Cryptocurrencies are assets
In its ruling of February 14, 2023 (Ref. IX R 3/22), the Federal Fiscal Court (Bundesfinanzhof, BFH) ruled that cryptocurrencies are among (other) assets that are the subject of a private sale transaction within the meaning of Section 23 para. 1 sentence 1 no. 2 EStG may be. These shall be deemed to be in the meaning of Sec. 23 para. 1 sentence 1 no. 2 EStG if they are acquired in exchange for fiat money or for other virtual currencies; they are disposed of within the meaning of the provision if they are exchanged back into fiat money or exchanged for other currency tokens.
Tax exemption after 12 months
The BFH has ruled that cryptocurrencies such as bspw. Bitcoin or Ethereum are considered economic goods and can therefore be acquired and sold within the meaning of Section 23 EStG. Basically, this also confirms the view expressed by the Federal Ministry of Finance in its letter dated May 10, 2022, that purchases and sales within a one-year holding period are to be regarded as taxable transactions.
What about mining, staking and the like?
It is still unclear – the BFH did not have to rule on this – how to proceed with self-created tokens (e.g. by way of staking or mining). The tax authorities see a taxable inflow at the time of “creation” in every case, even in the private sphere (marg. no. 47, letter dated May 10, 2022) and then, provided that the holding period of one year is not exceeded, also taxable disposal proceeds (positive and negative).
However, the Supreme Court has still not ruled on whether the inflow from staking or mining results in taxable income at all and whether, in the event of a subsequent sale, the previous inflow can qualify as an acquisition within the meaning of Section 23 EStG. Also, contrary to the view of the tax authorities, a distinction should be made between reward and transaction fees for the purpose of determining whether an inflow is taxable and non-taxable.
It pays to look closely!
For tokens, which were thus obtained by staking or mining, nothing further has been decided by the first supreme court ruling in this context. This applies both positively and negatively to the taxpayer. In any case, it is necessary to differentiate “where” the tokens come from when determining income. Accordingly, facts should be disclosed – taking into account the BMF letter as well as the BFH ruling now published – when preparing the income tax return and, in case of doubt, the assessments should be challenged by means of an appeal. This is the only way to safeguard tax interests and at the same time avoid criminal proceedings.