Crypto Tax Return in Germany: Deadlines, Penalties, Consulting

A crypto tax return accurately brings together one's trading data, closes any gaps logically and determines the taxable profit, which is then reported to the German tax office. How can such gaps occur? Investors use cryptocurrencies very individually and differently. Unfortunately, data is often lost in the process. Sometimes file sharing networks disappear from the market and even a wallet can be lost. But a crypto tax return must bring all data together to determine the profit/loss. Due to the individual circumstances, an accompanying letter of clarification is also part of the crypto tax return. This way the tax office is kept informed about the facts and is also immediately "pointed in the right direction" concerning the fiscal assessment.

Anyone who has made taxable profits from activities with cryptocurrencies in a given year must file a tax return. This also applies if the person is otherwise not obligated to submit a tax return in Germany and is not requested to do so by the tax authorities. Especially students and employees might therefore fail to submit a tax return. This is a quick way to commit illegal tax evasion.

The deadline for filing the tax return is generally on July 31 of the following year. This means that for the year 2019 it was July 31, 2020. Those who submit their tax return through a tax consultant are given more time, namely until February 28 of the year after next. In addition, a tax consultant can often apply for an extension of the deadline with the tax authorities if the processing of the crypto activities is particularly complex.

You generally need all CSV files of the exchanges and wallets you are using. In addition, you will need all further information on any secondary activities such as participation in ICOs, lending of cryptocurrencies, etc. The more complete the information is, the faster the crypto tax return can be produced.

Basically, this is possible. In this case, you have to calculate the profits yourself and enter them correctly into the SO or KAP file. For higher profits, the independent declaration of all profits is not recommended.

If you declare fewer profits than you actually made or do not file a tax return at all, you may be guilty of tax evasion. In the case of negligent miscalculation, this also constitutes an illegal tax reduction. The tax authorities can order criminal prosecution measures, including house searches and the seizure of electronic equipment if they suspect that you are guilty of tax evasion. You may also have to pay penalty interest on the taxes evaded.

One fundamental mistake is not to file a tax return because you have only "made crypto" and have not exchanged money back into Euros. However, every exchange of cryptocurrencies can already be a taxable event! Another common mistake is that not all necessary data is included in the evaluation, for example, because the transaction only concerns small amounts or because an exchange has disappeared and one no longer has access to its trading history.

In many cases, a semi-automatic solution such as the one offered by our partner Accointing is the best choice. It allows you to import your own exchange and wallet data, determine the respective sources of received cryptocurrency and have the profit calculated. This result is submitted to the tax office together with the tax return.

However, there are cases, which are far off the standard, e.g. because unusual procedures were carried out:

• Loan of cryptocurrencies from friends and relatives,
• Delegated Proof of Stake,
• Investments in DeFi-Products

These processes are very individual and can hardly be represented by software. A very high calculated (tax-free) profit or loss can also be a reason to have the software result checked one more time by a trained eye.

WINHELLER is an accounting firm specializing in crypto taxes and offers to process your activities with cryptocurrencies down to the smallest detail, calculate the profit made and prepare your tax return from scratch.

Together with a customized accompanying statement, we then submit everything to the tax authorities. We

• handle all communication with the authorities,
• clarify additional requests and
• accompany you all the way to the final tax assessment.

Experience has shown that the tax authorities follow the estimate of your profits or losses provided by us. If this should not be the case, we will also file an objection and, if necessary, legal proceedings on your behalf.