Germany: Crypto held for more than a year will not get taxed(vanticatrading.com)
vanticatrading.com
Germany: Crypto held for more than a year will not get taxed
https://www.vanticatrading.com/post/germany-crypto-held-for-more-than-a-year-will-not-get-taxed
230 comments
Interesting to compare that to what happens across the border in Denmark, where crypto is treated as speculation: EVERY individual sale you make has the profit taxed as personal income (calculated as FIFO and so up to ~52%) but the losses have deduction taxed separately at about 26%.
Thus you can end the year with 0 net profit, but a huge tax bill!
Thus you can end the year with 0 net profit, but a huge tax bill!
governments are really immoral when it comes to crediting losses.
it’s pretty easy to be taxed while losing money, even in the USA.
it’s pretty easy to be taxed while losing money, even in the USA.
The headline is miss-leading. As a German tax-residency I can give some background.
Already in the existing tax law, crypto held for more than a year didn't get taxed. If you sold within the first year your personal income-tax rate got applied. Which is most likely 45% if you work in any tech-related position.
The only exception was if the coins/tokens were used for staking the tax-free holding period got extended to 10 years.
This has changed now. All crypto held for more than one year will not get taxed.
Technically, it is also not a new tax law. The tax-authorities changed their interpretation, how the existing tax-law should be applied for crypto-holdings.
Already in the existing tax law, crypto held for more than a year didn't get taxed. If you sold within the first year your personal income-tax rate got applied. Which is most likely 45% if you work in any tech-related position.
The only exception was if the coins/tokens were used for staking the tax-free holding period got extended to 10 years.
This has changed now. All crypto held for more than one year will not get taxed.
Technically, it is also not a new tax law. The tax-authorities changed their interpretation, how the existing tax-law should be applied for crypto-holdings.
> your personal income-tax rate got applied. Which is most likely 45% if you work in any tech-related position.
The 45% bracket starts at 277.826 € in 2022. That is definitely not the kind of money people in a "tech-related position" in Germany routinely earn.
The 45% bracket starts at 277.826 € in 2022. That is definitely not the kind of money people in a "tech-related position" in Germany routinely earn.
Yup. But that's marginal tax rate. Average tax rate for e.g. 150k EUR income is 37.8%.
See https://www.bmf-steuerrechner.de/ekst/eingabeformekst.xhtml
See https://www.bmf-steuerrechner.de/ekst/eingabeformekst.xhtml
That’s surprisingly low, not too different from US tax rates!
The employee has to pay a ton of social security contributions and insurance in Germany, which in many other countries are paid by the employer, making the net salary most likely about half of the gross salary.
True! But it's also worth noting that those contributions are capped in Germany. This is different from other EU countries such as Portugal. For pension the cap is ~85k. For public health insurance is ~58k EUR, but you can opt out of this and get private health insurance instead as well.
Yes, you are correct. My fault.
It is 42% if your income is higher than 57.918 Euro (2021). Most tech-related positions will achieve that.
It is 42% if your income is higher than 57.918 Euro (2021). Most tech-related positions will achieve that.
The 42% income tax is the marginal rate and it's the one for singles.
Try https://www.bmf-steuerrechner.de/ekst/eingabeformekst.xhtml
As an example, for 60,000 Euros (a more typical magnitude) your tax rate will be 26.55% if you are single, 16.73% if you are married (using splitting).
Try https://www.bmf-steuerrechner.de/ekst/eingabeformekst.xhtml
As an example, for 60,000 Euros (a more typical magnitude) your tax rate will be 26.55% if you are single, 16.73% if you are married (using splitting).
So the crypto gains will be taxed at 42% because these are presumably on top of your salary.
Money is fungible. You could equally say the crypto is taxed at a lower rate but then (a larger part) of your salary would be taxed at the higher bracket.
Income streams on the other hand are not nearly that fungible. You can either work full time or not at all most of the time.
So unless you can turn crypto trading into a full time (or more precisely minimum salary) gig, it is a marginal activity taxed at the marginal tax rate.
So unless you can turn crypto trading into a full time (or more precisely minimum salary) gig, it is a marginal activity taxed at the marginal tax rate.
The decimal as a thousands separator made me read that as a much smaller number, and I was surprised that Germany calculated tax rates to 3 decimal digits.
For other confused people, read that as: €277,826.
For other confused people, read that as: €277,826.
Uh, yeah. I copied that straight out of German Wikipedia without paying attention to the number formatting.
99% of techies I know who are also financially literate enough to be stacking sats are in the top 5% bracket income-wise. I know that because I know what sort of offers suggested by me they have rejected. If the 5-th percentile of tech pay in Germany is around that amount, I can't tell.
Are there state level and municipal level income taxes as well?
Nope. The income taxes are distributed in a fixed ratio, 15% goes to the municipality/county, and 42.5% each to the state and the federal budget.
There is
- TV tax (also if you don't own a TV),
- pension tax (also if you have ETFs of your own),
- care and health insurance are two things separately deducted before money makes it into your bank account,
- iirc until 2021 eastern germany taxes to help poorer regions,
- church taxes if your parents signed you up for it -- until you pay a fee to get unregistered from the church.
This is all separate from income tax. And of course if you own a car or want to use public transport that's separate still.
Not sure what my landlord pays for waste management, in NL I think you pay separately for that, can't quickly find it for Germany (German Wikipedia about Kommunalabgaben says Abwassergebühren are indeed a municipality or city circle thing, but then two others said you don't pay anything to the municipality so I'm not confident I'm reading this German article correctly).
