Bitcoin tax heaven in Germany?

[karolp]

Hello, everybody! It will be pleasure, to be part of your community.

Would you like to explain me this: http://www.welt.de/print/die_welt/finanzen/article117487737/Bitcoin-Geschaefte-nach-einem-Jahr-steuerbefreit.html?

If I understood correctly, selling Bitcoins is complety free of tax when transaction is made by private person (and for private purpose only) and Bitcoins have been kept for more than year. Am I right?

If selling Bitcoins would be my only one source of income, will I be exempt from paying income tax at all? Of course, if I will be resident of Federal Republic of Germany and keep Bitcoins for more than year before selling.

[Vaagar]

If I understood correctly, selling Bitcoins is complety free of tax when transaction is made by private person (and for private purpose only) and Bitcoins have been kept for more than year. Am I right?

Jep, you´re right

If selling Bitcoins would be my only one source of income, will I be exempt from paying income tax at all?

If you sell the Bitcoin after one year u dont have to pay income tax´es for Bitcoins.

But its necessary to say, that holding one year means holding one year..
So if u buy 1 BTC on 1. June 2015 and 1 BTC on 1. July 2015..  u must hold the first BTC until 01. June 2016..
If u sold 1 coin between the both dates.. You alwas sell the first u buy (First In First Out)..

For trades with Bitcoins under a year u got a exemption limit of 600 €, after passing the limit u must pay income taxes.

Sorry 4 bad english

[karolp]

Sorry 4 bad english

Your English is very good, do not worry.

If you sell the Bitcoin after one year u dont have to pay income tax´es for Bitcoins.But its necessary to say, that holding one year means holding one year..
So if u buy 1 BTC on 1. June 2015 and 1 BTC on 1. July 2015..  u must hold the first BTC until 01. June 2016..
If u sold 1 coin between the both dates.. You alwas sell the first u buy (First In First Out)..

For trades with Bitcoins under a year u got a exemption limit of 600 €, after passing the limit u must pay income taxes.

Holding Bitcoins is not a problem, a have a lot BTC kept for more than year. However, I have few more questions and I will be grateful for answer.

1. What if I have Bitcoin address with a three incoming transaction: 20 BTC on 1. June 2014, 15 BTC on 1. September 2014 and 10 BTC on 1. December 2014? May I sell 20 BTC after 1. June 2015, 15 BTC after 1. September 2015 and 10 BTC after 1. Dcember 2015? I mean which account method is accurate: last in first our (LIFO) or first in first our (FIFO)? Explanation: https://en.wikipedia.org/wiki/FIFO_and_LIFO_accounting

2. May I fill tax declaration to declare income form selling Bitcoins only still pay null tax? Is it enough if I put list of my Bitcoins address and amounts of sold Bitcoins, to proof tax authorities that my income is free of tax?

[Vaagar]

1. What if I have Bitcoin address with a three incoming transaction: 20 BTC on 1. June 2014, 15 BTC on 1. September 2014 and 10 BTC on 1. December 2014? May I sell 20 BTC after 1. June 2015, 15 BTC after 1. September 2015 and 10 BTC after 1. Dcember 2015? I mean which account method is accurate: last in first our (LIFO) or first in first our (FIFO)? Explanation: https://en.wikipedia.org/wiki/FIFO_and_LIFO_accounting

You must use FIFO.

2. May I fill tax declaration to declare income form selling Bitcoins only still pay null tax? Is it enough if I put list of my Bitcoins address and amounts of sold Bitcoins, to proof tax authorities that my income is free of tax?

You must show them on a list: Date Buy and Price and when u have sold them.
Or its easier to have 3 different Wallets, so u havent much to explain

U should ask a tax accountant, he can u tell more cause german tax laws are full of exceptions.

[karolp]

Thank you for your help! I have last question.

What if I have Bitcoins kept longer than year, but I have not proof of purchase. I have got for free and bought Bitcoins when BTC was almost worthless. After that I have sent them a few times between my wallets (new software, new hardware) and now they are deposited (not moved) for longer than year.

I hope it is enough if I proof that Bitcoins are mine for more than year.

[Vaagar]

Thank you for your help! I have last question.

What if I have Bitcoins kept longer than year, but I have not proof of purchase. I have got for free and bought Bitcoins when BTC was almost worthless. After that I have sent them a few times between my wallets (new software, new hardware) and now they are deposited (not moved) for longer than year.

I hope it is enough if I proof that Bitcoins are mine for more than year.

