The new BMF letter “Einzelfragen zur ertragsteuerrechtlichen Behandlung von virtuellen Währungen und von sonstigen Token” has meanwhile also been published. Below you will find my brief and initial assessment of the letter of the Federal Ministry of Finance (BMF).
Our expert Dr. Christopher Arendt answers important questions about this. Read more here.
Crypto, NFT, virtual currencies and other tokens
Since we have specialized in particular in tax advice in connection with NFT’s, we regret that the BMF letter unfortunately does not provide for a separate scope of application for NFT’s.
Indisputably, there are many specifics to consider in this area that also have a tax indication. Therefore, many questions regarding taxation in the field of crypto remain unresolved. This is especially true for the area of NFT’s.
The essentials at first glance (not conclusive) attached:
All operations in the crypto world can have a tax relevance
It remains the case that all acquisition and exchange transactions carried out in the crypto world remain tax-relevant in the view of the Ministry of Finance. All transactions within the wallet must therefore be considered and assessed for tax purposes.
The approach of assuming tax relevance only when the “cryptocoins” are exchanged from the wallet back into fiat has apparently not caught on with the tax authorities.
10-year holding period falls (for the time being?)
First of all, it is nice that the 10-year holding period disappears, at least according to the view of the administration. I.e. all tokens held as private assets can be sold tax-free after one year, regardless of their use.
I am curious to see whether this will stand, because the tax exemption has the downside that any losses over the annual period can no longer be claimed. It is quite conceivable that taxpayers will sue for tax recognition of their losses on the 10-year holding period.
Separation between private and commercial business remains difficult in individual cases
Writing does not. Since mining and forging continue to be considered commercial activities, the tax question arises as to whether one can still hold tokens “in private” at all in addition. Determining the scope of the business for tax purposes does not only entail tax risks for co-entrepreneurs.
In this respect, at any rate, the related tokens are exempt from the one-year speculation requirement and are always subject to tax consideration.
New possibility of determining the sequence of consumption
In any case, the determination of the capital gain also via the “average method” instead of the first-in-first-out method (FiFo) is to be understood as a relief. In this respect, there is now a right of choice for the taxpayer.
This is also of great importance for the NFT market, where the acquisition of cryptocoins (Ethereum) is regularly only a stopover (albeit a fiscally significant one).
Tax problems of the airdrops
In the case of airdrops, the tax authorities now assume that the “drop” is a tax-relevant transaction. In any case, the linking of a wallet is seen as sufficient “participation” for the allocation under other income (Section 22 (1) no. 3 EstG).
The airdrop received is then to be determined with the market value, which raises quite significant questions about its determination (not only in the NFT area). As a consequential effect, the airdrop is then also subject to the one-year speculation period. In these cases, the airdrop can only be sold tax-free after a one-year holding period.
This allocation entails a major tax risk, because if the price of the airdrop collapses after allocation and the airdrop is sold within the one-year period, loss offsetting (receipt: airdrop = gain, airdrop sale = loss) is ruled out due to the different types of income (22 (1) no. 3 sentence 3 EStG).
Regrettably, there are no concrete indications from the Ministry of Finance in this regard. However, it is expected that a further letter will address this issue separately.
I will be happy to keep you up to date on this.
Best regards Christopher Arendt
Crypto & Steuern I Interview mit Dr. Christopher Arendt I Trends #280
Further contribution to the topic:
Income tax return 2021: How do I take my crypto investments into account?
Are profits from cryptocurrency trading subject to tax? Revision BFH withdrawn
Von Kryptowährung zur Kryptokunst: Durchblick bei digitalen Erträgen
Bitcoin, Ethereum, NFT … what’s there to consider for tax purposes?
ACCONSIS in the press:
€uro/ Börse-Online, Kryptische Steuerregeln, Ausgabe 07/2022
beck.de/ Beck-Verlag, Virtuelle Währungen und Token: Einzelfragen zur steuerlichen Behandlung, 06/2022
€uro am Sonntag, Wie der Fiskus auf Gewinne aus Kryptowährungen zugreifen darf, ist für viele Investments noch nicht klar geregelt. Auf welche Fallstricke Anleger achten sollten, 27.02.2022
Börse-Online, Krypto-Investments bei Teenagern: “Gefahr von Steuerstraftaten”, 17.02.2022
BR24, Krypto-Investoren im Steuerdschungel, 04.02.2022
Do you have questions about Kryto & Steuern and the current BMF letter?
Specialist lawyer for tax law
Managing Director of ACCONSIS
Dr. Christopher Arendt
+ 49 89 547143
or by e-mail email@example.com
The tax aspect behind crypto trading with cryptocurrencies or crypto art also harbours many dangers and challenges. I would be happy to advise you individually on this and work with you to find solutions to safeguard your digital returns.
If you have any questions on this topic, please do not hesitate to contact me.