- TV tax (also if you don't own a TV),
- pension tax (also if you have ETFs of your own),
- care and health insurance are two things separately deducted before money makes it into your bank account,
- iirc until 2021 eastern germany taxes to help poorer regions,
- church taxes if your parents signed you up for it -- until you pay a fee to get unregistered from the church.
This is all separate from income tax. And of course if you own a car or want to use public transport that's separate still.
Not sure what my landlord pays for waste management, in NL I think you pay separately for that, can't quickly find it for Germany (German Wikipedia about Kommunalabgaben says Abwassergebühren are indeed a municipality or city circle thing, but then two others said you don't pay anything to the municipality so I'm not confident I'm reading this German article correctly).
Let's clarify a bit here.
- There is no "TV tax". There is a fee that most households (not people) must pay. It's always the same, no matter what your personal marginal tax rate is.
- pension premiums are not a tax. For employees they get deducted from your gross income and effectively lower your tax - and gains from ETF are not considered.
- For care and health insurance it's the same as for pension.
- Yes, there's still a tax for western Germany to help eastern Germany
- Yes, there's church tax (if you are already e.g. catholic) and yes you have to be a fee to get out of it.
In addition, for employees (and some others) there are:
- Mandatory unemployment premiums
- Additional premiums for care insurance if you are single
- Mandatory accident insurance (paid by the employer though)
- There is no "TV tax". There is a fee that most households (not people) must pay. It's always the same, no matter what your personal marginal tax rate is.
- pension premiums are not a tax. For employees they get deducted from your gross income and effectively lower your tax - and gains from ETF are not considered.
- For care and health insurance it's the same as for pension.
- Yes, there's still a tax for western Germany to help eastern Germany
- Yes, there's church tax (if you are already e.g. catholic) and yes you have to be a fee to get out of it.
In addition, for employees (and some others) there are:
- Mandatory unemployment premiums
- Additional premiums for care insurance if you are single
- Mandatory accident insurance (paid by the employer though)
I'm not opposed to them btw, but as a Dutch person I found it weird to have this all split out. In NL you get AOW no matter if you're the queen or just Joe, you just have to be of pensionable age and iirc lived in NL during your working life. The public broadcasts are financed with tax money but not every household separately gets a bill equivalent to a Netflix subscription to be paid for a year ahead. If we pay money to zimbabwe then that's just regular tax money also, not another separate solidarity tax entry on your payslip.
> I'm not opposed to them btw, but as a Dutch person I found it weird to have this all split out.
No problem, I'm just trying to shed some light into it for those not German and/or not familiar with how it works in Germany. Also, these things are difficult and there are many pros and cons, so I'm not even sure what my own opinion is on many of those things. But I can at least provide some pros & cons and then everyone can make up their own mind about it.
> In NL you get AOW no matter if you're the queen or just Joe, you just have to be of pensionable age and iirc lived in NL during your working life.
In Germany it's different because the amount of your pension depends on your contributions - hence it makes sense for it to be different from tax that you pay (which have no impact on your pensions at all).
At the same time it has benefits if things are listed out separately, because it increases transparency to where your money goes. At the same time it increases beaurocracy (and hence costs for administration) quite a bit, in particular for foreigners.
> The public broadcasts are financed with tax money but not every household separately gets a bill equivalent to a Netflix subscription to be paid for a year ahead.
The reason why this is a fee in Germany and not a tax lies in the idea that the public media should be more independent from the politics. Whether this really works or not is a different question, but it was set up like this so that politicians can't "threaten" journalists and public media by reducing their budgets if they don't do as politicians want. At the same time. The process for deciding on the amount of the fee is a bit complicated and involves politicians as well, but not only.
It definitely adds friction that it's a separate system. For instance, exceptions are being made for certain groups e.g. people who live on social welfare, who are students without income and sufficient financial support from their parents, people who have heavily impaired vision/hearing and so on.
No problem, I'm just trying to shed some light into it for those not German and/or not familiar with how it works in Germany. Also, these things are difficult and there are many pros and cons, so I'm not even sure what my own opinion is on many of those things. But I can at least provide some pros & cons and then everyone can make up their own mind about it.
> In NL you get AOW no matter if you're the queen or just Joe, you just have to be of pensionable age and iirc lived in NL during your working life.
In Germany it's different because the amount of your pension depends on your contributions - hence it makes sense for it to be different from tax that you pay (which have no impact on your pensions at all).
At the same time it has benefits if things are listed out separately, because it increases transparency to where your money goes. At the same time it increases beaurocracy (and hence costs for administration) quite a bit, in particular for foreigners.
> The public broadcasts are financed with tax money but not every household separately gets a bill equivalent to a Netflix subscription to be paid for a year ahead.
The reason why this is a fee in Germany and not a tax lies in the idea that the public media should be more independent from the politics. Whether this really works or not is a different question, but it was set up like this so that politicians can't "threaten" journalists and public media by reducing their budgets if they don't do as politicians want. At the same time. The process for deciding on the amount of the fee is a bit complicated and involves politicians as well, but not only.
It definitely adds friction that it's a separate system. For instance, exceptions are being made for certain groups e.g. people who live on social welfare, who are students without income and sufficient financial support from their parents, people who have heavily impaired vision/hearing and so on.
Doesn't matter what terms you slam on it, in the end very few coins enter your pocket / stay there (I'm looking at you, vat) in Germany even if you just have a mediocre income.
It doesn't matter for what ends up in your pocket from your paycheck in the end.
But it still matters quite a bit. If you just see "deductions: 42%" on your paycheck, that's different from seeing "3% tax because you don't have children, 4% tax because you live in west Germany, ...". It helps you understand your life situation's impact on what ends up in your pocket and it also educates people in some way, e.g. there will be more public discussions if it's still necessary for western Germany to support eastern Germany if the impact is immediately visible on your paycheck.
