Ethereum, Bitcoin, Ether: This is how you can claim cryptocurrencies for tax purposes

Enlarge image

Bitcoin token coin: The purely electronic currency had a bad year

Photo: BENOIT TESSIER / REUTERS

Cryptocurrencies like Bitcoin were conceived as an alternative to state monetary systems.

However, this does not avoid the tax authorities.

Profits made from speculation on the crypto market are taxable in Germany.

According to the Federal Ministry of Finance, they are classified as so-called »other economic goods«.

However, you can sometimes use losses to reduce the other tax burden.

In the "Finanztest" issue 2/2023, Stiftung Warentest has worked out what investors need to consider.

An important distinction: Did the investors actually buy cryptocurrencies such as Bitcoin or Ethereum themselves or did they only invest in so-called Exchange-Traded Products (ETP) or certificates?

These securities are subject to withholding tax in Germany.

That means: There is a savings allowance of 1000 euros per year, for married couples 2000 euros.

Anyone who made more profit pays a flat rate of 25 percent.

This does not require much effort: Local custodian banks compile all tax-relevant information.

Losses from crypto transactions are offset against other profits.

On the other hand, anyone who has invested directly in cryptocurrencies and kept them in their own "wallet" must collect the relevant data themselves and enter it in the tax return.

Anyone who bought bitcoins at a high price in the past year and sold them at a loss in the same year can claim this in their tax return via Annex SO.

However, the losses here can only be offset against profits from other sales transactions.

Even those who only made losses in 2022 can benefit from taxation: the losses can be carried back to the previous year and the year before, thus reducing the tax burden.

It is also possible to carry a loss forward to the following year.

There is bad news for investors who have lost money with the now closed FTX trading platform: According to the experts at Stiftung Warentest, these losses cannot currently be claimed for tax purposes.

Winners have their limits

On the other hand, anyone who has made a profit must observe the exemption limit of 600 euros for private sales transactions: Anyone who has earned more than this amount must pay tax on the entire amount as income.

However, this only applies if you have fallen below the speculation period of one year.

Those who have kept their cryptocurrencies longer do not have to pay any taxes on the profits from “private sales transactions”, but according to Stiftung Warentest they cannot claim the losses for tax purposes either.

"Finanztest" recommends that anyone who has traded in crypto assets beyond the level of a normal private investor should speak to a tax advisor, because the commercial limit could be exceeded here, which can have a significant impact on the tax burden.

tmk