What are crypto loans and how do they work?

A crypto loan does not affect taxable income. Therefore, the repayment contributions cannot be claimed for tax purposes in the event of repayment.

The crypto loans do not represent income and are therefore not an expense. The concept of repayment means that the borrower only pays back the money that he has already received. The situation is different with the interest that must be paid additionally. These may be deductible under certain conditions. The prerequisite for this is that the loan has been taken out for a specific purpose, for example to modernize a tenancy or to finance another home that is used for business purposes.

It is important to note that interest can only be claimed for tax purposes if the loan generates taxable income. Loans that are taken out exclusively for private purposes, e.g. for holidays or weddings, are not deductible.

The situation is different when you borrow cryptocurrencies. Lending of cryptocurrencies on platforms may be subject to either income tax or capital gains tax. Each country has different rules.

Germany

The taxation of interest income from cryptoloans has not yet been finally settled in Germany. There are two options here: On the one hand, the interest counts as capital income according to&rszlig; § 20 pcs. 1 no. 7 EStG and on the other hand the interest is considered income from other benefits.

If the first case is true and they are considered interest on with-profit loans, the tax is 26.375 percent. In the second case, if the interest is paid as other benefits according to&rszlig; § 22 no. 3 EStG is considered, then an exemption limit of 256 euros applies and the sale of this cryptocurrency (obtained through lending) would not be taxed.

Austria

As a rule, the income from lending is not a commercial activity, but income from other services according to § 29 EStG, which is taxed at a progressive tax rate of up to 55 per cent. If the rewards are kept for more than one year, the disposal of the rewards from private property is tax-free for tax purposes.

However, the Austrian Ministry of Finance is of the opinion that, especially in the case of lending (i.e. the transfer of crypto-assets to a third party and thus a “crypto-loan”), a so-called “interest-bearing investment” with income from There could exist capital assets. According to this view, the rewards received (interest) and capital gains are subject to a special income tax of 27.5 percent, regardless of the speculation period.

Switzerland

Income from movable property is generally taxable in Switzerland. This means that, in principle, decentralized property income must also be taxed. For a long time, the federal government and the cantons have not commented on the tax treatment of income from betting, lending and liquidity extraction. In its December 2021 working document, the FTA publicly stated for the first time that decentralized capital gains would be considered credit interest and would be taxed accordingly as taxable income.

Since tax authorities have so far treated crypto lending income differently, crypto investors should not disclose rental income on their tax returns without a tax advisor.

 

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