There are some legends about crypto investments.

One of them is that these are completely anonymous and therefore not traceable.

This goes hand in hand with the assumption that the pursuit of tax liability is not far off.

“In the past, the tax authorities had some technical catching up to do.

That is why the request to pay taxes in the crypto area was not followed as closely as elsewhere, ”says Florian Wimmer, CEO of Blockpit.

The Austrian company specializes in software for creating tax and money laundering documents for blockchain applications and has private and institutional customers in six countries.

Martin Hock

Editor in business.

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But anyone who thinks that the tax authorities are still long behind is likely to be wrong.

For the third quarter, the EU Commission has announced an expansion of the automatic exchange of information to crypto systems and e-money as part of the action plan for fair and equitable taxation.

This could be implemented by the beginning of 2023 under the acronym DAC8 (the eighth version of the “Directive on Administrative Cooperation”).

It's also about the past

It's about billions in taxes. According to an extrapolation from Blockpit, the Frankfurt School Blockchain Center and the law firm Dr. Andres to at least 1.28 billion euros in the 2020 tax year. With DAC8, the obligation to provide information will be extended to all financial service providers operating in the EU. The exchange should take place down to the transaction level. “Activities will be noticed at the latest when making deposits and withdrawals,” says Wimmer.

Internationally, tax tracking has tightened. The USA requested tax-relevant information from the crypto exchanges for the first time in 2018, and Europe will follow suit. The expansion of the registration requirements for financial service providers was the first step, says Wimmer. In Germany in particular, investors should be careful. The Federal Ministry of Finance is currently working out a detailed guideline for the taxation of income from staking and mining, i.e. from the production of coins and the confirmation of transactions.

In other respects, too, crypto investors shouldn't be too naive, warns Wimmer. Because with a limitation period of up to ten years, earlier transactions are still taxable. In principle, income from crypto trading in Germany and Austria counts as profits from private sales transactions. These are taxable if less than a year has passed between purchase and sale.

The Fifo (“first-in-first-out”) method applies: If the values ​​are identical, it is assumed that the first acquired were also the first to be sold. It cannot be ruled out that the speculation period for crypto investments that are used for staking will be increased to ten years, because these values ​​generate current income. “The EU directive will de facto de-anonymize the wallets,” says Wimmer. "The next level of tax prosecution will be that crypto trading will be fully traceable when entering via any regulated exchange due to the mandatory identification of the financial service providers."