Last Updated: 6 December 2023
The crypto market is on the rise. However, one should be careful, because one can quickly fall into the tax trap. All transactions in cryptocurrency trading are subject to tax if profits have been made and the acquisition has only existed for one year.
It is not relevant whether the currencies sold are received in euros, exchanged or used to buy another service or goods. But what about the tax on Bitcoin Future?
How to avoid the tax trap on profits from Bitcoins?
Bitcoins are not legal tender in this country. The Federal Ministry of Finance classifies Bitcoins as private money. It is also important to note that Bitcoins are not an investment, such as shares. These are subject to a final withholding tax of 25 % should they be sold at a profit.
Bitcoin trading is a private sale transaction, whereby any profits must be taxed according to § 23 EStG.
The value of the purchase and sale must be precisely documented with the euro value and the date when the transaction took place. If the profit amounts to 600 euros within one year, this amount must be recorded in the tax return.
In summary, this means that if bitcoins are sold after a holding period of at least one year, any resulting gains are tax-free.
How can one profit from Bitcoin Future?
Step 1: Click on the link to go to the official website of Bitcoin Future.
Step 2: Fill out the form to get a FREE licence to trade.
Step 3: Follow the instructions on the platform to profit from bitcoin fast!
Bitcoins as an investment
However,taxes will be due if the cryptocurrency is held for only a few months and then sold for a profit.
An example: If you buy bitcoins in mid-August 2016 for 520 euros and sell them again at the beginning of May 2017 for 1320 euros, you will make a price gain of 800 euros. This must be fully taxed in the income tax return, Annex SO.
Another example: If you sell your Bitcoins in a time frame of half a year with a profit of 520 euros, you are below the exemption limit of 600 euros and thus remain tax-free. The investor can offset any losses against profits.
In doing so, the losses can be carried forward to subsequent years. This also reduces the tax rate.
What is the tax rate?
The tax rate depends on the personal income situation in the year. There is no flat rate here. The investor must expect a personal income tax rate of up to 45%. To determine the amount, all income is added together.
Difference between tax-free amount and exemption limit
The exemption limit for taxpayers is often confused with the tax-free amount. Despite the fact that the words are used as synonyms, they are different in German tax law.
Freigrenze: capital gains
Quite different from the tax-free allowance, the exemption limit, which may exist for private sales transactions, covers the amount that does not have to be taxed. However, only if 600 euros are not exceeded.
Selling Bitcoins tax-free
In addition to the exemption limit, there are other options for avoiding bitcoin tax. With a holding period of one year, there is no tax on bitcoin gains. The reason is that after one year, they are no longer private sales transactions.