dydx [ income tax or capital gains tax ]

[Bitcoiner2023]

Good day to all readers,
I have a question regarding the taxation of dydx wins.

On dydx, trading is only perpetual, so the capital gain tax would apply.
However, the problem is that you are not trading in fiat, but in USDC which is a cryptocurrency.

Is there now income tax due to cryptocurrency?
Or does the capital gain tax fall because of Perpetual? (since you buy the USDC with Fiat)

[Findingnemo]

The answer depends on your country of residence.

In my country, I only have to pay the capital gains taxes for the profits I made with crypto to fiat conversion so the crypto to crypto conversion is not taxable event but this is not the same on other countries especially US (correct me if I am wrong) where IRS taxes cryptocurrency like property and investments, not currency. This means all transactions, from selling coins to using cryptos for purchases, are subject to the same tax treatment as other capital gains and losses.

source

[Tutorial] Crypto taxes for beginners maybe helpful to get better understanding about crypto taxation.

[Bitcoiner2023]

The answer depends on your country of residence.

Sorry Germany

[Findingnemo]

The answer depends on your country of residence.

Sorry Germany

In Germany, you have to pay the capital gain tax for crypto to crypto if you made profits over 600€ and realize this profit within 365 days from the original purchase. So the tax due depends on your purchasing price of BTC Since USDC is a stable coin so you can clearly find the profits you made and can claim the tax-free if it's below 600€

Crypto Taxes in Germany: Complete Guide & Instructions [2023]

[Bitcoiner2023]

In Germany, you have to pay the capital gain tax for crypto to crypto if you made profits over 600€ and realize this profit within 365 days from the original purchase. So the tax due depends on your purchasing price of BTC Since USDC is a stable coin so you can clearly find the profits you made and can claim the tax-free if it's below 600€

Crypto Taxes in Germany: Complete Guide & Instructions [2023]

No, for crypto you pay personal income tax.
But if you hold 1 year, then the gains are tax free.

Future trading with fiat would be capital gains tax, but since I am trading futures with USDC I would have to pay personal income tax.

But what about the holding period?

Example:
01.01.2023 I buy with 1000€ (1500 USDC)

I trade these USDC on the dydx exchange.

By 01/02/2024 I will make a profit of 8500 USDC with trading, so on 01/02/2024 I will have a total of 10,000 USDC.

If I convert this 10,000 USDC to Fiat on 01/02/2024, will I not pay any taxes at all?

Because:
The USDC were not converted into BTC due to perpetual trading, so the holding period is given.

[Findingnemo]

Example:
01.01.2023 I buy with 1000€ (1500 USDC)

I trade these USDC on the dydx exchange.

By 01/02/2024 I will make a profit of 8500 USDC with trading, so on 01/02/2024 I will have a total of 10,000 USDC.

If I convert this 10,000 USDC to Fiat on 01/02/2024, will I not pay any taxes at all?

Because:
The USDC were not converted into BTC due to perpetual trading, so the holding period is given.

So the profit from your trade is $8500 which is the taxable amount because sale = trade so you are obligated to pay taxes or I may be completely wrong The sale defines the conversion of USDC to fiat.

The sale of stablecoins becomes taxable only when you trade them within a year (365 days) and make a profit of more than 600€ as a result.

But taxation is a very complex subject and needs professional help to find the accurate value cause there will be a lot of exceptions for different reasons so if you actually made that much profit then you better take your records for audit to find the value.

[Bureau]

As per my understanding of Taxation, it is better to consult a professional. If you ask questions on the forum, you will get different answers. Tax is a complicated issue and most of the information provided on the internet is based on personal experience. I am not a German, and I do know there is a local board Deutsch (German) local board. Did you ask your question there, if you have not then it is better to ask your question on that board or do a search. Still, it is better to talk to a pro than us on the forum.

Thanks.