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Wondering How to Navigate Crypto Taxes in South Africa? Read our detailed guide on South African Crypto Taxes!
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Since the TAA(Tax Authority Austria) released revised guidelines on crypto taxation effective March 1st, 2022, completely overhauling the crypto tax infrastructure, there has been an air of confusion and uncertainty in the Austrian crypto space. People need clarification about whether their investments and holdings fall under the old or new tax regime. And this led to friction for crypto enthusiasts across the country.
Therefore, we decided to curate an extensive crypto tax guide for Austrian residents covering crypto taxation before and after the new guidelines came into effect. The idea is to clarify new rules clearly for investors so they don’t have to be intimated by the tax guidelines and can file their taxes conveniently.
The new guidelines make things more complicated for us to explain. And although we have tried our best to segment this guide in a way that’s convenient for you to understand, we suggest going through the sections carefully to avoid missing out on crucial details.
With that out of the way, let’s get into it.
09/06/23- Updated to accommodate DAO, Gifts and Donation Taxes
09/06/23- Updated to accommodate ICO taxes
Austria saw a new tax reform being implemented on March 1st, 2022 that has changed the way crypto transactions are taxed. The amount of taxes you pay on crypto transactions depends on the nature of transactions in Austria. It is important to note that unlike other tax jurisdictions Austria doesn't have a dedicated capital gains tax and any profits generated by selling, swapping, or spending crypto assets is taxed under the existing income tax laws.
Consider the following transactions:
06/01/2021 - Alex bought 1 BTC for €15,000
08/03/2021 - Alex bought 2 ETH for €2,000 each
16/04/2021 - Alex bought 1 BTC for €18,000
18/06/2021 - Alex sold 1 ETH for €2,200
13/01/2022 - Alex sold 1 BTC for €20,000
17/04/2022 - Alex sold 1 BTC for €22,000
Now as evident from above, a total of three disposals were made. So let’s look into the capital gains calculations of each one and the tax consequences arising from them.
I ETH sold for €2,200 on 18/06/2021
Now, since we’re using the FIFO accounting method as recommended by the BMF,
This is the same ETH token that was acquired on 08/03/2021 for €2,000
Disposal Amount = €2,200
Cost basis = €2,000
Capital Gain = Disposal Amount - Cost Basis = €2,200 - €2,000 = €200
And since the disposal was made within a year of acquiring the tokens, the gains are taxable.
1 BTC sold for €20,000 on 13/01/2022
If we go by the FIFO accounting rule, this is the same BTC acquired on 06/01/2021.
Note that this disposal was made after holding the BTC for a little over a year. Since the disposal was made before March 1, 2022, under the old tax regime, the gains incurred from this disposal will be considered long-term gains and will attract no tax liabilities.
1 BTC sold for €22,000 on 17/04/2022
Based on the FIFO accounting this is the same BTC acquired on 16/04/21 for €18,000.
Note that this disposal was also made after holding the BTC for over a year. But since the disposal was made after March 1, 2022, under the new tax regime, the gains incurred will be taxable.
Disposal Amount = €22,000
Cost Basis = €18,000
Capital Gain = €22,000 - €18,000 = €4,000
Additionally, an interest-bearing tax applies to transactions where you earn interest income. All transactions that generate interest income are taxed at a flat rate of 27.5%. The following transactions fall under the interest-bearing tax category in Austria:
Indeed, Austria's crypto tax reform has made it clear that investors are required to report their crypto transactions to the BMF and fulfil their tax obligations accordingly. In line with the practices of other European tax authorities, the BMF is working with prominent crypto exchanges to acquire KYC (Know Your Customer) data. Furthermore, the forthcoming EU directive, DAC8, grants BMF the authority to verify crypto ownership and scrutinize the accounts of crypto companies.
Old Tax Regime
Before the enforcement of the new regulations on March 1st, 2022, Austria did not have a dedicated capital gains tax structure in effect. Instead, all proceeds obtained from the disposal of assets were subjected to taxation under the income tax regulations. If the assets were held for less than one year before being sold, they were treated as short-term capital gains and incurred tax obligations as per the income tax rules. Conversely, if the assets were held for over one year before their sale, no taxes were imposed on the resulting gains.
The rate at which your short-term gains are taxed depends on your income level and the type of transaction you’re involved in. Here are the tax rates based on income level:
You might be wondering how these tax rules apply to investors in 2023. Well, any assets that were purchased before March 1st, 2022, will continue to be taxed based on the previous tax rules. Additionally, assets that were acquired on or before February 28th, 2022, and are still held by investors are considered non-taxable under the new guidelines.
It is important to note that certain transactions involving interest-bearing activities such as staking, lending, liquidity mining, and yield farming will be subject to a fixed interest-bearing tax rate of 27.5%.
New Tax Regime
The recent tax reform brings about significant changes that impact crypto investors. The rates at which gains are taxed have been altered, and long-term capital gains are no longer exempt from taxes, except for specific legacy holdings, which we will delve into shortly. However, it's worth noting that the taxation of interest-bearing transactions remains unchanged even after the tax reform, providing a sense of stability.
The latest tax reform has introduced a notable shift for crypto investors, as all transactions resulting in short-term capital gains are now subject to the stock tax rate of 27.5%. Furthermore, any assets that were held before the implementation of the new tax regime will be categorized as legacy holdings and will not be subject to taxation under the revised tax laws.
You can voluntarily opt-in to the new tax laws from January 1 2022, if you wish to.
But why would someone want to do that?
Well, because it can save you money.
Note that in the previous tax regime, your gains were taxed based on your income, so if you happen to be in the higher income group, attracting a 35-40% tax rate, you can opt-in to the new tax regime where you only have to pay a flat tax rate of 27.5%.
One important addition to the tax framework has been the allowance for taxpayers to offset their capital losses against their capital gains, which was previously not allowed.
We’ve already discussed the tax rate from the previous tax regime in the table above. After the tax reform, all your gains will be subjected to a flat stock tax rate of 27.5%.
Now that you understand how your gains will be taxed and the taxes you'll be responsible for, it's crucial to determine the extent of your gains to estimate the corresponding tax amount owed to the tax authorities.
Calculating your capital gain or loss is relatively straightforward. You can use the following formula:
Capital Gain/Loss = (Disposal Amount or Selling Price) - (Cost Basis)
For an accurate calculation of your capital gain or loss, two key pieces of information are required: the disposal amount or selling price of the asset and the cost basis. If you are uncertain about the cost basis, there is no need to be concerned. It simply refers to the total amount you paid to acquire the asset, including any additional fees like gas or transaction fees.
It is essential to understand that when determining the cost basis, one should adhere to the accounting method recommended by the tax authorities, which is typically the First-In-First-Out (FIFO) method. We will provide more comprehensive information regarding this accounting method later in the guide.
Consider the following transactions:
03/02/2022 - Andrew buys 2 BTC for €14,000 each
06/04/2022 - Andrew buys 3 ETH for €1,400 each
05/06/2022 - Andrew buys 1 BTC for €18,000 and 2 ETH for €1,600 each
13/06/2022 - Andrew sells 1 BTC for €20,000
19/08/2023 - Andrew sells 3 ETH for €2,000 each
As you can see, Andrew made two disposals. Let’s calculate the gain for each disposal one at a time.
Andrew sells 1 BTC for €20,000
Please be aware that in this guide, we will be using the FIFO accounting method as recommended by the BMF. A more comprehensive discussion of accounting methods is provided later in the guide. For now, a straightforward way to comprehend how the FIFO (First-In-First-Out) method operates is to imagine that the first asset you purchase is the first one you sell.
Now, this is the same BTC acquired on 03/02/2022 for €14,000
Cost Basis = €14,000
Disposal Amount = €20,000
Capital Gain/Loss = Disposal Amount - Cost Basis = €20,000 - €14,000 = €6,000
3 ETH sold for €2,000 each.
If we use the FIFO accounting rules, these ETH tokens are the same ones that were acquired on 06/04/22 for €1,400 each
Cost Base = €1,400
Disposal Amount = €2,000
Capital Gain for 1 ETH = €2,000 - €1,400 = €600
So for 3 tokens, the total gain comes out to be = 3*600 = €1,800
Total Gain for both disposals = €6,000 + €1,800 = €7,800
Old Tax Regime
Before March 2022, taxpayers were not allowed to offset their capital losses and had to do away with them without availing of tax benefits.
New Tax Regime
Under the new tax regime in Austria, taxpayers are granted the ability to offset their capital losses with their capital gains, considering that cryptocurrencies are now recognized as tangible assets. However, it's important to note that you can only offset your losses against gains by applying the same taxation principles. This means that if you intend to neutralize your crypto losses, you can only do so by offsetting them against capital gains that fall within the 27.5% tax bracket.
In simpler terms, losses incurred before March 1, 2022, cannot be utilized to offset gains achieved after the implementation of the tax reform, unless you voluntarily choose taxation under the new tax regulations.
The BMF is yet to release specific guidance on how lost or stolen crypto is viewed from a tax perspective. However, it is likely that these losses will be assessed on a case-by-case basis and may be deducted from your overall income to lower your tax bill, given that you can offer all the supporting documents to prove the ownership of assets before theft.
Most countries offer tax breaks to crypto investors, and Austria is no exception. The Austrian tax authorities offer multiple tax breaks under both the old and new tax regimes. Listed below are some of them:
Old Tax Regime
New Tax Regime
The FIFO (First-In First-Out) cost basis method is recommended for cost basis calculations in Austria. This method assumes that the first assets purchased or acquired is also the first assets sold or disposed of.
In crypto investments, FIFO would mean that the first cryptocurrencies purchased are also the first ones sold.
Here's an example of how the FIFO accounting method works:
Consider the following transactions made by Mark:
Let's say you decide to sell 2 BTC on 01/07/2021 when the price is €35,000 per BTC.
Using the FIFO accounting method, you would sell the 2 BTC you purchased on 01/01/2021 and 01/03/2021 as they were the first two BTC purchased.
For the BTC purchased on 01/01/2021, the cost basis is €10,000 and for the BTC purchased on 01/03/2021 the cost basis is €20,000.
So the collective cost basis for both BTC tokens would be = €10,000 + €20,000 = € 30,000
Now the total amount received on the disposal of 2 BTC = €70,000
Capital Gain/Loss = €70,000 - €30,000 = €40,000
As previously mentioned, the tax authorities regarded gains from crypto-related transactions as income and subjected them to taxation according to income tax laws. However, under the new tax guidelines, a new overarching tax known as the stock tax has been introduced, replacing the previous income tax system. This change signifies a shift in the taxation framework for crypto-related gains.
We have discussed it in detail in the above section titled “Crypto Capital Gains”.
For assets bought before March 1, 2022, your net income is simply the sum of capital gains made for all short-term trades, as any disposal made after over a year of holding these assets is not taxable under the old tax guidelines. You can refer to the above section titled “How to calculate crypto gains and losses” if you have any doubts about how to calculate your capital gains.
Listed below are some tax-free transactions in Austria under both the new and old tax laws:
In addition to this, by opting into the new tax reform, you can avail of some additional tax benefits:
Listed below are some of the taxed crypto transactions in Austria:
Mined tokens are taxed based on the timing of the mining activity. If the tokens were mined on or before February 28, 2022, they would be subject to income tax and if the tokens were mined on or after March 1, 2022, they would be taxed upon receipt at a flat rate of 27.5%.
When disposing of these mined tokens, if the disposal occurs before March 1, 2022, income tax will be imposed on the transactions, with the tax rate varying based on your income bracket. However, if the disposal takes place after March 1, 2022, a flat rate of 27.5% will be applicable.
Starting from March 1, 2022, the trading of mined coins is tax-free. Furthermore, if you mined coins before February 28, 2021, and held them for over a year, these holdings will be considered as legacy assets. As a result, any profits from selling, trading, or utilizing these coins will not be subject to tax.
The BMF under the new tax reform clearly states that income deemed to be generated is taxable. According to a document titled Tax Treatment of Cryptocurrencies published by the Federal Ministry Republic of Austria
“...current income is not deemed to be generated if:
the service associated with processing the transaction consists primarily of investing (staking) existing cryptocurrency…”
However, tokens received as staking rewards inherit a cost basis of zero to ensure that all your gains are taxed once you decide to dispose of these tokens.
The BMF lacks a definitive framework for determining the tax implications of trading activities involving crypto margin trading, futures, and other CFDs. Nonetheless, it's worth noting that the 27.5% tax rate that applies to capital gains from financial assets, including derivatives, generally also pertains to crypto. It's recommended that you consult with a tax expert for specialized guidance regarding the taxation of crypto derivatives and other CFDs.
Although the BMF guidelines do not specifically mention income from DAOs, they do mention cryptocurrency holding acquired using a technical activity involving transaction processing services are deemed to be currency income and are subject to income tax.
However, the nature and scope of these technical activities should not extend beyond simple asset management work. Otherwise, the income would be classified as income from commercial activity. Working at a DAO involves completing more complex tasks. and therefore income from DAOs may be categorised as income from commercial activity.
We suggest seeking advice from an experienced tax advisor to understand how income from DAOs is taxed.
ICOs are events that allow investors to own native tokens from unreleased projects at a discounted price. It is similar to IPOs from traditional markets and involves swapping mainstream tokens like BTC and ETH to get access to project-native tokens.
Although the guidelines do not specifically mention how income from ICOs will be taxed, these transactions will likely be viewed as crypto-to-crypto trades. The BMF does not consider crypto-to-crypto trades as taxable.
However, it is advisable to seek guidance from an experienced tax accountant to avoid legal complications in the future.
If you're considering gifting or donating crypto assets in Austria, there is good news for you. Gifting crypto is not subject to taxation. However, there are certain reporting requirements to be aware of. If you are gifting assets to your relatives, any donations exceeding €50,000 should be reported to the BMF. While if you are gifting to friends or third parties, the reporting threshold decreases to €15,000.
While the BMF still needs to provide specific guidelines for crypto donations, based on existing knowledge about fiat donations, it is reasonable to assume that crypto donations made to registered charities are eligible for tax deductions. Furthermore, you are not required to report these transactions to the BMF. The organization receiving the grant is responsible for reporting the transactions to the BMF, and the information will be automatically included in your employee tax assessment report.
In Austria, the taxation of NFTs largely depends on their intended use and the specific circumstances of their acquisition and sale.
If an individual buys an NFT as an investment and later sells it for a profit, any capital gains realized from the sale will be taxed based on the date of disposal. If acquired and disposed of on or after March 1 2022, the gains will be subjected to a flat rate of 27.5% in the new tax regime, and if disposed before that, the gains will be subjected to the regular income tax rates.
On the other hand, if an NFT is acquired and sold as part of a business activity, the transaction may be subject to Value Added Tax (VAT) at a rate of 20%. This would be the case. For example, if a company creates and sells NFTs as part of its regular business operations.
The BMF is yet to release clear guidelines on the taxation of DeFi transactions. However, this does not imply that DeFi transactions are tax-free. It just means that you need to interpret the current guidelines and apply them to your DeFi transactions to calculate your NFT taxes.
Lucky for you we deliberated this matter with tax professionals, and here’s what we found about the taxation of DeFi transactions:
Soft forks are non considered taxable by the BMF as no new tokens are redistributed among the chain participants.
Tokens received through airdrops and hard forks are treated similarly for tax purposes. They are not taxed upon receipt and have a cost basis of €0, which is not good news. This means that when you sell your tokens, you will be taxed on their entire value, not just the gains. If you sell these tokens on or before February 28, 2022, regular income tax rules will apply, but if you sell them after that date, a flat tax rate of 27.5% will be charged on the sale.
The financial year in Austria runs from January 1 to December 31. Taxpayers must file their returns by April 30 (for paper forms) or June 30 (for online returns) of the following year. For instance, the current financial year is from January 1, 2022, to December 31, 2022, and the deadline for postal returns is April 30, 2023, while for online returns, it's June 30, 2023. It's essential to keep these dates in mind to avoid penalties for late submissions.
Note that if you file your tax return through a registered tax professional, the deadline extends to 31st March 2022.
When filing taxes in Austria, cryptocurrency investments are considered part of the taxpayer's annual return. Such investments should be reported electronically using the FinanzOnline portal before the 30th of June. Specifically, individuals should report their cryptocurrency investments under the "other income" category on their Income Tax Return - E1.
Here’s a step-wise tutorial on how to file your crypto taxes using the online Finanz portal:
Note that you need to complete all your income calculations and review them thoroughly before you file your taxes so that you can validate the tax calculations made by the software. One way to avoid this is by using crypto tax software like Kryptos to do these calculations. The platform can auto-fetch all your transactions and calculate the cost basis for each one of them, generating legally compliant tax reports in a matter of minutes.
Now that you’re aware of how your crypto transactions are taxed and what forms you need to fill out to complete your tax report, here’s a step-wise breakdown of how Kryptos can make this task easier for you:
If you need clarification regarding the integrations or generating your tax reports, you refer to our video guide here.
The BMF hasn’t released an official list of documents that taxpayers need to maintain, but as a general rule, maintain the following documents to avoid complications while filing taxes:
There is no legal way to avoid crypto taxes altogether in Austria and you might end up in trouble with the tax authorities if you choose to do so. However, there are ways you can reduce your tax bill and pay less taxes. We’ve already discussed most of them in detail in prior sections of the guide under the section titled “Crypto Tax Breaks Austria''. Here’s a summary:
1. Is Crypto legal in Austria?
Yes, crypto is legal in Austria. Austria has a clear regulatory framework for cryptocurrencies and has recognised them as a means of payment since 2019. The country has implemented anti-money laundering (AML) regulations that apply to cryptocurrency exchanges and service providers, and the Financial Market Authority (FMA) is the responsible regulatory body for overseeing compliance with these regulations. Overall, Austria has been proactive in embracing blockchain technology and cryptocurrencies, with several initiatives aimed at promoting innovation in this field.
2. How is Crypto taxed in Austria?
In Austria, cryptocurrencies are treated as assets and are subject to capital gains tax. Therefore, any profit from buying and selling cryptocurrencies is subject to taxation, just like any other investment.
When calculating capital gains tax, the cost basis of the cryptocurrency is determined based on the value at the time of acquisition. If the cryptocurrency is held for more than one year, the tax rate on the capital gains is 27.5%. If the cryptocurrency is held for less than one year, the gains are taxed as income, with a progressive income tax rate that ranges from 0% to 55%.
It's also worth noting that any income received in cryptocurrency, such as through mining or airdrops, is subject to income tax. Additionally, if a business accepts cryptocurrency as payment, the transaction is subject to value-added tax (VAT) in the same way as any other transaction.
3. Is any crypto tax-free in Austria?
In Austria, there is no tax-free cryptocurrency. All gains from buying and selling cryptocurrencies are subject to taxation, just like any other investment. Even if you receive cryptocurrencies as a gift or through an airdrop, they are still subject to taxation as income.
4. How to file crypto taxes using Kryptos?
We’ve already discussed how to file your crypto taxes in the above sections of the guide offering a stepwise breakdown of the entire process. However, we agree that it is unreasonably complicated even for someone with a fair amount of prior knowledge. Although there’s an easy way to file your crypto taxes using a crypto tax software called Kryptos.
Where all you need to do is log in on the platform, add all your trading accounts, wallets, and DeFi accounts and sip coffee while Kryptos does all the heavy lifting for you. The platform can auto-fetch all your transactions from the tax year and generate a legally compliant tax report within a matter of minutes while also suggesting ways to lower your tax bill. It works like magic, all you need to do is try it once.
All content on Kryptos serves general informational purposes only. It's not intended to replace any professional advice from licensed accountants, attorneys, or certified financial and tax professionals. The information is completed to the best of our knowledge and we at Kryptos do not claim either correctness or accuracy of the same. Before taking any tax position / stance, you should always consider seeking independent legal, financial, taxation or other advice from the professionals. Kryptos is not liable for any loss caused from the use of, or by placing reliance on, the information on this website. Kryptos disclaims any responsibility for the accuracy or adequacy of any positions taken by you in your tax returns. Thank you for being part of our community, and we're excited to continue guiding you on your crypto journey!