As of March 1, 2022, the new regulations on the taxation of cryptocurrencies will come into force. On the one hand, this means that cryptocurrencies continue to gain recognition as a legitimate investment object, since the taxation of cryptocurrencies was opaque and practically non-existent before the regulation, whereas on the other hand, the first attempts at taxation by Austria must also be questioned critically as some questions remain unanswered. However, Mr. Mark Robert, a well-known crypto tax accountant, counselor, and owner of Results Tax Accountants, will answer the most important questions for cryptocurrency owners here. RTA is a group of expert accountants, and cryptocurrency tax advisors.
When will crypto assets be taxed and which assets are affected?
Taxation will come into effect on March 1, 2022. From then on, cryptocurrencies such as Bitcoin and Co. will be treated like conventional financial products (shares). As a result, realized gains are taxed at a rate of 27.5%. It is noteworthy; however, that the law applies retrospectively and also includes existing crypto holdings. Prior to February 28, 2021, realized gains fall under the old regime, this stated that the gain was taxable at the income tax rate. However, if you held the cryptocurrency for more than a year, the profits were tax-free.
In practice, this means that cryptocurrency that was purchased in 2021 and generates profits is subject to taxation of 27.5% KESt from the moment the cryptocurrency is exchanged for a recognized currency (FIAT /USD, GBP or Euro).
Does this mean that trading is also taxed?
Most crypto investors trade their crypto assets, in the sense of an exchange from one crypto currency to another in order to achieve price gains (e.g. Bitcoin in Ethereum, Bitcoin to Ripple etc). This trading is still tax-free, only the mostly final exchange of cryptocurrency into FIAT money (USD, GBP or Euro) is taxed.
Does taxation have any advantages?
Yes. It has now been clarified by law that trading within the crypto world is and will remain tax-free. Profits and losses generated from the sale of cryptocurrencies in FIAT money are now offset jointly with other financial products. In this way, gains in stocks can be offset by losses in cryptocurrencies and vice versa.
What about NFTs?
According to the Federal Ministry of Finance, these are still tax-free if they are held for more than 1 year (old regulation).
What happens when you move abroad?
The new provisions result in an exit tax for new assets. This means that if you move to a third country (e.g. Dubai, China, Singapore etc), the crypto assets must be taxed immediately, regardless of an exchange for FIAT money. Within the US, EU or EEA countries, the assets are only taxed when they are sold.
Will my crypto platform pay the tax for me?
Yes. From January 1, 2024, domestic service providers such as Bitpanda are obliged to pay the capital gains tax to the tax office. However, Foreign Service providers are not obliged to do so; here the investor must continue to pay the capital gains tax himself.