Tax reform brings major changes to the taxation of cryptocurrencies

The taxation of cryptocurrencies has been characterised by a fair degree of complexity in the past (see also KI 03/18). The draft bill on eco-social tax reform now provides that income relating to cryptocurrencies (the most prominent example being Bitcoin) is to be classified as income from capital assets. It is important to note that any cryptocurrencies acquired after 28 February 2021 will no longer qualify as speculative income and, consequently, capital gains from their disposal will no longer become tax-exempt over time. However – as is already standard practice in the area of capital gains and, for example, with cryptocurrency derivatives – a distinction is to be made between current income and realised capital gains. As a general rule, the special tax rate of 27.5 % (analogous, for example, to income from share investments) is to apply. The 27.5 % deduction is to be withheld and remitted in the form of a withholding tax by the domestic debtor or the domestic service provider. No transitional period is currently envisaged.

The consultation draft also includes a definition of the term cryptocurrency: "a digital representation of value that has not been issued or guaranteed by a central bank or public authority and is not necessarily linked to a fiat currency, and does not possess the legal status of currency or money, but is accepted as a medium of exchange by natural or legal persons, and can be transferred, stored and traded electronically."

Under the draft consultation, ongoing income from cryptocurrencies is intended to include fees for the use of cryptocurrencies as well as the "mining" of cryptocurrencies. In contrast, "staking", "airdrops", and "bounties" are not intended to be counted as ongoing income. Airdrops or bounties are generally understood to be cryptocurrencies transferred free of charge or for only insignificant consideration. In addition to the sale of cryptocurrencies, realised capital gains are intended to include the exchange of cryptocurrencies for other economic assets and services, including legal tender. Since airdrops, bounties, and staking are not counted as ongoing income, they are intended to fall under the category of realised capital gains – the acquisition costs are then to be set at zero. No realised capital gains are intended to arise when exchanging one cryptocurrency for another cryptocurrency – in such cases, the acquisition costs of the transferred cryptocurrency would be carried over.

The acquisition date and costs of cryptocurrencies are now of greater importance, as they can determine general tax liability and are also decisive for the amount of taxation. The draft bill provides that in the case of unknown acquisition costs, the taxpayer's information on acquisition costs and dates shall generally apply (this is typically important for domestic debtors or service providers), provided it is not obviously incorrect. If the acquisition date is not known or was not provided or was incorrectly provided by the taxpayer, the acquisition shall be assumed to have occurred after 28 February 2021.

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