Tax advice for cryptocurrencies

Cryptocurrencies such as Bitcoin enable decentralized, counterfeit-proof transactions and open up comparatively high potential returns for speculative investors. At the same time, they raise a whole range of legal issues that pose challenges not only to private individuals but also to companies. We offer you our full support to ensure that your tax assessment of cryptocurrencies runs as smoothly as possible. Call us now at our tax consultancy office in Berlin Charlottenburg and let us advise you.

Tax classification of cryptocurrencies

When it comes to the tax treatment of cryptocurrencies, the focus is on distinguishing them from legal tender. Unlike the euro, US dollar and pound, sellers here are under no legal obligation to accept them in exchange for goods and services. The decision to allow transactions is at Seller’s discretion.

Likewise, cryptocurrencies are not classic e-money, since the miners are not considered issuers. This in turn affects the tax treatment of Bitcoin, Ether, Ripple & Co. In income tax law, they are regarded as intangible assets. Furthermore, their tax treatment depends on whether transactions are carried out in the private or business area.

Taxation of cryptocurrencies for private investors

Anyone who trades in cryptocurrencies as a private individual must first and foremost deal with the taxation of the sale. On the one hand, this applies to sales on trading platforms, but on the other hand it also applies to paying for goods. In both cases, these are private sales transactions (§ 23 Para. 1 No. 2 EstG), provided that the tokens were purchased beforehand. The aspect of acquisition is of particular importance – especially if the cryptocurrencies were previously held for more than a year.

The classification as a speculative object regulates that profits from sales are completely tax-free after one year. However, since in many cases it is not actually a matter of purchases and there may even be commercial trade, it must always be checked in individual cases whether Section 23 (1) No. 2 EstG applies. We would be happy to support you with this.

Our services include:

  • Advice on choosing the FiFo or LiFo method
  • Advice on all unclear issues
  • Filing the income tax return
  • Communication with the tax and revenue office

If you need cryptocurrency and tax support, call us now. We would be happy to help you with any problems.

Taxation of cryptocurrencies at companies

Unlike private investors, companies and commercially active persons cannot carry out private sales transactions. Instead, transactions with bitcoins held as business assets lead to income from commercial operations (§ 15 EstG). In this case, there is also no minimum holding period, the expiration of which could lead to a tax exemption for a realized gain. Depending on the legal form of the company, the income generated is then subject to income tax, corporation tax and trade tax.

In addition to the income tax consequences of crypto transactions, the sales tax aspect is of central importance. In 2015, the European Court of Justice made its judgment in the Hedqvist case, according to which the commercial exchange of Bitcoin into conventional currencies is not subject to VAT. A decision by the German Federal Fiscal Court or an order from the tax authorities on the subject has not yet been issued. In this respect, there is still a certain degree of uncertainty regarding the tax treatment of Bitcoin/cryptocurrencies in the corporate context.

In principle, it is advisable to examine the company’s activities closely and to gain clarity about the aspect of tax liability. We would be happy to support you and advise you on all open questions.

Call now – Tax consultancy Berlin

Are you looking for competent tax advice in Berlin? Then call now. We at Goldstein Consulting are always at your disposal as experienced specialists.

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