a Steuerberater, just an employee of a Lohnsteuerhilfeverein, who has probably only done an apprenticeship.

Go to somebody else, if he's as stubborn as that, i.e. not willing to look up §23 Absatz 1 Nr. 2 EStG even when you tell him about it, he's not the right person for doing an unusual tax return like yours.

Einkommensteuergesetz (EStG)
§ 23 Private Veräußerungsgeschäfte

(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;

 

36 minutes ago, AlexBlomkvist said:

2. In 2017 I exchanged some crypto but only in the first months of the year and I did not actually realize any gains since the transactions were done in a short period of time so there were not drastic price changes. In April I "stored" everything on a Ledger Nano S and did not touch it anymore. Then in December I bought something again and exchange it a few times using a different wallet so the April coins and the December coins have not been mixed so far. At the end of December I send everything to the "April" address so now everything is mixed. 

If I had, let's say, 1 ETH in the April wallet that I never touched ever since it was put there and then, in December I bought another ETH and exchanged it for another coin that only then I sent to the April wallet, can the TAX office say that I have to pay TAX on the ETH I exchanged in December because its value was 20 times its previous value in April? Or if I can prove that the ETH exchanged in December was not sent from the April address I am fine? Hope this makes sense.

 

Collect proof of everything, to show the path of all your currency.

 

36 minutes ago, AlexBlomkvist said:

3. If I made less than 600 EUR profit in 2017, must I still declare everything in the TAX documents, including all the proof (transactions, screenshots from exchanges, wallets, etc) or can I just leave this out of the TAX declaration and, if they ask for anything I can just submit the proof.

 

In that case you do not submit an Anlage SO at all in your 2017 tax return.

 

36 minutes ago, AlexBlomkvist said:

4. If I make some profit in 2018, do you have any idea if providing a, let's say, Ethereum Blockchain Explorer link to my wallet along with screenshots where it can be seen that coins have been kept there for more than 1 year + the exchange I sold them too (with detailed transaction and bank account) is sufficient evidence? Or maybe they would like to see what happened before that amount got into the ETH wallet, this meaning that I have to supply evidence all the way back to 2017.

 

Sorry, no idea.

It's up to your local Finanzamt how much proof they want and how far back they want that proof.

 

They may suspect you of hiding profits from previous years (remember: any time you exchange them, even into another cryptocurrency, that's a tax event which may mean a profit!) and ask you to prove your cryptocurrency transactions back to the beginning of all time.

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14 minutes ago, tabe said:

what if I buy 5000 euro of bitcoins and in some months the 5000 euro is worth 6000 euro. Then I buy some stuff with 1000 euro worth of bitcoins or withdraw some money from a bitcoin ATM and exchange my bitcoins back to euros (5000 euro). At the end I made 1k benefits but exchanged back the same amount that I bought. Do I still have to pay taxes?

 

Yes :D

 

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2 minutes ago, PandaMunich said:

 

Yes :D

 

Haha, so there is no way around I just stop trying

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What if I make an e-company in Lithuania for example. and trade from this company. Should I pay taxes for Lithuania with Lithuanian law or for Germany with German law?

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11 minutes ago, tabe said:

What if I make an e-company in Lithuania for example. and trade from this company. Should I pay taxes for Lithuania with Lithuanian law or for Germany with German law?

 

You really are looking to find out how Germany punishes tax evaders, don't you?

 

Your Lithuanian company would have to register a Zweigniederlassung in Germany and tax the profit here - and since it would be crypotocurrency owned by a business and not by a a private person, the "private sales" law which exempts profits on cryptocurrency held for more than 1 year would not apply and the profit would always be taxable, i.e. even if you sell the cryptocurrency after more than 1 year.

Please read:

 

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38 minutes ago, PandaMunich said:

 

He's not a Steuerberater, just an employee of a Lohnsteuerhilfeverein, who has probably only done an apprenticeship.

Go to somebody else, if he's as stubborn as that, i.e. not willing to look up §23 Absatz 1 Nr. 2 EStG even when you tell him about it, he's not the right person for doing an unusual tax return like yours.

 

He actually appeared to look for the law but he could not find it, but I remember he kept mentioning a "Tax on speculation" which, he said, was 0% after one year but that article of law is not valid any longer. However, in the link you provided I see that the work "speculation" is not even mentioned so maybe he was trying to put the crypto transactions in another category of taxation when in fact it should be put in the "forein curency" category?

Since this year I have no crypto gains, Ill stick with him. Next year I will probably move to someone else. I have asked for some prices from winheller.com but they are apparently crazy expensive (at least for my standards). I'll see to it next year if the market does not crash completely by then :)

Thanks again, You're awesome!

