From a tax point of view, Bitcoin and Altcoins are not a relevant currency when it comes to income from capital assets. Instead of paying withholding tax on the profits, it is a private sale transaction. However, if there are taxable gains on the sale, then they are subject to the personal tax rate. The tax office has bitcoin taxation more and more on display. With our tips, we show how cryptocurrencies affect taxes and what cryptocurrencies and investors need to know.
1. When to pay income tax
Unlike many other countries, cryptocurrencies in Germany are seen as a private asset. This is in contrast to, for example, real estate – which has a direct impact on taxes. In certain circumstances, cryptocurrencies are subject to individual income tax, but not capital gains tax.
Anyone selling private assets such as cryptocurrencies must comply with the relevant tax rules. For example, the period during which the asset was held is important. If you own the cryptocurrency for less than a year, income tax must be paid on all gains on a sale. The sale includes the classic exchange of cryptocurrency for euro or another cryptocurrency and exchange of cryptocurrency for another or services and goods. Short-term profits can be deducted tax-free. Here, however, a maximum profit of 600 euros per. calendar year.
Hence our tip: If possible, cryptocurrencies should be stored for more than a year. Then the private assets can be sold tax-free, which is why it is definitely worth saving. In addition, there are some cryptocurrencies that count as revenue. These include wagering bonuses or mining. Income tax must also be paid here.
2. No taxes on gambling winnings in cryptocurrency
Whether you love them or hate them: Digital currencies have become indispensable. They have been a part of our lives for a long time, and their growing popularity is a clear sign that they have come to stay, despite the continued skepticism of many people. In fact, cryptocurrencies have become so popular that even many popular and new non-deposit casinos are already using this payment method. Some casinos even only offer cryptocurrencies like Bitcoin or Ethereum.
However, the use of cryptocurrencies does not automatically exempt from tax. Therefore, it is important to clarify whether the use of the cashless transaction method can end up being costly due to high taxes to be paid. Gaming winnings are generally tax-free. Only interest can be taxed from the second year. You also need to consider what to do with the profits. If you continue to speculate, other rules apply than if the winnings are simply transferred directly after play.
3. FIFO method: storage period for cryptocurrencies
If you buy or sell Bitcoin more often, it is difficult to determine the exact holding period. As a starting point, this must be an individual task, just as continued purchase prices must be calculated. If this cannot be determined, an average value can be used. This in turn involves a great deal of effort because it is difficult to track every date and every transaction.
The FIFO method is recommended so that Bitcoin can still be taxed well and income is taken into account in the tax return. FIFO stands for “First In First Out” and is accepted by many tax offices because it simplifies taxation. The cryptocurrencies you bought first are sold first.
4. How to declare cryptocurrencies for tax purposes
Anyone working with a tax tool should make sure that cryptocurrencies are included and supported from the start. Because this is actually not the case with all common providers. But it works quite simply with, for example, Taxfix, where revenue from Bitcoin sales can be easily specified.
If you are navigating to the income area, you must state that cryptocurrencies were purchased in the respective tax year. The follow-up questions then help to determine the ownership period and which prices applied when buying and selling. Many tax programs work this way, making taxation very easy. In addition, it is better to inform than to have problems in the end. As we have shown here, there are not always taxes on cryptocurrencies. However, there are some exceptions that need to be made for tax purposes.
5. If cryptocurrencies are stolen or lost
Lost or even stolen cryptocurrencies may be claimed as damage from BZSt. To do that, you need evidence. This includes the address of the e-wallet to which the key belongs. You also need information about when the key was purchased and when it was gone. A hardware credentials and the transactions of an exchange associated with the identity can also be beneficial.
It can be stated that cybercrime is generally on the rise. More and more often, Bitcoin and Co. end up. on the wrong accounts. Criminals often use the well-known phishing method. Those affected will receive security notices via email requesting personal information. Messages should therefore always be checked. You also need to be careful with links. An antivirus program can also provide good protection against phishing.