6 tips for the crypto tax at the end of the year

It’s that time again: a new year is coming to an end. But not only Santa Claus brings surprises in the contemplative time. As if the end of the year wasn’t packed enough, there’s also the switch from one tax year to the next.

But fear not, with the right knowledge and tools, your crypto tax return will be a breeze. There are a few ways you can save on taxes and time before the end of the year and have a successful tax year.

Therefore, despite your phobia of bureaucracy, you should take enough time to plan and think about your tax situation. To help you with that, CoinTracking presents the 6 year-end tax tips to make your Christmas season (or your end of the year, don’t think twice) a little more contemplative.

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1. Find out more about the relevant tax rates

Germany has a progressive income tax system with tax rates between 14% and 45%. This means that the more you earn, the more tax you have to pay on your winnings. Income below the basic allowance of almost €10,000 per year is not taxed. The same applies to Austria. Here, however, the tax rate ranges from 20% to 55%.

In addition to income tax, capital gains tax is also relevant. Gains from certain assets such as crypto futures or stocks are subject to a flat tax of 25% for Germany.

2. Claim tax deductions (and 1-year storage period)

In Germany and Austria, private individuals can take advantage of tax deductions for their crypto taxes. This is done by subtracting the acquisition cost from the sale price of the cryptocurrencies.

More precisely, it means: You can claim all costs associated with the purchase or sale of cryptocurrencies. This reduces your profit and your tax burden at the same time.

If cryptocurrencies are held in Germany for more than one year (after acquisition), no tax is payable on the profit. This is exactly why it pays to sell your coins only after a year.

3. Track your crypto transactions

As with any proper bookkeeping, it is important in the crypto world to keep an accurate record of all crypto transactions. This includes the date, amount, transaction type and the relevant exchange rate.

Detailed records help keep track and ensure no important transactions are overlooked. On the other hand, they take tons of time and drive users worldwide to despair.

Fortunately, there is CoinTracking. The professional app gives you a tool to track all crypto transactions in one place. It provides real-time data on prices, trades and balances so you can make informed decisions about managing your portfolio.

Additionally, you can use the CoinTracking app to complete your tax return with a single click. So you don’t have to worry about the tax treatment of your transactions and save yourself a lot of time and nerves.

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4. Realize your crypto price losses

In the world of cryptocurrency, not only can the gains be huge, but the losses can also be huge. However, you can use these losses to reduce your tax burden. But beware: If you keep your cryptocurrencies in Germany for more than a year, there is no tax on the profits, but no losses can be claimed either.

If you generate crypto losses in one year, these can be offset against the profit from the following year and the tax burden is reduced in this year. They can even be carried over to the previous year and lead to a refund of the taxes already paid from the previous year.

5. How to properly tax crypto assets

Crypto assets are treated as private assets in Germany and are subject to either income tax or capital gains tax.

This means that income and capital gains tax applies when crypto assets are bought, sold, exchanged or transferred. Income tax applies to profits from the sale of crypto-assets if they are purchased “on spot”, that is, directly on the blockchain.

While capital gains tax is levied on profits from the transfer of financial products, i.e. margin or futures. To ensure compliance with all applicable tax regulations, crypto activities should always be reported to the appropriate tax authorities.

Note: Unlike in Germany, cryptocurrencies are capital investments in Austria. Therefore, a flat capital gains tax of 27.5% applies to these.

6. Make sure to include crypto trading in your tax return

With CoinTracking, creating and submitting your crypto tax return is child’s play. It is important to ensure that you enter your crypto profit correctly.

The tax exemption limit for private sales transactions (this includes crypto in Germany) is €600. If you get a profit that exceeds this, the tax must be calculated and submitted on the return.

If it turns out that too little tax has been paid or the income has not been reported correctly, the authorities can impose fines, late payment penalties or interest.

CoinTracking: Market leader in tax software and portfolio tracking

Determining your crypto tax can be a big challenge. If all this is too much for you, CoinTracking’s professional app will do everything automatically for you. CoinTracking has been around since 2012 and has since established itself as the market leader in crypto tax software and portfolio tracking.

Everything is possible here, from tracking your performance and visualizing the portfolio to a complete tax report. CoinTracking supports automatic import from 110+ exchanges, 200+ blockchains and 9 crypto wallets.

With CoinTracking, it only takes a few minutes from registration to (NFT) portfolio tracking or to the complete tax report. The tax reports automatically adapt to the tax laws of your country, making it easy for you to create individual tax reports.

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Full service: CoinTracking’s all-round carefree package

Since it often turns out to be very difficult to value your crypto assets yourself, CoinTracking offers the full service. Experts and qualified tax advisors will advise you and provide you with professional support to write complete and correct tax reports for your crypto or NFT portfolio.

With Full Service, a CoinTracking expert will review your account, correct errors, and ensure that your tax return is correct. Simplify your crypto tax life and book the full service today.

Click here for CoinTracking’s full service

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