4
Do business with cryptos and think about how you can avoid taxes, you need to plan your sales strategy. This is the only way to legally save on taxes.
Avoiding crypto taxes: what taxes are due
Trading in cryptocurrencies is a private sale and is therefore subject to income tax. If you have traded in cryptos, you must also pay tax on them properly. Trading in cryptos can take different forms.
- If you sell your cryptocurrency within one year of purchase, you must pay tax on the profit. You must then declare the transaction in your next tax return.
- Exchanging cryptocurrencies is also subject to income tax. The taxable profit is the positive difference between the sales values.
- Even payment with cryptos must be declared to the tax office. After all, the value of the purchased goods determines the income and thus also the amount of tax.
- If you operate mining, you must also pay taxes on the coins you win. This income is considered other income.
- By the way: You also have to declare the sale of NFTs in your tax return. Here, the Nun-Fungible Tokens with crypto are treated the same.
How to avoid tax
If you don’t want to pay taxes on your profits, there are a few legal options. Not declaring profits is punishable by law and can quickly backfire during a tax audit. To stay on the safe side, the following tips can help:
- The speculation period for cryptos is very short. If more than a year passes between the purchase and sale of the coins, the transaction is tax-free.
- Take the exemption limit into account when calculating your profit. From the 2024 tax year, this will be €1,000 for private sales. So if you make less money trading cryptocurrencies in a year, you will not have to pay tax on your profits.
- If you incur losses when trading cryptos, you can also declare these in your tax return. This further reduces your tax burden and, in case of doubt, can even exempt you from tax liability altogether.