In addition, since pension is not a tax, it matters both in the sense that higher pension contributions lower the tax you pay _and_ it also matters in that you earn claims against the state for receiving pension later on. Pension contributions are protected very differently by German law compared to if it were just a tax and you would gain welfare from the state when you stop working. This might be a nitty gritty detail, but it starts to matter when people want to change pension distributions - e.g. some changes suddenly might require 2/3 of the parliaments votes instead of a simple majority vote.
I could go on, but I think that's enough food for the mind.
But it still matters quite a bit. If you just see "deductions: 42%" on your paycheck, that's different from seeing "3% tax because you don't have children, 4% tax because you live in west Germany, ...". It helps you understand your life situation's impact on what ends up in your pocket and it also educates people in some way, e.g. there will be more public discussions if it's still necessary for western Germany to support eastern Germany if the impact is immediately visible on your paycheck.
In addition, since pension is not a tax, it matters both in the sense that higher pension contributions lower the tax you pay _and_ it also matters in that you earn claims against the state for receiving pension later on. Pension contributions are protected very differently by German law compared to if it were just a tax and you would gain welfare from the state when you stop working. This might be a nitty gritty detail, but it starts to matter when people want to change pension distributions - e.g. some changes suddenly might require 2/3 of the parliaments votes instead of a simple majority vote.
I could go on, but I think that's enough food for the mind.
And Gewerbesteuer, if you’re self-employed. Unless you’re Freiberuflich…
Yeah, and contributions to e.g. IHK and so on. That's why I focussed on employees. :)
No.
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That doesn't make any sense to me if I'm understanding it correctly. If you buy $100 in bitcoin and sold for $120 then you'd have to pay $54 in taxes? That can't be right unless it's 45% on the $20 extra that you "profited" ?
You've only made an income of $20, so you're only taxed on that.
IANAL (but German): I am only aware that you have to pay taxes on gains. I'd be pretty sure (or very much surprised) if you had to pay e.g. $50 in taxes after buying $200 of crypto, losing half of it and then converting the remaining $100 back to cash. So given your example you report $20 gained on the transaction and pay $10 in taxes.
If you've to pay taxes in German and move serious amounts of money (be it stock or crypto): Get a tax accountant and setup some tax avoi... optimization. I feel like our system essentially demands this.
Oh, I'm lazy and always do tax estimates with 50% instead of 45%.
If you've to pay taxes in German and move serious amounts of money (be it stock or crypto): Get a tax accountant and setup some tax avoi... optimization. I feel like our system essentially demands this.
Oh, I'm lazy and always do tax estimates with 50% instead of 45%.
I'm from Germany and sold my ETH at the peak some time ago with a profit of ~80k. It was a very strange feeling to receive that completely untaxed, as everything else is taxed here.
> I'm from Germany and sold my ETH at the peak some time ago with a profit of ~80k. It was a very strange feeling to receive that completely untaxed, as everything else is taxed here.
If you buy a car (let's say an oldtimer) and sell it for more money than you bought it after one year, it is also tax free.
Real estate is also tax free after two years (or ten years, depending on whether you have lived in it).
If you buy a car (let's say an oldtimer) and sell it for more money than you bought it after one year, it is also tax free.
Real estate is also tax free after two years (or ten years, depending on whether you have lived in it).
Did you declare the 80k profit on your tax return?
I haven’t lived in Germany, but in the European countries I know, that would qualify as capital gains.
I haven’t lived in Germany, but in the European countries I know, that would qualify as capital gains.
Seems that it’s treated as “personal asset” in Germany just like a car, thus not capital gains at all like stocks, which would always be taxed at 25%.
> Real estate is also tax free after two years
Gold one year (and free of VAT, when buying)
Gold one year (and free of VAT, when buying)
That's true. I stand corrected.
> was a very strange feeling to receive that completely untaxed,
Well thats the absurdity of the German tax system.
People which do not have much don't pay much taxes (lower %cut).
People who are more wealthy then that pay a lot of taxes (max %cut).
People who are even more wealthy again much less taxes (still max %cut, but docents of ways to circumvent taxes, and "safely" launder money e.g. by going through art collections, buildings etc.).
Well thats the absurdity of the German tax system.
People which do not have much don't pay much taxes (lower %cut).
People who are more wealthy then that pay a lot of taxes (max %cut).
People who are even more wealthy again much less taxes (still max %cut, but docents of ways to circumvent taxes, and "safely" launder money e.g. by going through art collections, buildings etc.).
It also has crazy things like taxation on energy produced by your solar panels that you use yourself.
It has taxation on energy usage independent of source. Given that traditionally alternate sources where things like companies having their own small gas power plant or similar this isn't really crazy. (Some details you can skip: The law effectively was about preventing circumvention of taxes on wasting energy, preventing unhealthy fragmentation in the power grid, making stabilizing the power grid easier and helping/subventing electric companies which back then often where state owned, i.e. tax payer financed; The law somewhat made sense for this goals, in the past. But only in the past. Change in technology and the ecosystem make it IMHO sub-optimal today. Today we probably should push for interconnected micro-grids with some decentralized energy sources each.)
Today the law is stuck in the past and should be changed IMHO. At least an exception for green decentralized energy and/or excluding (only) small producers should be done, maybe more.
Thinking about it currently is the best political weather for it.
Today the law is stuck in the past and should be changed IMHO. At least an exception for green decentralized energy and/or excluding (only) small producers should be done, maybe more.
Thinking about it currently is the best political weather for it.
It's the same in the US.
