Tax tip: Tax-free profits with cryptocurrencies

The prices of cryptocurrencies like Bitcoin fluctuate strongly. If you buy at the right time, you can make high profits. Until now, however, it was unclear how these profits would be taxed. Now the Federal Fiscal Court has provided clarity and brought joy to many investors: Under certain circumstances, profits in this area are now tax-free.

Some tax offices were of the opinion early on that crypto profits are taxable. The Federal Ministry of Finance nevertheless affirmed the tax liability only in 2022. Although a lawsuit was filed against this assessment, the Federal Fiscal Court (Bundesfinanzhof, BFH) finally ruled in favour of the tax authorities on 14 February. As the court stated, profits from the sale of cryptocurrencies are taxable.

However, this does not apply without restrictions. Taxes are only due if there is less than one year between purchase and sale. If this speculation period is exceeded, the sale is always tax-free. The decisive factor is therefore when the sale takes place. Whether a year has expired must be determined to the day. The burden of proof lies with the taxpayer. So if you are patient, you will receive the profits tax-free.

On the other hand, losses are deductible if the currencies were held for less than one year. They can then be offset against gains from speculative transactions, i.e. in addition to cryptocurrencies, with art, precious metals or real estate, provided the real estate was sold within ten years. However, gains from shares, funds and interest cannot be offset.