Cryptographic currencies and bitcoins are not legal tender like the euro. Thus, there is no legal obligation to accept bitcoins. What is important for the private investor is how a sale is taxed.
So what needs to be taken into account?
Bitcoin trading – a private disposal transaction
Trading in virtual currencies such as Bitcoin Revival, belongs to private disposal transactions for tax purposes. These are also called speculative transactions.
If, for example, Bitcoins are exchanged for the Euro currency via a platform and a capital gain is thereby achieved, this may be taxable under certain circumstances.
There are two scenarios for this:
The holding period of one year is tax-free
Those who bought Bitcoins and Co. several years ago can count on tax exemption on capital gains. There is one catch, however, and that is crypto-interest. A final withholding tax is due for these and the speculation period increases to ten years.
The holding period is taxable for less than one year
Anyone who holds bitcoins for only a short time and then sells them at a profit must pay tax on this at their personal tax rate. However, there is an exemption limit. Private sales transactions remain tax-free up to the exemption limit of 600 euros per year.
It is important that the exemption limit is not mentioned in the same breath as the tax-free amount. If there is only one euro above the exemption limit, the entire capital gain must be taxed.
One year is the private disposal limit for the exemption limit, This means that if a painting is sold in addition to the capital gains from trading in Bitcoins, these gains must be counted together. Thus, the gain remains tax-free if it is below 600 euros.
Accounting for losses
Even if losses have arisen from Bitcoin trading, these can be offset against profits from the previous year with expected profits. Thus, losses from private sales transactions can only be offset against profits, but not against profits from share transactions.
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Recorrectly enter in the tax return
The capital gain from bitcoin trading, for example, is entered in the Schedule SO (Other income). This should also be done if the profit is less than 600 euros (exemption limit). The reason is that the tax office will first determine the tax exemption.
The amount of tax depends on the investor’s personal income situation.
Summary – then bitcoins are tax-free
Two values are relevant:
- The profit made from the sale of Bitcoins.
- The amount of time Bitcoins have been owned.
If you have held your Bitcoins for one year, then the sale is not taxable, The amount of the gain is not relevant. If the Bitcoins are sold again after twelve months, the exemption limit applies to profits of 600 euros. From this 600 euros, the profit is taxable.
In order to nevertheless include the income from the sale of the Bitcoins in the tax return, the FIFO method (first-in-first-out) can be used. As a result, the Bitcoins that were bought first must be sold first.