Tax liability when trading with Bitcoin and Co.?
The Internet is not an unregulated, law-free space, despite the perception that has appeared differently in the meantime. This also applies from a tax point of view. For example, lawmakers are now working against tax fraud in online trading. Operators of online marketplaces are now liable for the sales tax of traders who use their platform. A new law obliges platform operators in Germany to collect the data of their dealers in order to transfer them to the tax office if necessary. Similarly, an EU digital tax for large technology companies such as Apple, Google or Amazon will be introduced.
Slightly smaller, but still important, is taxation on the sale of cryptocurrencies. "If you use Bitcoin, Ethereum or Litecoin as an investment opportunity, you may be subject to tax. Even if the currencies are virtual, profits from the sale of cryptocurrencies are subject to real taxes, "says Cologne-based auditor and tax consultant Matthias Klein (Klein + Partner). "So they are not significantly different from other types of investment such as stocks or assets."
The legislator has defined two levels of "divestment". One type of sale is the sale of cryptocurrencies against the euro via a trading platform - usually the taking of profits similar to a securities transaction. According to Matthias Klein, the use of coins as a means of payment already constitutes a divestiture. in other words, if the holder pays for the purchase of goods or services using a digital currency. "In both cases private sales transactions within the meaning of the Income Tax Act exist if the period between the acquisition and the sale of the Internet currency is less than one year," comments Matthias Klein with reference to § 23 (1) no. 2 of the Income Tax Act (EStG), which deals with these speculative transactions. Outside the holding period, these transactions are tax-free.
If a sale transaction is completed within the one-year holding period, an exemption limit of 600 euros will apply annually. However, this exemption applies to all private sales transactions in the year in question, not just to the taxpayer's crypto transactions. The relevant capital gain results from the difference between the realized sale price on the one hand and the acquisition costs and advertising costs of the used international currency on the other hand. Losses achieved can generally be offset, returned and carried forward. However, offsetting may only take place with profits from private sales transactions.
Matthias Klein also points to the question of what is known as mining, ie the mining of digital coins. "Anyone who produces the coins themselves, does not acquire them, so pays no tax on the speculative gains in a sale. But he is subject to income taxation insofar as he receives income from other benefits. And if the taxpayer makes his computing power repeatedly available or even procures his own hardware for it, he trades commercially with all tax and legal implications. "
Matthias Klein warns against dismissing these fiscal duties as banal. "Due to the increasing importance of crypto currencies as a means of payment and investment, the tax authorities will closely monitor such events. So it can quickly come to a deliberate reduction in charges in case of non-performance of tax obligations. That's a criminal offense. "
By the way: For companies, transactions with Internet currencies generally lead to taxable income. Depending on the legal form of the company, the profits are then subject to income tax (partnerships)
or corporation tax (GmbH, AG etc.) as well as additionally the trade tax.
The Cologne tax consultant also points to the updated case law on VAT. This was in principle aligned with the EU ruling, according to which the purchase and sale of bitcoins is free of VAT. Virtual currencies are equated to legal tender, resulting in a VAT exemption. So far, this equality has been denied. "However, this also raises follow-up questions regarding the tax treatment of Bitcoin in relation to further revenues, for example from mining or for trading platforms. Therefore, the question of any VAT liability should be professionally answered, "says Matthias Klein.