Germany, am I legally required to prove the origin of my BTC?

[zweipandassand]

Let's say I am a law-abiding German citizen, but I have 3 BTC, that have been swapped from XMR and I can't prove the origin of them at all. Then after holding for 1 year, I cash them out tax free to my private bank account via coinbase or something.

Can the fiscal authorities (Finanzamt) then force me to prove the origins of my BTC? What if I don't do that. Would I be doing a crime, even if I am not money laundering and there is no further evidence in that direction? What crime would that be? Could they take my money?

[1715200968]

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[stompix]

Let's say I am a law-abiding German citizen, but I have 3 BTC, that have been swapped from XMR and I can't prove the origin of them at all. Then after holding for 1 year, I cash them out tax free to my private bank account via coinbase or something.

From Bafin: (original pdf)

Rough translation for other readers:

Cash deposit into a customer account and which exceeds an amount of 10,000 euros, the origin of the assets must be verified by means of meaningful information evidence to prove. The aim of this proof requirement is the plausibility check of the transaction in the context of the information already available about the customer. the Evidence can also be provided personally on-site within a reasonable period of time during the business relationship or transmitted in some other way.
For cash transactions up to EUR 10,000, such measures must only be taken on a risk-based basis.

It's a case-by-case thing, for a small amount they will probably not care, but don't you have any kind of proof you at one point bought some cryptos? How did you get those XMR? Not even a trace of a bank deposit a cc purchase, some paypal, skrill deal, nothing?

Can the fiscal authorities (Finanzamt) then force me to prove the origins of my BTC? What if I don't do that.

IF! they ask you to and you don't, that it's pretty simple, the amount is frozen till you do!
The only way to do force them is with a court order.

[Poker Player]

It's a case-by-case thing, for a small amount they will probably not care,

This has been discussed quite a bit in this section of the forum, and it is clear that it is a question of quantities. For large amounts, like 3 Bitcoins, you better have a way to prove their origins, otherwise you can be accused of money laundering or something like that. For 300 euros nobody is going to tell you anything.

The 10,000 Euro limit that stompix cites I think applies to the entire European Union, or at least the Eurozone. From those amounts, the problems start.

[hugeblack]

You just need to prove the source of the money, for example, if 3 years ago you deposited $100 in a platform, you will need to prove that you made the deposit of X crypto and transfer it to Y crypto, using mixing services will not change many things as long as you have the cash, but if you want to pay taxes correctly, avoid it.

The 10,000 Euro limit that stompix cites I think applies to the entire European Union, or at least the Eurozone. From those amounts, the problems start.

I am not familiar with the laws in Germany, but in my country there are many indicators that determine the freezing of funds. For example, if you periodically receive $50,000 from a source, you will be asked in the first time and ignored the next times as long as they are periodic & follow a certain pattern, but for example, if you receive $500 from 5 unknown sources outside the country, your account may be frozen, in short, it is related to suspicious behavior.

[jrrsparkles]

Let's say I am a law-abiding German citizen, but I have 3 BTC, that have been swapped from XMR and I can't prove the origin of them at all. Then after holding for 1 year, I cash them out tax free to my private bank account via coinbase or something.

Can the fiscal authorities (Finanzamt) then force me to prove the origins of my BTC? What if I don't do that. Would I be doing a crime, even if I am not money laundering and there is no further evidence in that direction? What crime would that be? Could they take my money?

Yes you have to provide how the funds came from and since its 3 BTC it better to report it by yourself before they ask, if you bought years before now it gave huge returns which converted into 3BTC or whatever you have to pay the capital gain taxes then you will be safe and you know tax evasion is a crime as well.

[HeRetiK]

Let's say I am a law-abiding German citizen, but I have 3 BTC, that have been swapped from XMR and I can't prove the origin of them at all. Then after holding for 1 year, I cash them out tax free to my private bank account via coinbase or something.

Can the fiscal authorities (Finanzamt) then force me to prove the origins of my BTC? What if I don't do that. Would I be doing a crime, even if I am not money laundering and there is no further evidence in that direction? What crime would that be? Could they take my money?

In practice the fiscal authorities are likely the last in line to ask for a proof of source of funds. Both exchanges and especially your bank are likely to ask for the source of your funds first. Both of which can freeze your assets until the issue has been resolved, though banks seem more likely to simply close up your account and stop doing business with you, presumably because that will give the bank less of a legal headache than preventing you from accessing your money.

Whether you throw up any red flags and get asked for proof of source of funds will really depend on the sums involved and your overall situation. If you're a student with little income and suddenly receive a six digit sum you'll not only give your bank's compliance officer a heart attack but will likely be up for questioning as well. If you have a good middle class income your bank is unlikely to even notice if you receive a few additional hundreds or thousands of Euros every now and then.

As far as source of funds is concerned -- Even if you have no records of the swap from BTC to XMR, or of what happened with the XMR afterwards, it might be helpful if you at least have proof that you held those BTC in the past, ie. old wallet files. If you can proof at least part of your transaction chain, for example that you bought (a reasonable amount of) BTC that you then traded for XMR it may not be perfect but at least something. (assuming you get asked for proof of source of funds in the first place)

Yes you have to provide how the funds came from and since its 3 BTC it better to report it by yourself before they ask, if you bought years before now it gave huge returns which converted into 3BTC or whatever you have to pay the capital gain taxes then you will be safe and you know tax evasion is a crime as well.

If you hold your assets for more than a year there's no capital gain taxes to be paid on cryptocurrency profits in Germany.

[Lucius]

Let's say I am a law-abiding German citizen, but I have 3 BTC, that have been swapped from XMR and I can't prove the origin of them at all. Then after holding for 1 year, I cash them out tax free to my private bank account via coinbase or something.

If you really can't prove the origin of the cryptocurrency and the money you used to buy it, you have two options. The first is to try to talk to your tax advisor and look for some legal solution, and the second is to find a way to sell BTC under the radar and be smart in spending euros. When I say "under the radar" I don't necessarily mean something illegal, but that there are options in the EU where you can sell crypto without KYC completely legally (payment in cash) - maybe plan a nice vacation on the Adriatic next summer

[qwertyup23]

Let's say I am a law-abiding German citizen, but I have 3 BTC, that have been swapped from XMR and I can't prove the origin of them at all. Then after holding for 1 year, I cash them out tax free to my private bank account via coinbase or something.

Can the fiscal authorities (Finanzamt) then force me to prove the origins of my BTC? What if I don't do that. Would I be doing a crime, even if I am not money laundering and there is no further evidence in that direction? What crime would that be? Could they take my money?

Though this may be determined in a case-to-case basis, generally, it depends upon the quantity of BTC on your transactions.

The laws of Germany may be different but speaking personally from experience, some local exchanges in my country ask for the reason/origin of the BTCs that I owned. In order to maximize the perks and limits, I have to disclose and provide KYC documents. I do think that similarly in your question, authorities may ask for the origin of your BTCs as 3 BTC is significantly huge, given its price on the market.

[MCVXYZ]

Is cryptocurrency distinguished from real money for bundesbank? This is the key question.
Anyway, I think you have to talk about legal advisor or ask the question in regional topic, because every country has its different approach on this issue.

[yat97]

3 entire bitcoins? Hmm.... what if you had a grandparent or relative who died who gave you the keys? And you believe they mined it and gave it to you. otherwise, maybe figure out some crypto friendly nations to move to, especially if you wait on selling whn btc goes to hundreds of thousands and you're a millionaire.