Free Bitcoins are "bought" for 0 Euro
If u can verify that the deposit is older than a year, they cant say anything

[OnkelPaul]

Showing that the bitcoins have been in your wallet for long enough should be ok in my opinion.
But the first assumption (that you could have BTC as income and keep it for a year, making it tax-free) does not work.
If you don't want to evade tax, you need to declare income and pay taxes, whether your income is in Euro, Dollar, or BTC.
The one year rule is basically a rule of thumb to differentiate between traders who buy and sell bitcoins to generate an income, and holders who buy (or get them for free) and keep them for a longer time.

I'm no tax expert, but that's the gist of what I understood about it. If in doubt, ask a tax expert (preferrably one who knows what bitcoin is and how to handle it properly tax-wise)

Onkel Paul

[karolp]

I understood and do not want to avoid taxation. However, I am Bitcoin keeper (BTC was my emergency treasury) and would like to sell part of them. I hope I can do it without taxation.

[qwk]

I understood and do not want to avoid taxation. However, I am Bitcoin keeper (BTC was my emergency treasury) and would like to sell part of them. I hope I can do it without taxation.

The special case of someone from out of country coming to Germany to sell their coins might have more peculiarities which probably no one here can safely advise you on.

In any case, Germany is not necessarily a tax haven for Bitcoin, even though it may look like one to an outsider.
The rule "selling Bitcoins after holding them for one year is tax free" is an oversimplification.

It should rather be "if you buy Bitcoin for private use and happen to not spend them for one year after purchase and you did not do so in order to avoid taxes, then you may more ore less safely expect a sale to be tax free".
And even then it's not automatic.
The reason is simply that the general rule "hold for one year" only applies to private "property management" and explicitly does not apply if you are professionally speculating/trading.

TLDR; go ask a tax attorney and find out what applies to your special, individual situation. That's the way it goes in good old Germany.

[SebastianJu]

If I understood correctly, selling Bitcoins is complety free of tax when transaction is made by private person (and for private purpose only) and Bitcoins have been kept for more than year. Am I right?

Jep, you´re right

If selling Bitcoins would be my only one source of income, will I be exempt from paying income tax at all?

If you sell the Bitcoin after one year u dont have to pay income tax´es for Bitcoins.

But its necessary to say, that holding one year means holding one year..
So if u buy 1 BTC on 1. June 2015 and 1 BTC on 1. July 2015..  u must hold the first BTC until 01. June 2016..
If u sold 1 coin between the both dates.. You alwas sell the first u buy (First In First Out)..

For trades with Bitcoins under a year u got a exemption limit of 600 €, after passing the limit u must pay income taxes.

Sorry 4 bad english

Dont you think it does matter which coin you sell? I mean when you buy 1btc and let it lay around on a bitcoin address for one year, then it shouldnt matter that you buy and sell other bitcoins on other addresses, isnt it? You could prove that you didnt move the coin.

I know this rule applies to trading houses too. Some got rich with buying and selling houses that way.

[shitaifan2013]

If I understood correctly, selling Bitcoins is complety free of tax when transaction is made by private person (and for private purpose only) and Bitcoins have been kept for more than year. Am I right?

Jep, you´re right

If selling Bitcoins would be my only one source of income, will I be exempt from paying income tax at all?

If you sell the Bitcoin after one year u dont have to pay income tax´es for Bitcoins.

But its necessary to say, that holding one year means holding one year..
So if u buy 1 BTC on 1. June 2015 and 1 BTC on 1. July 2015..  u must hold the first BTC until 01. June 2016..
If u sold 1 coin between the both dates.. You alwas sell the first u buy (First In First Out)..

For trades with Bitcoins under a year u got a exemption limit of 600 €, after passing the limit u must pay income taxes.

Sorry 4 bad english

Dont you think it does matter which coin you sell? I mean when you buy 1btc and let it lay around on a bitcoin address for one year, then it shouldnt matter that you buy and sell other bitcoins on other addresses, isnt it? You could prove that you didnt move the coin.

I know this rule applies to trading houses too. Some got rich with buying and selling houses that way.

that's at least what I'm doing to prove I held coins for longer than a year. I've put them on physical bit-cards as cold wallets, since I could additionally hand out those bit-cards to the tax authorities as proof.
tbh, I'm not really sure if it will work that way *fingerscrossed* didnt cash out any real amount of btc yet.

btw would that possibly create a market for people to buy those cards at a premium if they for instance wanna cash out now? 

[abhinavsingla]

Hi all,

I have read the discussion and I'll be glad if someone can solve a query. I am a student and have come from Asia and my parents would like to support me through bitcoins as the conventional methods cost a lot of money. Will I be taxed if I get money from Asia through bitcoins as I'll not be able to hold them for 1 year. Currently, I do not pay taxes (except few cents I get as Zinsen from my saving account here in Germany). I do have a Steuer ID. I'll be really glad if someone can help me regarding this.

