According to Section 23 of the Income Tax Act (EStG), there is a private sale of cryptocurrencies if there is less than a year between the purchase and sale of the cryptocurrencies. Furthermore, the exemption limit (no exemption) of 600 euros must be exceeded. If there is more than a year between the acquisition and the sale, the profit from the sale remains tax-free in full. In the opinion of the tax authorities, in the context of the assessment according to § 23 EStG, each sale of a crypto currency must be considered individually according to the so-called first-in-first-out (FiFo) method.
Here is a small example:
Alice buys 0.5 Bitcoin for 4000 euros on January 2nd, 2017 and another 0.6 Bitcoin for 4500 euros on April 5th, 2017. On January 10th, 2018 she sells 0.5 Bitcoin for 6000 euros. On March 30, 2018, she sells 0.6 Bitcoin for 7,000 euros.
Solution:
The sale of the 0.5 Bitcoin is tax-free. There is more than a year between purchase (January 2nd, 2017) and sale (January 10th, 2018). The capital gain of 2000 euros is completely tax-free. The 0.5 Bitcoin were the first to be purchased and are therefore the first to be sold again (using the first-in-first-out method).
The sale of the 0.6 Bitcoin, on the other hand, is taxable according to Section 23 EStG. There is less than a year between purchase (04/05/2017) and sale (03/30/2018). In addition, the exemption limit of 600 euros has been exceeded (7000 euros – 4500 euros = 2500 profit). The capital gain of 2500 euros is therefore fully taxable.
from Rechtsanwalt Martin Figatowski, LL.M. (Tax)
I am happy to answer any questions you may have about the taxation of crypto currencies.
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