I do some amateur stonks trading and I believe the bank I trade at will withhold some taxes for dividends paid; I presume that the total monetary value of stocks + cash held on January 1st of every year is passed on to the tax office, who will use it for capital gains taxes (iirc it's a percentage of 4% of the amount, that is, they assume you will, on average, be able to get a 4% ROI on investments and tax that return).
This difference between income taxes and possession / investment taxes is why pretty much everywhere in the world, high ranking and high earning people don't pay as much taxes because their earnings will be from stocks and non-wage income. I'm sure there's macro-economic reasons behind it, I dunno.
This difference between income taxes and possession / investment taxes is why pretty much everywhere in the world, high ranking and high earning people don't pay as much taxes because their earnings will be from stocks and non-wage income. I'm sure there's macro-economic reasons behind it, I dunno.
Yeah it’s a pretty surreal feeling especially considering how Germany has an absolutely antiquated system on startup stock options that would simply tax your potential gains to oblivion, which ranks bottom in Europe together with Belgium. See https://www.indexventures.com/rewardingtalent/country-detail... Still considering leaving in the near future because of this and a few other factors (e.g. gloomy winter).
Physical gold is also tax free after a year in Germany.
How does this work? Do you declare that you have sold crypto at all, or you just sell after one year without notifying anyone?
The second option. I simply didn't notify anyone and so far no one asked about it. Maybe because the money came from Binance (crypto) they simply didn't bother or something.
> I simply didn't notify anyone and so far no one asked about it.
That's not really how it works though. You are not supposed to wait for them to ask you about it, you declare it truthfully and otherwise it's tax evasion. Not sure if that applies for your case but that's how these kind of taxes usually work.
That's not really how it works though. You are not supposed to wait for them to ask you about it, you declare it truthfully and otherwise it's tax evasion. Not sure if that applies for your case but that's how these kind of taxes usually work.
Sounds like GP basically walked out of a shop with goods in their bag and is now posting online how happily surprised they are it was free for a change. Yeah, if you don't go to the register then you don't pay. Until the day someone finds out.
Chewing bubblegum isn't a taxable event so I don't tell the IRS when I do it. Or giving my friend a drone for his birthday, if you prefer something closer to the topic.
If selling ETH after holding it for a year isn't a taxable event in Germany, and it sounds very much like it isn't, on what basis should this be reported to the tax authorities?
If selling ETH after holding it for a year isn't a taxable event in Germany, and it sounds very much like it isn't, on what basis should this be reported to the tax authorities?
Actually, my not up-to-date info is that one is pretty much always required to declare the winnings of crypto sales in their Lohnsteuererklärung. Winnings below 600EUR or winnings for crypto assets sold after 1 year of possession are tax free.
I have some crypto that I bought last year and some that I bought many years ago that don't have any transactions records for and now I'm lost at how to properly declare a sale.
Honestly, the complexity of this is stopping me from doing more crypto trading.
I have some crypto that I bought last year and some that I bought many years ago that don't have any transactions records for and now I'm lost at how to properly declare a sale.
Honestly, the complexity of this is stopping me from doing more crypto trading.
I doubt they will particularly care if you just honestly tell them how much you bought them for. Surely with all the potential means of acquiring crypto (from another private person even), you would not have to always show an exchange ledger to prove their value at the point of purchase? Many people would presumably be facing the same situation. Not sure if this would be a good reason to stop you, just my 2 cents.
You will need to pay taxes as you are required to mention this in your tax form.
Otherwise it's just tax fraud.
I would put 20-30k aside to be save.
Otherwise it's just tax fraud.
I would put 20-30k aside to be save.
Nah. It’s mentioned in multiple places in this thread that crypto, just like any other personal asset, is tax-free after being held for a year. It has always been so. Not sure on what basis you arrived at the conclusion that “You will need to pay taxes as you are required to mention this in your tax form.”
Also see https://www.toytowngermany.com/forum/topic/370675-taxation-o...
Also see https://www.toytowngermany.com/forum/topic/370675-taxation-o...
To be honest, it is the way it should be. Government taxing crypto is similar to mafia holding a gun and asking you for money.
Good that they didn't go that way (even if only applies to assets held > 1 year)
Good that they didn't go that way (even if only applies to assets held > 1 year)
I get some public services need the tax money to function. But governments nowadays tax people beyond oblivion, specially in Europe.
Counterpoint - in the UK, I can turn up at a hospital anytime and they'll look after me. The place is generally tidy, amenities are good, emergency services efficient, roads good etc. (I appreciate there's always exceptions to this). I can earn no or very little money and still be (mostly) taken care of by the state. My taxes cover this, and also cover those that can't pay. As such, life is (I expect) much better for those with less than it was a hundred years ago and society is probably happier and more stable as a whole.
I don't know if we have it completely correct and there's definitely a balancing act. There's also growing inequality. But what's the right amount of tax to pay? Not referencing you directly, but I often see crypto threads that call for the government to "keep their hands of my money" - and I wonder if these people would still say the same thing when their bins weren't emptied, or the roads were so full of potholes the lambo couldn't drive on them etc etc.
I don't know if we have it completely correct and there's definitely a balancing act. There's also growing inequality. But what's the right amount of tax to pay? Not referencing you directly, but I often see crypto threads that call for the government to "keep their hands of my money" - and I wonder if these people would still say the same thing when their bins weren't emptied, or the roads were so full of potholes the lambo couldn't drive on them etc etc.
> in the UK, I can turn up at a hospital anytime and they'll look after me.
Where the hell do you live in the UK because that’s certainly not true in Birmingham. I moved to Germany and got orthopaedics, MRI, and physio in the space of 3 weeks. Would have taken months in the UK during COVID. Have you actually tried using the NHS?
> I can earn no or very little money and still be (mostly) taken care of by the state.