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24 minutes ago, PandaMunich said:

 

You really are looking to find out how Germany punishes tax evaders, don't you?

 

Your Lithuanian company would have to register a Zweigniederlassung in Germany and tax the profit here - and since it would be crypotocurrency owned by a business and not by a a private person, the "private sales" law which exempts profits on cryptocurrency held for more than 1 year would not apply and the profit would always be taxable, i.e. even if you sell the cryptocurrency after more than 1 year.

Please read:

 

 

 

Thank you PandaMunich for the clarifications. I was just curious about how it works here, I am not planning to do any of this. I know that I should never mess with the German taxes.

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33 minutes ago, AlexBlomkvist said:

I remember he kept mentioning a  "Tax on speculation" which, he said, was 0% after one year but that article of law is not valid any longer.

 

He's talking about the taxation of profits from the sale of shares&bonds&funds (= Wertpapiere), which was also contained in §23 Absatz 1 Nr. 2 EStG until 2008. Back then, if you held a share or bond or fund for more than 1 year, the profit from the sale was tax-free, see here for the 2008 version of §23 EStG:

5a67532e4d0e8_2018-01-2316_21_39-Start.p

 

From 2009, the taxation of profits from the sale of shares&bonds&funds that were bought in 2009 or later changed, i.e. they were moved to §20 and were from then taxed with 25% Abgeltungsteuer, no matter how long you kept them.

 

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

 

Currency (= Fremdwährung), on the other hand, was and still is part of §23 EStG:

§ 23 Private Veräußerungsgeschäfte

(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;

 

33 minutes ago, AlexBlomkvist said:

He actually appeared to look for the law but he could not find it

 

If you want to perform a public service, buy him this book and tell him to open it at §23 EStG...

 

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23 hours ago, PandaMunich said:

If you want to perform a public service, buy him this book and tell him to open it at § 23 Income Tax Act ...

 

 

I'm pretty sure this was the book he was looking into but what I assume is that, although he found § 23 Income Tax Act, he kept mentioning that my "investment' has nothing to do with that Act because...same story, it moved to § 20, so on.

He even told me that my bank will directly handle the 25% worth of taxes so I had to explain that I did not buy the cryptocurrency via my bank. He was trying to apply the taxation of profits from the sale of shares, bonds & funds to the selling of cryptocurrency as well, which is wrong apparently. Cryptocurrency should be treated, at least for now, as foreign currency so 
§ 23 applies for it as well.
 

Thanks a lot, once more, for your precious help!

 

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I feel the need to say that the one time Panda Munich and my Steuerberater had an argument (with me as intermediate), Panda Munich won.

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What happens if I make a profit of 10 BTC doing normal trading on Poloniex, but later I lose those 10 BTC margin trading on the same platform and the same tax year?

 

Do I have to pay taxes for the 10 BTC profit, or can I compensate it with the margin loss?

 

Thanks.

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In Germany, the tax year is the calendar year, i.e. 1. January to 31. December.

 

27 minutes ago, dhayes said:

Do I have to pay taxes for the 10 BTC profit

 

Yes, since trading Bitcoin outright and trading a leveraged bitcoin option (which is what I think margin trading is) are at the moment considered two different income types, between which losses are not transferable.

 

The profit from trading Bitcoin outright is "sonstige Einkünfte", is declared in Anlage SO and is taxed at your personal income tax rate, while the leveraged bitcoin option profit is "Einkünfte aus Kapitalvermögen", is declared in Anlage KAP and is taxed with a flat 25% Abgeltungsteuer (or at your personal income tax rate, should it be lower than 25%):

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Are POS coins required to be held more than 10 years in order to be tax free only if they are used for staking (produce interest) or also when held in a exchange (no interest)?

 

Thanks.

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Only currency that produced interest/dividends/income at least once has to be held 10 years for the profit from its sale to be tax-free, see §23 Absatz 1 Satz 1 Nr. 2 Satz 4 EStG:

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;

 

However, since most POS coins require quite a large minimum investment before they earn you income, I think only very few posters in Toytown will have this problem: https://coinsutra.com/proof-of-stake-cryptocurrencies/

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Mr @PandaMunich. I've made an account here just so I can ask you a few questions since you look like you know things.

I tried to talk to my tax advisor in Dusseldorf, but the guy have no idea about this stuff. I moved to Germany this year and don't want to mess up or do something illegal like tax fraud or anything like that.

 

1. I bought BTC and will not sell for at least a year. When I sell it, do I still need to declare the income even if it's not taxable?

 

2. Bought Ethereum and with the ETH I participated in 2 ICOS (eth price went up by that time, so basically I've lost money since the ICOS were cheaper at the moment I bought the ETH). So no profit until now. Will hold these coins when I'll get them and the ETH at least a year => sell and no taxes. Right?

 

3. Things get complicated. I participate in lots of Airdrops. This means that for sharing a link on twitter or joining a Telegram or Facebook group, I get free tokens/coins. These tokens have no value at the airdrop moment, but when they officially launch and hit exchanges they have some value. If I just hold these and change them to ETH and then hold one more year at least, do I need to declare and pay taxes for this money? If so, what kind of taxes?

 

4. Another tricky one. I have a friend on Twitter who is trading a lot (he's not in Germany). I don't trade myself, but I gave him 2 ETH so he can trade and he said he will give me back more. Let's say I gave him 2 and he gives me 3 or 5. What about these? Do I need to declare them? Do I pay taxes for them? If so, what kind of taxes?

 

Thank you for your time.

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5 minutes ago, shortafella said:

1. I bought BTC and will not sell for at least a year. When I sell it, do I still need to declare the income even if it's not taxable?

 

No.

But keep the proof that you kept them for at least 1 year, in case the Finanzamt should ever ask for it.

 

6 minutes ago, shortafella said:

2. Bought Ethereum and with the ETH I participated in 2 ICOS (eth price went up by that time, so basically I've lost money since the ICOS were cheaper at the moment I bought the ETH). So no profit until now. Will hold these coins when I'll get them and the ETH at least a year => sell and no taxes. Right?

 

No.

Every transaction is a tax event.

 

Transaction 1: you bought a ETH at price t

Transaction 2: you bought b ETH at price u

Transaction 3: you bought c ETH at price v€, these you intend to keep for more than 1 year.

 

Transaction 4: you "sold" a ETH at price w€, and since the ETH price had gone up, you made a taxable profit of (w - t)
Transaction 5: At the same you "bought" in an initial coin offering a quantity d of another_cryptocurrency at price w€.

 

Transaction 6: you "sold" b ETH at price x€, and since the ETH price had gone up, you made a taxable profit of (x - u)
Transaction 7: At the same you "bought" in an initial coin offering a quantity e of another_cryptocurrency at price x€.

 

Transaction 8: sell quantity c ETH at price ??€ --> if held for more than 1 year, no taxable profit

Transaction 9: sell quantity d of another_cryptocurrency at price ??€ --> if held for more than 1 year, no taxable profit

Transaction 10: sell quantity e of another_cryptocurrency at price ??€ --> if held for more than 1 year, no taxable profit

 

17 minutes ago, shortafella said:

3. Things get complicated. I participate in lots of Airdrops. This means that for sharing a link on twitter or joining a Telegram or Facebook group, I get free tokens/coins. These tokens have no value at the airdrop moment, but when they officially launch and hit exchanges they have some value. If I just hold these and change them to ETH and then hold one more year at least, do I need to declare and pay taxes for this money? If so, what kind of taxes?

 

As soon as they have some value, you had self-employment income of that amount, which you have to declare in Anlage G and pay income tax on their value:

If you then hold them for more than 1 year, you will not have to pay income tax on their increase in value during that year, but you still have to tax their initial value!

 

20 minutes ago, shortafella said:

4. Another tricky one. I have a friend on Twitter who is trading a lot (he's not in Germany). I don't trade myself, but I gave him 2 ETH so he can trade and he said he will give me back more. Let's say I gave him 2 and he gives me 3 or 5. What about these? Do I need to declare them? Do I pay taxes for them? If so, what kind of taxes?

 

Those are gifts, and not income tax relevant.

And as long as these gifts do not exceed 20,000€ within 10 years, neither do you have to pay gift tax, see the end of this post:

 

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15 minutes ago, PandaMunich said:

No.

Every transaction is a tax event.

 

Transaction 1: you bought a ETH at price t

Transaction 2: you bought b ETH at price u

Transaction 3: you bought c ETH at price v€, these you intend to keep for more than 1 year.

 

Transaction 4: you "sold" a ETH at price w€, and since the ETH price had gone up, you made a taxable profit of (w - t)
Transaction 5: At the same you "bought" in an initial coin offering a quantity d of another_cryptocurrency at price w€.

 

Transaction 6: you "sold" b ETH at price x€, and since the ETH price had gone up, you made a taxable profit of (x - u)
Transaction 7: At the same you "bought" in an initial coin offering a quantity e of another_cryptocurrency at price x€.