[LiteCoinGuy]

Showing that the bitcoins have been in your wallet for long enough should be ok in my opinion.

......

Onkel Paul

i guess sometime in the future someone has to go to court and proof that. but iam optimistic 

[Chefin]

I understood and do not want to avoid taxation. However, I am Bitcoin keeper (BTC was my emergency treasury) and would like to sell part of them. I hope I can do it without taxation.

To have the Tax-rules of germany you must stay longer then half year in germany. The rule is: you have to pay the Tax in that country you stay most in the year. So its not enough to have a flat here in Germany, you have to STAY there. And for more then 6 Month. Its part of double-tax contract between the countrys.

Its not that easy it sounds. I have been longer time working outside Germany from my company. If i stay longer then 6 month on one Project, they get me home for a Day after a few weeks for reporting and feedback. After this the time start new. So i dont had to pay tax outside Germany. For you case it means: you can leave germany to visit you mum or dad but if you do one business-work outside Germany they will not accept your 6 month.

You problem is, they dont check it before you make your transaktion. You have to make the deal, then give all infos to tax-office in the next year. So for 2016 you have to give them in 2017 your papers. Then they check it and if they decide your wrong, you cant cancel the transaktion. So you have to be sure, that you did everything correct. Therefore i would recommend to consult a taxspecialist. Its possible, no question, but to be sure you dont make misstakes, get the official rules.

Wish you the best, to get your incoming tax-free

[SebastianJu]

Hi all,

I have read the discussion and I'll be glad if someone can solve a query. I am a student and have come from Asia and my parents would like to support me through bitcoins as the conventional methods cost a lot of money. Will I be taxed if I get money from Asia through bitcoins as I'll not be able to hold them for 1 year. Currently, I do not pay taxes (except few cents I get as Zinsen from my saving account here in Germany). I do have a Steuer ID. I'll be really glad if someone can help me regarding this.

You would need to make sure that your parents send the bitcoins from an address they control, so that they can sign a private message with and they can prove that it really were them who sent the coins. You would need to receive the coins in your own wallet too, then send it to your exchange, turn them to fiat and withdraw to your bank account.

At the end it would be provable that these funds were sent from your parents. You can't be charged for something you received from your parents since it's not something you earned by working for it.

If we in germany get money from someone we know and it is not a reward for a work then it is tax free of course. I'm only not fully sure if the transfer over a border can change anything. The one year holding time is of no matter to you at all at least.

That's only my opinion on the matter though. Maybe someone other has a different opinion.

[abhinavsingla]

Hi all,

I have read the discussion and I'll be glad if someone can solve a query. I am a student and have come from Asia and my parents would like to support me through bitcoins as the conventional methods cost a lot of money. Will I be taxed if I get money from Asia through bitcoins as I'll not be able to hold them for 1 year. Currently, I do not pay taxes (except few cents I get as Zinsen from my saving account here in Germany). I do have a Steuer ID. I'll be really glad if someone can help me regarding this.

You would need to make sure that your parents send the bitcoins from an address they control, so that they can sign a private message with and they can prove that it really were them who sent the coins. You would need to receive the coins in your own wallet too, then send it to your exchange, turn them to fiat and withdraw to your bank account.

At the end it would be provable that these funds were sent from your parents. You can't be charged for something you received from your parents since it's not something you earned by working for it.

If we in germany get money from someone we know and it is not a reward for a work then it is tax free of course. I'm only not fully sure if the transfer over a border can change anything. The one year holding time is of no matter to you at all at least.

That's only my opinion on the matter though. Maybe someone other has a different opinion.

Thanks for the reply. It appears the same for me. I need another opinion. I have got a bit coin account too in India. Which is more easier to prove my parents bit coin account or my account?

[SebastianJu]

Hi all,

I have read the discussion and I'll be glad if someone can solve a query. I am a student and have come from Asia and my parents would like to support me through bitcoins as the conventional methods cost a lot of money. Will I be taxed if I get money from Asia through bitcoins as I'll not be able to hold them for 1 year. Currently, I do not pay taxes (except few cents I get as Zinsen from my saving account here in Germany). I do have a Steuer ID. I'll be really glad if someone can help me regarding this.

You would need to make sure that your parents send the bitcoins from an address they control, so that they can sign a private message with and they can prove that it really were them who sent the coins. You would need to receive the coins in your own wallet too, then send it to your exchange, turn them to fiat and withdraw to your bank account.