Also not true, the conservative government are very aggressive about taking away benefits
Where the hell do you live in the UK because that’s certainly not true in Birmingham. I moved to Germany and got orthopaedics, MRI, and physio in the space of 3 weeks. Would have taken months in the UK during COVID. Have you actually tried using the NHS?
> I can earn no or very little money and still be (mostly) taken care of by the state.
Also not true, the conservative government are very aggressive about taking away benefits
I'm from Portugal, afaik we get taxed a lot more than you. For reference, the minimum wage is ~700€.
See the prices:
- We pay a lot more for cars, for example a 20000€ car in Germany costs 25000-30000€ in Portugal. After acquiring a car, depending on the engine capacity you pay more taxes (if you get a after-2010 car). For example, I drive a BMW 316d from 2017 and I pay 250€ anually to the state just to drive it. Our roads are garbage filled with holes and bad quality pavement. Also, a litter of diesel costs 2€, taxes for fuel are ~50%.
- Our wages are highly taxed as well, atleast 34% go to the social security and to the state each month. If you get 800€ per month and you boss decides to raise you by 100€, half of the money goes to the state.
- Food and services are highly taxed as well. Most stuff pays 23% of taxes for no freaking reason.
- Electricity and other services are also highly taxed as well. We pay 23% for electricity in our bill and we also have to pay for RTP (state national television...) from that bill. Water bill, only 5% of my bill is actually for what I've used in water, water is basically undrinkable but I pay 95% just for taxes.
- Rent, stocks and other stuff are all taxed to 28%. Meaning one month of rent and 28% goes directly to the state instead of the landlord. He also has to pay an yearly tax to keep his propriety. This tax depends on the size and a lot of factors but an apartment may pay 400€ yearly.
- A company pays around 4000 different taxes yearly, and the most ridiculous tax is that the government taxes the companies for profit they have yet to make. Companies in 2022 are already paying 2023 taxes.
And list could go on.
All this taxation for crappy healthcare system (IT'S NOT FREE...), crappy roads, crappy public services, crappy policing (Portugal it's not a safe country like many foreigners agree, try needing the police help and you'll see...) and of course, crappy military that is way short on NATO demands.
Point being: Taxing is basically theft, no matter the country you are in, you will never get the benefits of your taxes because corrupt governments, debt, etc...
See the prices:
- We pay a lot more for cars, for example a 20000€ car in Germany costs 25000-30000€ in Portugal. After acquiring a car, depending on the engine capacity you pay more taxes (if you get a after-2010 car). For example, I drive a BMW 316d from 2017 and I pay 250€ anually to the state just to drive it. Our roads are garbage filled with holes and bad quality pavement. Also, a litter of diesel costs 2€, taxes for fuel are ~50%.
- Our wages are highly taxed as well, atleast 34% go to the social security and to the state each month. If you get 800€ per month and you boss decides to raise you by 100€, half of the money goes to the state.
- Food and services are highly taxed as well. Most stuff pays 23% of taxes for no freaking reason.
- Electricity and other services are also highly taxed as well. We pay 23% for electricity in our bill and we also have to pay for RTP (state national television...) from that bill. Water bill, only 5% of my bill is actually for what I've used in water, water is basically undrinkable but I pay 95% just for taxes.
- Rent, stocks and other stuff are all taxed to 28%. Meaning one month of rent and 28% goes directly to the state instead of the landlord. He also has to pay an yearly tax to keep his propriety. This tax depends on the size and a lot of factors but an apartment may pay 400€ yearly.
- A company pays around 4000 different taxes yearly, and the most ridiculous tax is that the government taxes the companies for profit they have yet to make. Companies in 2022 are already paying 2023 taxes.
And list could go on.
All this taxation for crappy healthcare system (IT'S NOT FREE...), crappy roads, crappy public services, crappy policing (Portugal it's not a safe country like many foreigners agree, try needing the police help and you'll see...) and of course, crappy military that is way short on NATO demands.
Point being: Taxing is basically theft, no matter the country you are in, you will never get the benefits of your taxes because corrupt governments, debt, etc...
I totally see your sentiment about Portugal but not sure you can then confidently arrive at the conclusion “no matter the country you’re in”. When something is dysfunctional in one country that doesn’t suggest it’s the same in every other country? I’m sure Scandinavian countries also have their issues but folks living there might generally dislike their high taxation less than in Southern Europe.
> society is probably happier and more stable as a whole.
The pill capital of the world? Who can't decide which international alliances to run with?
I was with you until this.
The pill capital of the world? Who can't decide which international alliances to run with?
I was with you until this.
Than it was 100 years ago?
I am by no means suggesting we have it right, but widening the gap between have an have not and then saying "we have, we're ok - you look after yourself" isn't exactly a recipe for stability.
I am by no means suggesting we have it right, but widening the gap between have an have not and then saying "we have, we're ok - you look after yourself" isn't exactly a recipe for stability.
The average European has a good quality of life though.
Americans enjoy substantially higher material consumption than their European counterparts. The US has 85% higher household consumption expenditures than France (about the median of the EU15). The difference between the US and France is about equivalent to the difference between France and Mexico.
https://en.wikipedia.org/wiki/List_of_countries_by_household...
https://en.wikipedia.org/wiki/List_of_countries_by_household...
Median wealth per adult in the US: $79,274
Median wealth per adult in France: $133,559
https://en.wikipedia.org/wiki/List_of_countries_by_wealth_pe...
That’s the Credit Suisse report that includes things like natural resources. It’s entirely unrelated to actual individual wealth.
So Canada gets credit for its uranium reserves and then divides it across the population.
No relation whatsoever to actual cash in the bank.
