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You may have to pay tax on profits at Coinbase. The regulations here differ from those for normal investments
Increasing money on Coinbase: Taxes are due in this case
Cryptocurrencies are treated differently from normal investments in legal terms. Different regulations therefore apply.
- Under German law, Bitcoin and other cryptocurrencies are neither legal tender nor securities. Therefore, no withholding tax is payable
- Instead, Bitcoin and other cryptocurrencies are usually recognized as “other assets”, similar to other valuables.
- If you convert bitcoins into other currencies or use them to pay for purchases, this is considered a “private sale transaction” and is tax-free under certain conditions.
- Profits from Bitcoin or other cryptocurrencies only have to be taxed if you sell the assets less than one year after the purchase and the profit from the sale exceeds 600 euros.
- If you hold cryptocurrencies for longer than one year and only sell them after this period, the profits made are tax-free.
Winnings through Coinbase: How they have to be taxed
Profits from cryptocurrency transactions are booked under “other income” and taxed at the normal income tax rate.
- The purchase and sale date, sale price, acquisition and capitalization costs as well as the resulting profit or loss must be entered in the accounts.
- If you have used Coinbase for trading, the reporting function is suitable for documenting the required information.
- After you click on your account name on the home screen of the website (top right corner), there is a “Taxes” option. If you follow the page, you can view your transaction history under Reports (see image).
- If you generate a report, you can see at what time and in what amount you traded your cryptocurrencies. You can use this information for your tax return.