 

Transaction 8: sell quantity c ETH at price ??€ --> if held for more than 1 year, no taxable profit

Transaction 9: sell quantity d of another_cryptocurrency at price ??€ --> if held for more than 1 year, no taxable profit

Transaction 10: sell quantity e of another_cryptocurrency at price ??€ --> if held for more than 1 year, no taxable profit

 

 

Not sure I understood. Here's what happened exactly.

 

December bought 3 ETH. - Transaction 1

Transaction 2: Bought IOS for 0.2 ETH (price is in ETH and not Euros. same price in ETH before and after I bought the token, so how do I calculate profit or loss?)

Transaction 3: Bought SETHER for 0.2 ETH. Same situation. ICO price in ETH regardless the ETH price in Euro. So how did I made profit or loss?

 

Transaction 4: I sell 2.6 ETH after more than a year - no tax

Transaction 5 & 6: Sell IOS and SETHER after more than a year - no tax

Right?

 

Airdrops. Why is that self employment? I don't work for those money just put my data in some google document...plus how can I know the initial value of a token? Usually these are first listed in obscure exchanges that I have no clue about...

 

One more clarification for the last part. I give 2 ETH to a guy to trade. He gives me back 5 in a year, but maybe ETH is valued at 10k euros so he gives me 50k in Euros. How much is the tax if this "gift" is more than 20k?

 

I don't know if you work as a tax advisor in real life, but if you know any tax advisor (I m in Dusseldorf but maybe we can work on email) that knows crypto laws, I would like to contact that person when I sell something so I'm sure no mistake is done. Of course I'm talking about a paid service.

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51 minutes ago, shortafella said:

December bought 3 ETH. - Transaction 1

Transaction 2: Bought IOS for 0.2 ETH (price is in ETH and not Euros. same price in ETH before and after I bought the token, so how do I calculate profit or loss?)

Transaction 3: Bought SETHER for 0.2 ETH. Same situation. ICO price in ETH regardless the ETH price in Euro. So how did I made profit or loss?

 

Sorry, but evidently you haven't read this entire thread attentively.

Please do so now.

 

Even if you exchange one cryptocurrency into another, the Finanzamt pretends that you went via the reference currency €, and you will have a taxable profit since the ETH exchange rate to the € rose between the date you bought the ETH, and the date you "sold" them for € and then used those € to "buy" another cryptocurrency.

 

51 minutes ago, shortafella said:

Transaction 4: I sell 2.6 ETH after more than a year - no tax

Transaction 5 & 6: Sell IOS and SETHER after more than a year - no tax

Right?

 

Yes.

 

51 minutes ago, shortafella said:

Airdrops. Why is that self employment? I don't work for those money just put my data in some google document...plus how can I know the initial value of a token? Usually these are first listed in obscure exchanges that I have no clue about...

 

Because you got that cryptocurrency in return for something you did, this is commonly known as payment for services rendered, which can either be employee income if you do so within an employment contract, and in all other cases that's self-employment income.

 

Concerning what value to use, that is between your Finanzamt and you. 

Either they ask you to use the value the first time it was listed, no matter how obscure the exchange, or they agree that you use the value when it was first listed in a major exchange.

 

51 minutes ago, shortafella said:

One more clarification for the last part. I give 2 ETH to a guy to trade. He gives me back 5 in a year, but maybe ETH is valued at 10k euros so he gives me 50k in Euros. How much is the tax if this "gift" is more than 20k?

 

Enter into this gift tax calculator the amount you got:
Ihr Verhältnis zum Schenkenden? Sie sind sein...: übriger Erbe (z.B. Lebensgefährte, Freunde)

Privatvermögen: 50000

--> click on berechnen

--> Schenkungsteuer = gift tax = 9,000€

 

5a6f4105a593d_2018-01-2916_42_38-Start.p

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Thanks a lot for this thread and big ups to its contributors. 

 

Need an advise. I`ve been recently (end of 2017) gifted (not by a family member or relative) some altcoins worth more than 20k EUR (following initial ICO price) and my plan was to exchange it to some liquid coin during first part of 2018 and transfer to EUR first part of 2019 (in a year) in order to recieve it tax free.

 

I understand that following gift tax rules and my class 3 i would need to pay 30% from coin EUR value minus 20k EUR, but i litterally don`t have the money to do that. This altcoin is only on scam exchanges so far and i don`t know when it is up on proper ones. I am ready pay my taxes when i trade it (so trading difference between altcoin and liquid coin will also be subject to the tax as far as i understood since it is happening within the first year of ownership) and convert it to EUR in 2019, but i guess it is not possible?

Thanks!

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