Last Updated: 24 November 2023
Since cryptocurrencies are not legal tender in this country, they only become taxable under certain conditions. They are not compared with profits from investments, shares or other financial means.
According to the view of the tax office, profits from trading with Bitcoins are comparable to profits from art or valuables. It may well be that profits from this sale can be tax-free under certain circumstances.
When are Bitcoins tax-free?
Two values are significant:
- The amount of profit made from the sale of Bitcoins
- the time frame in which Bitcoins were owned
To be taken into account here:
Anyone who has owned their Bitcoins for more than one year can expect to be exempt from tax. The amount of profit does not play a role. Investors also do not have to declare the profit in their tax return.
If the investor sells his Bitcoins again within twelve months after the purchase, gains of up to 600 euros are tax-free. However, if the profit is only one euro above the 600 euros, the entire profit must be taxed. So too with Bitcoin Revolution.
Important to know:
This 600-euro limit includes not only bitcoins, but also private sales transactions over the course of a year. For example, if you sell a painting within a year and make a profit of 700 euros from it, you have exceeded the exemption limit.
The amount of profit from the Bitcoin sales is irrelevant.
What does the holding period of Bitcoins say?
Now, if bitcoins are sold or bought more often, it is often impossible to determine the exact holding period. It is almost impossible to give the individual Bitcoin a buy or sell date.
In order to nevertheless include the income from the sales in the tax return, the FIFO method (-First-in-First) can be used. This means that the bitcoins that were bought first must be sold first.
Calculating the yield accurately
The yield amount can be calculated quite simply:
Selling price – Acquisition costs – Selling advertising costs – Yield.
As sales promotion costs can be, for example, a dealer’s commission. Therefore, the yield can be a profit, but also a loss.
Reducing the tax burden through losses
If the investor has suffered a loss when trading Bitcoin, the tax burden can be mitigated. Losses can be offset against gains that come from private disposal items in the existing year.
If no gains were made, the loss can be deferred to subsequent years and offset against any gains that may have arisen, without limitation.
How are Bitcoins entered in the tax return?
It is indicated in the “Income” section how many Bitcoins were sold in the existing year. Then it must be stated how long they have been in the possession of the investor. The price at which they were sold must also be indicated.
How much tax is there?
Profits are taxed at the personal income tax rate, the solidarity surcharge and possibly church tax.