Acquisition and disposal of cryptocurrencies

May 20, 2021

Currently, cryptocurrencies, such as Bitcoin, Ethereum, Ripple, etc., are experiencing a significant boom. If private individuals trade in such cryptocurrencies, i.e. buy them and then sell them on later, no capital income is generated. Rather, it is currently assumed that this is a private sale transaction. However, this has not yet been conclusively clarified.

Gains or losses are recognized for tax purposes as a tax sale transaction if there is a period of less than one year between acquisition and sale. Outside this period, there is no tax recognition. The exchange into another cryptocurrency or the use for payment on the Internet is also considered a disposal.

The following peculiarities apply to the tax recognition of private disposal transactions:

• If the sum of all private disposal transactions does not exceed the exemption limit of €600 in the respective calendar year, they are tax-free. As soon as this exemption limit is exceeded, all gains from private sales transactions are taxable.
• Losses incurred on the acquisition and disposal of cryptocurrencies may only be offset against gains from other private disposal transactions in the same calendar year. To the extent that offsetting is not possible, the losses may be offset against gains from private disposal transactions in the immediately preceding calendar year (carryback) or in subsequent years (carryforward), but not against other income.