“ These figures are influenced by real estate prices, equity market prices, exchange rates, liabilities, debts, adult percentage of the population, human resources, natural resources and capital and technological advancements, which may create new assets or render others worthless in the future.”
So Canada gets credit for its uranium reserves and then divides it across the population.
No relation whatsoever to actual cash in the bank.
“ These figures are influenced by real estate prices, equity market prices, exchange rates, liabilities, debts, adult percentage of the population, human resources, natural resources and capital and technological advancements, which may create new assets or render others worthless in the future.”
"Good quality of life" is not the same as "higher material consumption", though the former is unquantifiable and subjective. As someone who has lived about equal amount of time in the U.S., I'd say I have better quality of life in Europe but less material consumption.
Is it common to associate quality of life and consumption? I’m sure there is some correlation but it seems a bit strange, especially when you think about things France has such as universal free healthcare or free access to good education.
Meanwhile, the quality of life in America is great, not merely "good".
Yeah it’s crazy why anyone emigrates from Europe to the US
This is pretty ignorant. Assuming your comment is based on a actual experience in both places (and ignoring how heterogeneous "Europe" and "the US" are), the comment is still equivalent to saying "it's crazy that someone has different priorities than me"
it's hard to get high wages in europe compared to america. So it makes sense to work in america for a while, save and invest, and eventually come back to europe to retire or live a more leisurely lifestyle.
But their lifestyle is so much worse the moment they step foot in America
To improve their life? Immigration of qualified workers is a bit different.
0daystock(3)
Incoming has been taxed for a long time. If new ways of obtaining such incoming arrise (crypto), wouldn't it be unfair not to tax them? That has little to do with greedy governments.
That was my concern too. Governments already have WAY TOO MUCH power and the last thing we should be doing is to make governments richer.
Don't know about Germany but in my country government is corrupted and and tax paid is going straight into corruption.
While mine is one of the worse, it's definitely not the only one.
Do not support corruption.
Don't know about Germany but in my country government is corrupted and and tax paid is going straight into corruption.
While mine is one of the worse, it's definitely not the only one.
Do not support corruption.
You may feel that way about all taxes. But it's weird that crypto currencies are an exception.
People tend to have special feelings about the taxes they pay (or would pay) themselves.
Personally, I pay mostly income taxes, and I definitely feel that taxation should be shifted away form income over to property taxes, taxes on polution and taxes on resource consumption. (To encourage people to provide services to each other, and discourage them from buying physical goods that end up in a landfill within a few years.)
Personally, I pay mostly income taxes, and I definitely feel that taxation should be shifted away form income over to property taxes, taxes on polution and taxes on resource consumption. (To encourage people to provide services to each other, and discourage them from buying physical goods that end up in a landfill within a few years.)
…Will not get taxed as income but instead as capital gains.
Americans are familiar with this system, it’s how short-term and long-term capital gains work in the USA.
Edit — my misunderstanding, German system is different after all. See asldjajlfkj's reply below.
Americans are familiar with this system, it’s how short-term and long-term capital gains work in the USA.
Edit — my misunderstanding, German system is different after all. See asldjajlfkj's reply below.
No. A "Privatverkauf" is tax free after one year. If you sell before that it is taxed as income.
Crypto is never taxed as capital gains in Germany.
Thanks for the clarification! I edited my reply.
I have to say, this blows the mind for Americans who assume European countries are tax hells. The IRS will tax everything, sometimes before you’ve sold it: I had to pay mark-to-market capital gains tax on unrealized gains in a foreign mutual fund I’d bought before moving to USA.
I have to say, this blows the mind for Americans who assume European countries are tax hells. The IRS will tax everything, sometimes before you’ve sold it: I had to pay mark-to-market capital gains tax on unrealized gains in a foreign mutual fund I’d bought before moving to USA.
Then you'll be surprised to learn that Switzerland doesn't even have capital gains tax on any security (crypto, ETF...).
Not really surprised about that. Switzerland, Luxembourg - they're well known as attractive tax regimes. The surprising aspect is that there's so many options in the middle. Even in the EU, every country has a unique combination of tax features, and knowledge about one or two of them doesn't translate. Portugal is unlike Italy is unlike France is unlike Germany is unlike Sweden is unlike Finland.
My humble opinion is that some of this should be harmonized on the EU level. There's no reason to leave so many tax loopholes for those able to exploit them, other than each country's wealthy lobbying to maintain their own peculiar benefits.
My humble opinion is that some of this should be harmonized on the EU level. There's no reason to leave so many tax loopholes for those able to exploit them, other than each country's wealthy lobbying to maintain their own peculiar benefits.
They are tax hells. Crypto has been such a special case in Germany, which feels much more an exception than the norm.
Best summary so far.
German income tax rate is progressive, and maxes out at 45%. While capital gain tax is a flat 25%
If you're poor and only have your work to sell, you'll get taxed progressively until you're rich enough to save money and invest. Meaning your effective tax rate increases as you get reasonably rich (from work) and then when you're really rich, the rate slowly decreases down to the level of capital gain tax. I don't understand why this is accepted. I find this revolting as I'm in the position to benefit (my tax rate going below that of people far less wealthy than me).
capital gains is income from investing, which is how new productivity gets funded (via buying new plant and equipment, etc).
Encouraging investments is not a bad idea. Of course, it's possible to be too pro-investment, but a 25% flat rate on investment based income is not too low, but not too high. It's slightly lower than wage income as an incentive for people to save and invest.
Encouraging investments is not a bad idea. Of course, it's possible to be too pro-investment, but a 25% flat rate on investment based income is not too low, but not too high. It's slightly lower than wage income as an incentive for people to save and invest.
>capital gains is income from investing, which is how new productivity gets funded (via buying new plant and equipment, etc).
