How are profits and losses from Bitcoin treated for tax purposes?
Cryptocurrencies such as Bitcoin, Ethereum, or Litecoin are becoming established as a means of payment, although they are often seen as speculative objects. The Federal Ministry of Finance has issued guidelines on the taxation of cryptocurrencies (BMF letter dated 10.5.2022, IV C 1 - S 2256/19/10003 :001).
Key points:
- Capital gains from exchanges within one year are taxable; gains up to 600 Euro remain tax-free.
- The sale of acquired cryptocurrencies is tax-free after one year.
- Repeated trading in cryptocurrencies may constitute a commercial activity.
- Block creation is considered commercial and subject to income tax.
- Income from block creation may be taxable if it exceeds 256 Euro per year.
The Federal Fiscal Court has ruled that capital gains from the sale or exchange of cryptocurrencies such as Bitcoin, Ethereum, and Monero within one year are subject to income tax (BFH ruling of 14.2.2023, IX R 3/22).
A claimant made a profit of 3.4 million Euro in 2017 from trading cryptocurrencies. The BFH confirmed the tax liability of the capital gains. Cryptocurrencies are considered assets subject to private sales transactions under § 23 EStG. The taxation is not constitutionally objectionable.
(2023): How are profits and losses from Bitcoin treated for tax purposes?
How are profits and losses from gold sales treated for tax purposes?
Gold and silver have seen significant value changes in recent years. Many are considering selling their gold coins and bars to "cash in". But how are profits and losses from the sale of gold treated for tax purposes? The sale of coins and bars is considered a private sale transaction for tax purposes, and the 12-month holding period plays an important role (§ 23 para. 1 no. 2 EStG):
- For sales within 12 months of purchase, profits up to 600 Euro per year are tax-free. This is an exemption limit, not an allowance. Profits of 600 Euro or more are fully taxable as "other income" in accordance with § 22 no. 2 EStG at the individual tax rate. However, capital gains tax does not apply. Losses may only be offset against profits from private sales transactions, through loss offset in the same year and through loss deduction in the previous and/or following years.
- For sales after 12 months, profits are completely tax-free and losses are irrelevant for tax purposes.
The exemption limit means: A total profit of 599 Euro is completely tax-free, whereas a profit of 600 Euro or more is taxable from the first Euro. Profits from private sales transactions must be declared in the income tax return in "Anlage SO" on the reverse side. However, you are only obliged to submit this "Anlage SO" if your total profit or the total profit of your spouse from private sales transactions is at least 600 Euro.
The exemption limit of 600 Euro applies per person, provided each person makes the corresponding profits. It is not doubled for married couples. If purchases and sales are made through a joint marital account, the profits are attributed to both spouses equally (in "Anlage SO" in line 47). This way, the exemption limit is taken into account for each spouse.
There are bonds that entitle the holder to delivery of gold or another commodity and are backed by gold or another commodity in physical form. In Germany, this is particularly the XETRA-Gold bond from Deutsche Börse Commodities GmbH. The exciting question is how this bond is treated for tax purposes and whether it is subject to capital gains tax.
In 2015, the Federal Fiscal Court ruled that the profit from the sale or redemption of Xetra-Gold bearer bonds, which grant the holder a right to delivery of gold, is tax-free after the one-year holding period between the purchase and sale of the securities. In effect, the BFH equates the purchase and redemption or sale of the bond with the direct purchase or sale of physical gold (BFH rulings of 12.5.2015, VIII R 4/15, VIII R 35/14, VIII R 19/14).
Recently, the Federal Fiscal Court (in its ruling of 16.06.2020 (VIII R 7/17)) continued its case law, according to which the sale of exchange-traded bearer bonds that entitle the holder to delivery of physical gold and reflect the current gold price does not constitute the taxable sale of a capital claim. According to the BFH, the profit made by the claimant from the sale of "Gold Bullion Securities" bearer bonds did not result in taxable income from capital assets within the meaning of § 20 para. 2 sentence 1 no. 7 EStG, as the bonds are not to be classified as other capital claims within the meaning of § 20 para. 1 no. 7 EStG.
(2023): How are profits and losses from gold sales treated for tax purposes?
