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When you increase your assets on Coinbase, you should consider taxes. Profits from trading money in crypto form are relevant under tax law in certain cases. We explain which taxes have to be paid and how Coinbase can be used for tax returns.
Wealth through Bitcoins: In this case, taxes are due
Cryptocurrencies are legally treated differently from normal financial investments. Thus, different regulations apply.
- Under German law, bitcoins are neither legal tender nor securities. Therefore, no final withholding tax is due.
- Instead, Bitcoins are accounted for as “other assets”, similar to other valuables.
- If you convert Bitcoins into other currencies or pay for purchases with them, this is considered a “private sale transaction” and is tax-free under certain conditions.
- Only if Bitcoins are sold less than one year after purchase and the gain from the sale exceeds 600 euros, the gains must be taxed.
Tax profits from Bitcoins correctly with Coinbase
Profits from transactions with cryptocurrencies are recorded under “other income” and taxed at the ordinary income tax rate.
- If losses have been incurred, these can be offset against profits from other private sales transactions. It is also possible to carry them forward to the previous year or subsequent years.
- When recording, the date of purchase and sale, selling price, acquisition and advertising costs as well as the resulting profit or loss must be stated.
- If the Coinbase bitcoin wallet was used for trading, the reporting function is suitable for substantiating the required information.
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After clicking on your account name on the home screen of the website, there is an option to select “Reports”. Following the page, one can view one’s transaction history (see picture).
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If you use the “Create report” function, you can see at what time you traded cryptocurrencies and how much you traded. This information can be used for the tax declaration.
