date | theme

22. October 2018 | Taxation of Bitcoins and Cryptocurrencies

29. January 2019 | Bitcoins & cryptocurrencies: Moving abroad allows tax-free sales (this contribution)

18. June 2020 | Video: Cryptocurrencies & Bitcoins: Taxation of Trading / Lending / Mining & Cloud Mining

25. August 2021 | New rules for the taxation of Bitcoins & Co. – BMF letter to create clarification

It is known that the sale of cryptocurrencies such as Bitcoins in Germany is tax-free after one year. However, if the Bitcoins were lent in the meantime (lending), this extends the speculative period to ten years. A design developed by us offers the possibility of tax-free disposal. However, a prerequisite for the tax-free sale of Bitcoins is that the owner moves abroad. How the move works exactly so that you can sell the Bitcoins abroad tax-free, you will find out in the following article.

A departure describes the comprehensive task of the domestic residence (§ 8 AO), as well as the domestic, habitual residence (§ 9 AO). Consequently, there is an exit if a natural person (§ 1 ff.) BGB) together with its entire property moved abroad. Furthermore, there is the question of taxation, insofar as the natural person was the owner of Bitcoins or other cryptocurrencies at the time of the move. Provided that the Bitcoins & cryptocurrencies are in the private assets of the natural person, the following options for exit taxation must be examined:

1.1 Exit taxation by sale according to § 22 para. 1 sentence 1 no. 2 in conjunction with § 23 EStG

Insofar as assets have arisen through the acquisition, holding, trading or sale of Bitcoins, this is classified into the other income according to § 22 No. 2 i.V.m. § 23 para. 1 no. 2 EStG of the natural person. Even if cryptocurrencies are considered an intangible, unusable asset from a tax perspective, cryptocurrency assets are subject to the same tax assessment as foreign currencies. Usually, other income is subject to a one-year period (§ 23 Abs.). 1 sentence 1 no. 2 sentence 4 EStG) between acquisition and sale. Therefore, the asset escapes taxation if the time limit is exceeded and can be sold tax-free. However, in the present case of the taxation of the crypto currency, the period increases to a full ten years. Because the crypto currency serves as a source of income and for income generation. Thus, in order to achieve the tax-free sale, there must now be ten years between acquisition and disposal.

As a result, a sale pursuant to § 22 para. 1 sentence 1 no. 2 i.V.m. § 23 EStG fictitious?

No, a move does not classify the asset growth from Bitcoins & Co. as a sale. Only an actual sale process, or transactions equivalent to it, lead to the fulfilment of the private sale transaction.

1.2 Exit taxation of capital gains pursuant to § 6 AStG i.V.m. § 17 EStG

With regard to § 6 of the Foreign Tax Act, an exit triggers the taxation of § 17 EStG – sale of shares in corporations. The External Tax Act presupposes for the exit taxation that the departing person is liable to unlimited income tax for at least ten years (§ 1 Abs. 1 EStG) and the unlimited tax liability is terminated by residence or habitual residence. The sale of shares in corporations at the time of departure is then fictitious with the acceptance of the criterion.

Accordingly, the increase in assets from Bitcoins & cryptocurrencies is equated to shares in corporations according to § 17 EStG?

No, it can be ruled out that Bitcoin assets are shares in a domestic or foreign corporation. Accordingly, § 6 AStG does not trigger taxation of an asset growth by cryptocurrencies when moving away.

It has already been established that the move itself does not trigger taxation of a Bitcoin asset. However, the question arises as to how the tax-free sale of the crypto currency is possible. In this regard, § 2 AStG must be considered in detail. Accordingly, the following four situations are relevant for the fulfilment of the conditions of the extended limited tax liability: