Tax aspects when trading on crypto exchanges

Tax aspects when trading on crypto exchanges


When trading cryptocurrencies Crypto brokers or Trading platforms The question often arises about the tax treatment of profits. In Germany, crypto exchanges are not obliged to Steer automatically transferred to the tax office. In fact, this is not even possible, unlike with stock trading.

Since profits from cryptocurrencies are subject to income tax, the tax liability depends on the individual tax rate, which the exchange does not know. In addition, users can transfer coins from other platforms or wallets to an exchange, which means that the holding period is not clearly traceable for tax purposes. Therefore, the responsibility for correct taxation lies entirely with the investors themselves.

Who is responsible for taxing crypto profits?

In Germany, crypto exchanges cannot automatically pay taxes on profits generated to the tax office, as this is not possible for several reasons.

  • Unlike traditional financial institutions that withhold capital gains tax directly, there is no uniform automatic taxation regime for cryptocurrencies.
  • Profits from trading cryptocurrencies are subject to income tax and the amount of tax depends on the investor’s individual income tax rate. Since crypto exchanges do not have information about the user’s entire tax profile, they cannot determine the tax rate or carry out a tax-correct calculation.
  • It is also possible for coins to be transferred to the exchange from another platform or wallet. As a result, the exchange knows neither the original purchase time nor the purchase price of the cryptocurrency.

This missing information makes it impossible to determine the tax holding period and the tax rate and to correctly calculate potential tax exemption after one year or even the amount of taxes. Therefore, the responsibility for determining and properly taxing profits lies entirely with the investor.

Tax obligations for users of crypto exchanges

Crypto exchange users are responsible for meeting their tax obligations. Since stock exchanges do not pass on tax data to the tax office and do not make tax deductions, investors must calculate their profits independently and declare them in their tax return.

To do this, it is necessary to record all transactions – including purchases, sales, transfers between wallets and Staking returns – documented carefully. A complete record of all movements is crucial in order to correctly determine the holding period and to be able to prove tax-free profits after one year.

To make this process easier, it is recommended to use specialized tools such as CoinTracking, which automatically record transaction data and enable clear preparation for tax returns.

Such tools allow users to import all their trading activity, calculate profits and generate tax-related reports. This significantly reduces effort and helps avoid errors. However, it is still advisable to coordinate the data created with a tax advisor to ensure that all tax requirements are correctly adhered to.



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