Capital gains from cryptocurrencies are taxable

Cryptocurrencies are among the other assets for which speculative gains are taxable in the first year after acquisition.

The Federal Fiscal Court has confirmed the view of the tax authorities that virtual currencies are among the other assets that can be the subject of a taxable private sale transaction. They are to be regarded as means of payment as they are traded on trading platforms, have a market value and can be used for payment transactions. The technical details of virtual currencies are not relevant to their status as an asset.

This means that speculative gains from cryptocurrencies are taxable at least if the period between purchase and sale is no longer than one year. Of course, this also means that losses incurred within the one-year period are also subject to taxation and can be offset against speculative gains. By contrast, cryptocurrencies sold or exchanged outside the one-year period are not relevant for taxation purposes.

The Federal Fiscal Court considers the time of acquisition to be the moment at which the currency tokens are acquired in exchange for euros, a foreign currency or other virtual currencies. The sale takes place when the cryptocurrency is exchanged back into euros or a foreign currency or converted into other currency tokens.

Contrary to the plaintiff's opinion, the Federal Fiscal Court also does not see a structural enforcement deficit that could stand in the way of taxation. According to the judges, the fact that in individual cases a taxpayer manages to evade taxation despite all the investigative measures taken by the tax authorities when trading in cryptocurrencies cannot justify a structural enforcement deficit.