What tax regulations apply to investments in cryptocurrencies?
May 1, 2024 | 40,00 EUR | answered by Christiane Rapp
Dear tax advisor,
my name is Felix Siebert and I have been dealing with the topic of capital investments in cryptocurrencies for some time now. In recent months, I have increasingly invested in different cryptocurrencies and would now like to know what tax regulations apply to this.
So far, I have not submitted a tax return for my capital investments in cryptocurrencies and I am unsure about how to correctly declare the profits and losses from my investments. I am worried that I may be violating applicable tax laws and therefore want to make sure that I do everything correctly.
Could you please explain to me how I must declare the profits and losses from capital investments in cryptocurrencies in my tax return? Are there specific forms or regulations that I need to consider? How are cryptocurrencies treated for tax purposes and are there differences between different cryptocurrencies?
I would be very grateful if you could help me with this question, as I want to make sure that I pay my taxes correctly and on time. Thank you in advance for your support.
Sincerely,
Felix Siebert
Dear Mr. Siebert,
Thank you for your inquiry regarding the tax regulations for capital investments in cryptocurrencies. It is good that you are thinking early about how to correctly declare your profits and losses from your investments in order to avoid possible violations of applicable tax laws.
In general, the same tax regulations apply to capital investments in cryptocurrencies as to other capital investments. This means that profits from trading cryptocurrencies are generally taxable and must be declared in the tax return. It is important to consider both the realized profits and the realized losses from your cryptocurrency investments.
To correctly declare your profits and losses from capital investments in cryptocurrencies in your tax return, you should first document all relevant transactions and trades accurately. This includes the timing of the purchase and sale of cryptocurrencies, the respective exchange rate at the time of the transaction, and the amount of profits or losses.
In your tax return, you must then declare the profits from trading cryptocurrencies within the investment SO (income from capital assets). Here you can offset the profits and losses from your cryptocurrency investments and only declare the net profit or net loss. It is important that you have all relevant information and receipts for your cryptocurrency transactions available in case the tax office requests them as part of a tax audit.
As for the tax treatment of cryptocurrencies, this varies depending on the type of cryptocurrency. In general, cryptocurrencies such as Bitcoin, Ethereum, or Litecoin are considered digital assets and are treated tax-wise like other capital investments. However, it is possible that tax regulations for certain cryptocurrencies may be adjusted in the future, so it is advisable to regularly stay informed about current developments and changes in laws.
I hope this information helps you and that you are able to correctly declare your profits and losses from capital investments in cryptocurrencies in your tax return. If you have any further questions or need support, I am happy to assist you.
Best regards,
Christiane Rapp
