There is quite a bit of uncertainty about the different types of crypto taxes. Not that tax is levied directly on crypto, but crypto is seen as an asset and a commodity and therefore has a direct impact on the tax return. However, not every form of tax works the same and it may just be that your sweet crypto coins apply to multiple types of tax. And that, of course, creates ambiguity.
Crypto and Wealth Tax
Let’s start with the most annoying load right away. wealth tax. Annoying because wealth tax is a tax on money that has already been taxed once, namely income tax. The advantage of wealth tax is that it takes a while before you actually have to pay wealth tax. So you have some room to build up capital, without the tax authorities knocking on your door immediately and holding out the proverbial hand. The level of this so-called threshold changes every year, so check carefully every year to what amount this threshold has been set for the income year for which you are filing a tax return!
On which crypto do you pay how much wealth tax?
You actually pay on your total assets above the tax-free threshold wealth tax, even if this is crypto. So you add up all the different assets and determine how much of that capital is above the tax-free threshold. And then the fun can really begin. Because the Tax and Customs Administration wouldn’t be the Tax and Customs Administration if they didn’t make it overly complicated afterward.
Wealth tax and crypto
You have a bank account with € 175,000 in savings and you have invested a total of € 125,000 in Bitcoin, Ethereum, or other cryptos. In total, your assets are therefore € 300,000. This capital is yours alone, without a tax partner. Of course, you are not pathetic, because this is a pretty nice amount, but we will take the amount briefly to be able to properly explain the tax-free allowance and the graduated scales.
Crypto and Sales Tax
Sales tax is a tax that is linked to business activities. In popular parlance, turnover tax is also known as VAT. Most only know VAT from taxes that you pay on top of the price of products or services, but entrepreneurs must in turn remit this turnover tax to the tax authorities (after deduction of the turnover tax paid themselves). There are quite a few horror stories and speculation about sales tax in relation to crypto.
Crypto and Income Tax
When exactly do cryptos fall under assets and when do they fall under income? It is a difficult distinction that the Tax and Customs Administration also struggles with. Whether crypto must be specified under box 1 or box 3 makes a huge difference in the amount to be paid. Do you occasionally trade for fun and do you get your money from wages, benefits or are you an entrepreneur? Then the chance is very small that your crypto activities will be characterized as income by the tax authorities. Especially since you spend most of your time getting your income from other sources of work or benefits. If you are interested in other laws visit this site ()
Crypto and Profit Tax
The odd one out is probably the (corporate) profit tax. Certainly, because profit tax does not by definition arise from crypto (this is the income tax), but business investment in crypto can therefore be characterized as a profit or loss. In fact, if you decide to invest part of your business profit in crypto, you can pass on this profit or loss on this crypto in your profit tax. It is of course sour when your investment evaporates considerably, but less sour when this loss can be charged to your profit and loss account. To invest your profits in crypto can be smart. But just like with other investments, investments can have positive and negative consequences. It is therefore not possible to transfer your business profit to crypto and then no longer pay tax on it. Attempts to do so are seen as tax fraud, with all the possible consequences that entail.
Crypto Taxes and Burden of Proof
Of course, filling out the average tax return is based on good faith. The Tax and Customs Administration does not carry out 16 million checks per year on income tax and ensures that the specified amounts are entered correctly on a random basis. When completing the tax return, it is therefore important that the correct information is always entered and that no matters are withheld, distorted, or deliberately not appear on the tax form. In that regard, the burden of proof lies with the tax authorities in the event of doubts about what you have entered.