Where does Bitcoin get its profit from
Anyone who has Bitcoins could face a surprise from the tax office
Bitcoin owners are happy when prices rise again. If things are going particularly well for you, someone else could soon be happy: namely the tax office. Too often, owners of Bitcoin or other crypto currencies are not even aware that the digital currency can - and in some cases must - end up on their own tax return.
Lending bitcoins can get expensive
"If you buy and sell Bitcoin privately, the tax becomes relevant when you make a profit with it," says Thomas Schmid from the Hamburg tax consultancy Mazars in an interview with Business Insider. “The tax liability exists if there is less than a year between buying and selling the bitcoins.” As long as you own the currencies for longer, no taxes have to be paid on the profits. Schmid's colleague Martin Haack, however, points out an important exception: “What many do not know: Anyone who has once lent their Bitcoins for interest must pay taxes - if they sell these coins later - even if they have held them for more than a year “Warns Haack. A speculation period of ten years applies here.
"Many of them are not even aware of these regulations." Active Bitcoin fans should have this exception on their radar. After all, Bitcoins are being lent out against interest on platforms more and more often, according to Haack.
Only from a profit of 601 euros per year everything has to be taxed
Whether taxes have to be paid also depends on how much profit the Bitcoins bring in each year. “So far, the prevailing opinion has been that Bitcoin is an economic asset and not a currency or electronic money. Anyone who makes private profits with it and exceeds the exemption limit of 600 euros must pay tax on these profits, ”explains tax expert Schmid. From 601 euros, the tax office applies the personal tax rate for the entire profit. What you have earned with Bitcoin and Co. then belongs in the tax return. However, the exemption limit of 600 euros applies to all “private sales transactions”. So caution is advised here.
Trading abroad does not protect against tax payments
By the way, it doesn't matter where in the world the owner turned his bitcoins into cash. "Anyone who is taxable in Germany must also pay tax on all profits here," emphasizes Schmid.
The next question quickly arises: What about the deadline if, for example, Bitcoins are bought and sold over and over again over the year? “So far, the so-called 'first in, first out' principle has mostly been applied here. The bitcoins that came into the wallet first also go out first, ”says Thomas Schmid.
"So far there are no official guidelines"
So far, however, there are no fixed guidelines in Germany when it comes to taxing Bitcoin profits. The Federal Ministry of Finance has yet to set it up - it has been a long time coming for us. “So far there are no official guidelines. The currencies have not been an issue in the case law either, ”says Schmid.
Martin Haack therefore gives owners of Bitcoin and other digital currencies a piece of advice: "As an investor, it is now important to document purchase and sales data in such a way that they can be presented to the tax office later if necessary." Because there are no special rules yet there is still no tax exemption. Since Bitcoin is also increasingly being accepted by merchants, the question of how crypto currencies will be treated in companies' accounting will also arise in the future. Then it becomes even more complex than with private individuals.
Tax advisors anticipate an increasing need for advice
Some Bitcoin owners have already sought advice from Mazars' tax advisors: "We assume that we will be confronted more and more with the subject of Bitcoin and taxes from now on," says Thomas Schmid. "Since the end of 2017, the topic has also been increasingly found in specialist literature."
In the next few months, many will have to file their 2017 tax return - the year the Bitcoin hype reached new heights. From now on, Bitcoin owners should take a closer look before the tax office surprisingly does it later.
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