Cryptocurrencies & Taxes - Part 3: Commercial Trading of Cryptocurrencies

Bitcoin, Ethereum, Ripple, or EOS: Cryptocurrencies are becoming increasingly well-known and the choice of traded cryptocurrencies is huge. But how do they affect your tax return? Today we explain to you the distinction between private asset management and commercial trading of cryptocurrencies.

As we explained to you last time, capital gains from cryptocurrencies in movable private assets are generally tax-free and any losses are not tax-deductible. If cryptocurrencies are part of business assets, the gains are taxable and losses can be deducted. Thus, the crucial factor here is the distinction between commercial trading of cryptocurrencies (and thus independent professional activity) and private asset management. If one's own asset management reaches such an extent that it must be considered commercial activity, the resulting profits are taxed as income from commercial securities trading and from independent professional activity. In this case, in addition to income taxes, social security contributions such as AHV, IV, or EO are also due. For this distinction, the practice of commercial securities trading in the Circular 36 of the ESTV is applied analogously. A delineation is very difficult, which is why the ESTV names the criteria that can at least exclude commercial securities trading. The tax authorities assume a private asset management or tax-free private capital gains if the following criteria are cumulatively met: