Ever since cryptocurrencies like Bitcoin, Ethereum and Ripple first made an appearance, a lot has changed in Austria concerning the legal treatment of these new virtual currencies. In this blogpost, we will share the most important facts and information regarding the taxation and regulation of cryptocurrencies in Austria.
Cryptocurrencies in Austria
According to the current legislation in Austria, cryptocurrencies are not considered to be legal tender. Because of this, they are treated like any other financial asset, e.g. stocks or tokenized metals. Therefore, all profits made through trading and/or selling cryptocurrencies are legally considered to be income. Austria has a tax-exempt amount of 11.000 Euro for additional income, however, it is very important to document and declare all of your crypto-assets and transactions, no matter how much or how few that is. This gives you legal security in case of a tax audit and can be used as a proof of origin for disbursement.
The Taxation of Cryptocurrencies in Austria
For individuals, the taxation of cryptocurrencies largely depends on whether you realized profit through these assets and how long the cryptos have been in your possession. If you hold your crypto-assets for longer than a year they are no longer considered to be part of trading and are tax-free. Any profit made through them is then tax-exempt for private individuals. Keep in mind though that this is also true for realized losses, meaning that you can't set them off after a year.
However, if you trade your cryptos in for any other asset, product, service, legal tender or any other cryptocurrency within a year of holding them regular income taxation applies to them. You will have to calculate whether you made any profit by deducting the price you paid for buying them from the price that they were at when you traded them. A common method for this is the FIFO calculation, which implies that the oldest tranch is sold first. In special cases, it is allowed to use other calculation methods in Austria to minimize your taxes. Aside from that, an amount of 440 Euros is considered tax-free for these type of speculation activities, anything more than that has to be taxed.
The Austrian taxation system has progressive rates for the income tax, ranging from 25% to 55% and they depend on your overall annual income.
Caution: As tokenized securities (Security Token) become more common your crypto-portfolio may be divided into different asset classes. In Austria, security token are legally treated just like regular securities. All realized profit is subject to a flat tax rate of 27,5% and ist not tax-exempt after a year of holding it.
To avoid any fines and penalties when it comes to proper taxation we highly recommend to declare any profit made through the use of cryptocurrencies in your income tax declaration. You can find more information about this topic on this blogpost. Generally, we highly advise you to always document all of your trading and your transactions on any exchange, to avoid unforeseen problems concerning missing proofs of origin, in case the data may no longer be available in the future. The Blockpit platform automatises this process by using an API interface and offering a permanent and current documentation with an optimized tax report. To find more information about it klick here.
Finding out whether commercial use of cryptocurrencies is the case will depend on many different factors. It will have to be examined in every specific case and cannot be generalized. Aside from that, any company that offers services surrounding cryptocurrencies has to report themselves and inform the Austrian financial authority (Finanzmarktaufsicht, FMA). The reason for this are the new AML5 guidelines, which apply to all countries of the EU.
More and more Austrian companies focus on services and products concerning the use of cryptocurrency and government institutions have started to show more interest for this topic. Cryptocurrencies and blockchain technology are also mentioned in the current governing parties' official program. Many FinTechs and StartUps contribute to Austria being able to compete at an international level. Even the first payment terminal that automatically uses and accepts cryptocurrencies is from the small European country.
Disclaimer: The information provided in this blog post is for general information purposes only. The information was completed to the best of our knowledge and does not claim either correctness or accuracy. For detailed information on crypto regulations we recommend contacting a certified legal advisor in the respective country. If any questions occur, feel free to contact us in our social media channels.