At the end it would be provable that these funds were sent from your parents. You can't be charged for something you received from your parents since it's not something you earned by working for it.

If we in germany get money from someone we know and it is not a reward for a work then it is tax free of course. I'm only not fully sure if the transfer over a border can change anything. The one year holding time is of no matter to you at all at least.

That's only my opinion on the matter though. Maybe someone other has a different opinion.

Thanks for the reply. It appears the same for me. I need another opinion. I have got a bit coin account too in India. Which is more easier to prove my parents bit coin account or my account?

I would make sure that you can prove both sides of the transaction by being able to sign a message with the sending address and the receiving address. For that you need the private keys of both addresses. Most wallets allow to get these.

[Dunkelheit667]

...
Thanks for the reply. It appears the same for me. I need another opinion. I have got a bit coin account too in India. Which is more easier to prove my parents bit coin account or my account?

In case someone asks...

1) Your parents can give you a proof they send fiat to a BTC-exchange-account (bank statement).
2) They can send you a screenshot with an executed buy-order and the withdraw to your BTC-address.
3) You have a proof for a deposit from this BTC-address to an EU-BTC-exchange and your sell-order.
4) Withdraw the fiat to your EU-bank-account.

Just my humble opinion, this should be enough proof, even for German tax office staff. But I could be wrong.

Not sure how your account in India would help at all?

[raulillo]

Hope nobody gets angry for refreshing an old thread, but given it was in English, that was very helpful for me as an expat.

I'm living and working in Germany for some years, pay my tax here, do my Steuererklärung, usual stuff. I'm from another EU country (EU nationality), in case that'd be important.

I'm still not sure regarding the altcoins.

Case A) Let's say I buy BTC mit EUR today (February 2016), and immediately buy an altcoin with them. I keep them in a safe (coldwallet) and eventually cash them back to BTC in, let's say November 2016. Ideally I'll have quite some more BTCs than at the beginning. When can I cash them back to EUR free of tax? Still February 2017 or November 2017?

Case B) Similar to B, but instead of keeping the altcoin safe in a coldwallet, I'm trading with them for months long. Eventually converting to/from BTC/altcoin(s) back and forth. In November 2016 I decide I've won/lost enough and want to trade back to EUR. Which date would make this taxfree? February or November 2017?

And last but not least. I understand that even this being "taxfree", I have to provide all my public BTC addresses to the Finanzamt... Do I have to provide them with the information of the altcoin trader as well? Is that one easy to get?

Many thanks in advance and I hope the answer can be useful for more people.

I can understand some German, but the answer in this thread wasn't clear enough for me:
https://bitcointalk.org/index.php?topic=612741.0

[Vaagar]

Case A) Let's say I buy BTC mit EUR today (February 2016), and immediately buy an altcoin with them. I keep them in a safe (coldwallet) and eventually cash them back to BTC in, let's say November 2016. Ideally I'll have quite some more BTCs than at the beginning. When can I cash them back to EUR free of tax? Still February 2017 or November 2017?

I would handle it like this (I try it to explain by an example):
You bought 1 BTC for 100 €. Bought an Altcoin for 1 BTC on Feb 2016, sell the Altcoin on November 2016 for 1,1 BTC.
You didn´t hold them longer than one year.

If the price is still the same..

earning - buyprice = profit
1,1 BTC * 100 € - 1 BTC * 100 € = 10 Euro profit

It gets funny if the BTC price rises to 150 Euro / BTC, but here im not sure
Case A)
1,1 BTC * 150 € - 1 BTC* 100 € = 65 € profit -> new buyprice for 1,1 BTC 165 Euro
or
Case B)
0,1 BTC * 150 € = 15 € profit -> New Buyprice = 1,0 BTC for 100 € + 0,15 for 0 € = new buyprice for 1,1 BTC 100 Euro

You got the BTC on Nov 2016 so you must wait until Nov 2017 to sell them.

Case B) Similar to B, but instead of keeping the altcoin safe in a coldwallet, I'm trading with them for months long. Eventually converting to/from BTC/altcoin(s) back and forth. In November 2016 I decide I've won/lost enough and want to trade back to EUR. Which date would make this taxfree? February or November 2017?

After each trade with full amount of btc the "free-Tax"-Timer resets.

You must provide them everything, if you hold the coins for over one year. Then its enought to show them your BTC-Wallet with the date of deposit. If you trade them you can try to send them the summary of your trading in one sheet with your profit / loss. But maybe they wanna see each trade @ an excel-sheet.

This is my opinion, handle with care