Crypto & taxes: LiFo allowed
Crypto trading: what you need to consider for tax purposes now
Trading in crypto assets such as Bitcoin, Ethereum or Monero is booming and is therefore increasingly becoming the focus of the tax authorities. Anyone who makes profits must pay tax on them correctly. A recent ruling by the Nuremberg Fiscal Court and new guidance from the Federal Ministry of Finance show this: The requirements for private investors are high and mistakes can be expensive.
Private sales transactions: the one-year rule counts
Crypto assets are considered “other assets” for tax purposes. Anyone who sells them before a year has passed since the purchase must declare profits (or losses) as other income in their tax return. Anyone who holds them for longer remains tax-free, at least as a private individual.
But beware: the tax authorities are currently systematically evaluating data from large crypto trading platforms. Anyone who has not declared their profits correctly risks back payments and, under certain circumstances, criminal tax penalties.
Documentation is mandatory – software strongly recommended
The Nuremberg Fiscal Court recently confirmed that profits from the sale of crypto assets can also be taxable, regardless of whether they are utility tokens, security tokens or classic coins. The decisive factor is that there is a market, a price and therefore tax relevance.
Interestingly, the court also expressly permits the LiFo method (last in, first out) for determining profits, not just the FiFo method preferred by the tax authorities. Provided it is applied correctly and documented in a comprehensible manner.
In practice, this means using crypto tracking software that documents your transactions, records prices in a traceable manner and provides a clean basis for taxation.
What you should definitely do now
The tax authorities make it clear that anyone who is active on foreign trading platforms must fulfill extended obligations to cooperate. You not only have to disclose the data, but also obtain it yourself and prepare it in a comprehensible manner. If transaction data is missing (e.g. due to platform failure or hacker attack), the taxpayer bears the risk.
These include:
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Complete transaction overviews
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Clearly recognizable assignment of the wallets
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Documented courses & assessment procedures
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Plausible tax reports with settings
If this is not the case, there is a risk of estimation and thus often a higher tax burden.
Conclusion: Anyone who trades crypto must play along for tax purposes
Crypto trading is not a legal vacuum. Profits from short-term trades are taxable and the tax authorities keep a close eye on them. So make sure you document your trades properly at an early stage, use suitable tracking software and get tax advice if necessary.
Important: Even if the trading volume is low: explain instead of ignore.
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