How does that justify taxing work more than capital? For people with high salary, any extra income (from work) is taxed almost 2x that of capital gains.
Also, only a small % of investment actually goes funding productivity. Most is just rich people's money changing hands, base only on speculation with zero regards for impact on businesses/society.
>a 25% flat rate on investment based income is not too low, but not too high
Do you have a study on this, or is this your opinion?
How does that justify taxing work more than capital? For people with high salary, any extra income (from work) is taxed almost 2x that of capital gains.
Also, only a small % of investment actually goes funding productivity. Most is just rich people's money changing hands, base only on speculation with zero regards for impact on businesses/society.
>a 25% flat rate on investment based income is not too low, but not too high
Do you have a study on this, or is this your opinion?
This argument is brought up over and over, but people forget that companies in Germany pay roughly 30% (depending on county) tax on their profits. As a solo entrepreneur with a registered company, that would mean if I make 100€ of profit, 30€ company tax are deducted, and then 25% of the remaining 70€ as capital gains tax when I pay myself the dividends - so I am left with ~53€. That is 47% tax in total, which is actually higher than the maximum personal income tax bracket (42%).
But if you get dividends or profits from stock as a private person that doesn’t apply and you just pay capital gains.
If you have a company or are a solo entrepreneur you can also reduce your profits by expensing things via the company (tech, cars, etc.) or investing further.
If you have a company or are a solo entrepreneur you can also reduce your profits by expensing things via the company (tech, cars, etc.) or investing further.
I does apply equally if you got stocks - at least on a national level as AG (Aktiengesellschaft in Germany) pay equal amount of corporate taxes. But yes, it got kind of skewed with international companies like amazon etc. paying no taxes at all. But we should fix that (them not paying any corporate tax), and not punish small shops like me (again, I am a solo-enterpreneur/developer - if you tax me 30% corporate tax + 42% on dividends, I will leave germany next day).
I am just wondering which kind of „Selbstständigkeit“/incorporation you are talking about. If you are solo-selbstständig no special tax of 30% applies, maybe Gewerbesteuer which is much lower.
If you are running a GmbH or UG or GbR things might be different, but then why don’t you keep assets inside of the entity? Then the entity could grow its assets and you could only take what you need and save some assets for the future. (Assuming you make more than what you need to maintain your lifestyle)
If you are running a GmbH or UG or GbR things might be different, but then why don’t you keep assets inside of the entity? Then the entity could grow its assets and you could only take what you need and save some assets for the future. (Assuming you make more than what you need to maintain your lifestyle)
Yes, a "Selbstständiger" is taxed with personal income tax, but as I wrote, I am incorporated ("1-Mann GmbH"). I was tax "Selbstständig" for over 5 years and moved to a GmbH (=LLC) for various reasons completely unrelated to tax discussions (mostly protection of private assets and limited liability but also other reasons).
Edit: Corporate tax in Germany consists of two parts, Gewerbesteuer and Körperschaftssteuer. Those vary depending on where you are incorporated in Germany (Hebesatz), but 30% is a good rough estimate.
Edit: Corporate tax in Germany consists of two parts, Gewerbesteuer and Körperschaftssteuer. Those vary depending on where you are incorporated in Germany (Hebesatz), but 30% is a good rough estimate.
Regarding cars: Yes, it is cheaper to run business cars but its pretty limited. There is the 1% rule in germany, then a monthly of 1% of the cars shop-price (we use the nice word Bruttolistenneupreis) is considered income and taxed regularly. If a car costs 30.000€, that means you have to add 300€/monthly (virtually) onto your tax bill that is taxed as personal income. There are limits to the "you can tax deduct everything as a business" in Germany.
yes, this is double taxation, which i don't personally like.
In australia, there's franked dividends, which basically passes the tax credits down to shareholders (effectively, companies pay a 30% tax, but give that same dollar amount as credits to shareholders, who can then use it as tax paid in lieu). See https://www.investopedia.com/terms/f/frankeddividend.asp
In australia, there's franked dividends, which basically passes the tax credits down to shareholders (effectively, companies pay a 30% tax, but give that same dollar amount as credits to shareholders, who can then use it as tax paid in lieu). See https://www.investopedia.com/terms/f/frankeddividend.asp
> a study on this, or is this your opinion?
it is an opinion. The policy setting is not a fact based research, but ideologically based opinion. i would argue that any research is basically paid opinion pieces to try and convince someone on the fence.
> How does that justify taxing work more than capital?
the justification is in my comment above - it is taxed less than wage income to encourage people to spend their money investing, rather than spending it in consumption.
it is an opinion. The policy setting is not a fact based research, but ideologically based opinion. i would argue that any research is basically paid opinion pieces to try and convince someone on the fence.
> How does that justify taxing work more than capital?
the justification is in my comment above - it is taxed less than wage income to encourage people to spend their money investing, rather than spending it in consumption.
But capital gains tax alone doesn't make the entire equation of risk vs reward, unless you're putting capital gains tax all the way to 100%. Even if it was 90%, if the risk was zero, the time investment was near zero and the reward was your assets going up by 4% post-tax, you'd bet people would still invest, regardless of income tax.
> if the risk was zero
no investment has zero risk.
in any case, the 90% tax would discourage the investment for some people - because that investment might not return enough to be worth the opportunity cost of consumption instead. The point is, more investments means more possible productivity in the future, and any consumption->investment switch is good.
This is the same calculus as wage tax of course, but since most people don't have a choice but to work for a wage, they don't need to be incentivized to work by lower taxes.
no investment has zero risk.
in any case, the 90% tax would discourage the investment for some people - because that investment might not return enough to be worth the opportunity cost of consumption instead. The point is, more investments means more possible productivity in the future, and any consumption->investment switch is good.
