Mining Lab · Coinovo Academy · Tax and bookkeeping
What the tax office wants to see
As a rule it is not holding that is taxable but the event: a sale, an exchange into another currency, paying with crypto. Every one of those events needs an acquisition value and a disposal value.
The acquisition value is what the coins cost when acquired, including the purchase fee. Without it no gain can be calculated; if it is missing, the whole sale proceeds may be treated as gain. That is why the record at purchase matters more than the one at sale.
Without an acquisition value the whole proceeds are the gain.
Private disposal transactions: hold for more than a year and the sale is tax free. Below that your personal rate applies, with an exemption limit for the sum of all private disposal gains in the year. Mining is regularly treated as a trade once it is run systematically.
An exemption limit means: one euro over it and the whole amount is taxable.
Since the reform, crypto income is treated as capital assets, with a special rate and no holding period. An exchange between two cryptocurrencies triggers no taxation, which makes record keeping considerably simpler than in Germany.
Private capital gains are in principle tax free, but the holding counts towards wealth tax. Anyone acting like a trader can be classified as commercial, and then other rules apply. The holding is valued at year end.
With partial sales it must be established which coins were sold. The usual method is first in, first out: the oldest first. That decides the holding period and thus the tax. Anyone who bought in several tranches can tax the same quantity quite differently depending on the method.
You buy three times: in January 0.5 BTC at 40,000 euros, in June 0.5 at 60,000, in December 0.5 at 90,000. You hold 1.5 BTC and have paid 95,000 euros.
In February of the following year you sell 0.5 BTC at 100,000 euros. Under first in, first out the January coins count as sold: acquisition value 20,000 euros, proceeds 50,000, gain 30,000 euros. And because those coins were held for more than a year, the gain is tax free in Germany.
Had you been able to assign the December coins instead, the gain would have been only 5,000 euros but taxable, because the one-year holding period is not met. At a personal rate of 42 percent that is 2,100 euros of tax rather than nothing.
So the method decides not a few euros here but the question of tax free or not.
The chosen allocation has to be traceable and applied consistently. Anyone allocating one way in one year and another way the next, because it happens to suit, has no bookkeeping but a retrospective selection.
It helps to put purchases on separate addresses if you want to keep individual tranches distinguishable. What sits together on one address is harder to tell apart, in case of doubt, than what sits apart.
And once more, because it matters especially here: this is teaching material. Which method is permissible and how it must be documented belongs in a conversation with a tax adviser before the first return, not after.
Coins received from mining, interest products or rewards are valued at the time they accrue and count as commercial or other income depending on country and scale. The value on the day of accrual then becomes the acquisition value for the later sale. So there are two events, not one.
Accrual and later disposal are two separate events.
Purchase fees raise the acquisition value, sale fees reduce the proceeds. Network fees on a transfer to yourself are not a sale but do change your holding. Anyone who does not record fees declares too high a gain and pays too much.
Date, quantity, price at the time, value in euros, fees and the counterparty. Without these a gain cannot be evidenced, and in case of doubt the tax office estimates. Exchanges close, and their export files are then no longer obtainable: download them every year.
Complete from the first purchase; reconstructing afterwards is work.
This is teaching material, not tax advice. The rules differ by country, year and personal situation, and they change. Any limits and periods named are the position at the time of writing. For your own return a tax adviser is the right route; what this course can do is send you there prepared.
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