The virtual currencies were classified as a so-called unit of account by the Federal Financial Supervisory Authority (BaFin). Therefore, they are subject to the same tax regulations as other currencies and are classified as private money. In some cases, they also become taxable. The decisive factor here is the time of the bitcoin purchase and the sale of the cryptocurrency.
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Hold cryptocurrency for over a year
Anyone who has had Bitcoin, Ethereum and Co. in their digital wallet for more than a year can breathe a sigh of relief. In this case, no tax has to be paid due to the minimum holding period of 12 months. However, if you earn interest with the cryptocurrency business, the so-called final withholding tax must be paid for this. This is the case, for example, if you lend Bitcoins to borrowers in the form of peer-to-peer credit or if you “lend” your crypto dollars to other traders on relevant exchanges so that they can trade the digital tokens with leverage. In this case, the so-called speculation period, i.e. the minimum holding period, increases to a full ten years.
Bitcoins last less than a year
If you fall short of the holding period of one year and exchange your digital coins for other currencies or sell them at a profit, this must be taxed at the personal tax rate. To calculate your personal tax rate, multiply the income tax paid by 100 and divide by your taxable income.
If the private sales transactions generated through crypto trading are below the exemption limit of 600 euros per year, they are again tax-free.
How do you calculate the capital gain?
The profits, which are made by trading with digital currencies such as bitcoins, are calculated from the difference between the sales price achieved and the purchase price of the respective digital coin. Since the virtual currencies are subject to significant fluctuations, experts recommend using the so-called FIFO method for the calculation. “First in, first out” means here that the first digital token purchased is offset against the first digital token sold.
Wallet and losses tax deductible?
If you want to trade Bitcoins or other digital currencies, you need a crypto account. Any fees incurred are tax deductible. Likewise, any losses from, for example, bitcoin trading may be offset. You can do this either with profits from the previous year or with future profits, the so-called loss carryforward. Here, the sum of the losses can be offset against later positive income.
What taxes are involved in mining?
Anyone who earns their digital coins through mining and generates profits by digging for crypto coins has income from a commercial enterprise. These must be taxed accordingly. Depending on the contract and provider, taxes also apply to cloud mining, i.e. renting computing capacity and mining digital coins remotely.
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