This is the same calculus as wage tax of course, but since most people don't have a choice but to work for a wage, they don't need to be incentivized to work by lower taxes.
> and any consumption->investment switch is good
Not always: It is possible to over-invest and under-consume. Don't forget that the purpose of investment in the present is to enable consumption in the future. In the extreme case, a society which only invested and never consumed would starve to death. There is a natural balance point, and moving away from that point in either direction results in a less efficient allocation of resources.
Not always: It is possible to over-invest and under-consume. Don't forget that the purpose of investment in the present is to enable consumption in the future. In the extreme case, a society which only invested and never consumed would starve to death. There is a natural balance point, and moving away from that point in either direction results in a less efficient allocation of resources.
> It is possible to over-invest and under-consume.
certainly is, but i would argue that more people under-invest and over-consume! I would also argue that the minimal amount of consumption (let's say, you keep yourself alive, just barely), and maximizing your investment amount, is the best outcome for your future, and is the most efficient allocation of resources.
certainly is, but i would argue that more people under-invest and over-consume! I would also argue that the minimal amount of consumption (let's say, you keep yourself alive, just barely), and maximizing your investment amount, is the best outcome for your future, and is the most efficient allocation of resources.
> I would also argue that the minimal amount of consumption (let's say, you keep yourself alive, just barely), and maximizing your investment amount, is the best outcome for your future, and is the most efficient allocation of resources.
If you always prioritize your future over your present then your sacrifices are wasted—you live your entire life just barely keeping yourself alive and never claim any of the proceeds from your investments for yourself. As I said before, there needs to be a balance. Investment is pointless and wasteful without a plan to eventually consume more than you could have without investing.
If you always prioritize your future over your present then your sacrifices are wasted—you live your entire life just barely keeping yourself alive and never claim any of the proceeds from your investments for yourself. As I said before, there needs to be a balance. Investment is pointless and wasteful without a plan to eventually consume more than you could have without investing.
>it is taxed less than wage income to encourage people to spend their money investing, rather than spending it in consumption.
Did you mean speculating? A few % of so-called investors are actually supporting new businesses. I believe it's obvious when you think about investing in crypto.
Did you mean speculating? A few % of so-called investors are actually supporting new businesses. I believe it's obvious when you think about investing in crypto.
investments don't have to be "supporting businesses" for it to be worthwhile. Speculative investments also work.
By the same logic, income tax comes from working, which is how productivity gets done!
Besides, what are the wealthy going to do with their excess wealth except invest it?
Besides, what are the wealthy going to do with their excess wealth except invest it?
That might be true if they couldn't move wealth outside the country.
But a concern is that those with savings might move money out of the country to invest in jurisdictions with lower capital gains tax.
One view is that this tax jurisdiction forum-shopping creates a race to the bottom.
But a concern is that those with savings might move money out of the country to invest in jurisdictions with lower capital gains tax.
One view is that this tax jurisdiction forum-shopping creates a race to the bottom.
It's the same for workers, they can just perform their labour outside of the country and they would create a much larger problem.
>investing, which is how new productivity gets funded
As opposed to working, which is how productivity actually happens.
As opposed to working, which is how productivity actually happens.
>Encouraging investments is not a bad idea.
It definitely is if theres a glut of capital.
Which there is and has been for at least a decade.
It definitely is if theres a glut of capital.
Which there is and has been for at least a decade.
I feel the same way. Income is income. Hell if I lose my $150k a year job and take a $120k job just because I need money coming in I can't get a $30k "capital losses" advantage on my taxes like I can with stocks. Tax system is rigged against middle and lower classes everywhere it seems.
Yes, it’s the same in USA.
(The federal rates are lower, but state and local taxes can push your tax bill up to European levels, especially if you own property in a desirable area.)
(The federal rates are lower, but state and local taxes can push your tax bill up to European levels, especially if you own property in a desirable area.)
Point here is, crypto - as well as Gold and Real Estate - are considered a special case of capital. Contrary to stock they have - different - 'speculation periods' (Spekulationsfristen). If they are held beyond this period, no tax is collected for gains of the sale. This was true for stock too before 2009 (unfortunately).
I think you're probably aware of this, but for non Americans - this is the same as in the US. Except I think the capital gains rate (holdings > 1 year) is 15%?
(America also has progressive income tax that caps out around 40% I believe... any gains from holdings sold < 1 year are "short term capital gains" which is at standard income tax rates)
(America also has progressive income tax that caps out around 40% I believe... any gains from holdings sold < 1 year are "short term capital gains" which is at standard income tax rates)
[deleted]
With all the wining about European socialism, this is what I pay with combined NYC, state, and federal taxes, plus all the deductions for the safety net that the government should provide anyway.
American here. Did not know short-term and long-term were different things.
The holding period of one year, after which no taxes apply, corresponds to the general tax regulation of foreign currency balances in Germany. In the past, there has been a debate as to whether cryptocurrencies are actually "currencies" in terms of this general tax regulation. It seems that this debate has been saddled for a while now.
However, the tax exemption also has a disadvantage. Losses cannot be offset against other taxes. If your cryptocurrency investment is losing value, you should consider selling it before one year has passed. In such a case, it is also advisable to consult a tax counsellor first, because there might be some pitfalls (a certain period between selling and re-investment might be necessary; problems might arise when an account is older than a year, though the main investment is not; not all losses can be offset against all others, etc.).
Another pitfall is that the foreign currency account must not be interest-bearing. In such a case the holding period of one year is extented to ten years.
However, the tax exemption also has a disadvantage. Losses cannot be offset against other taxes. If your cryptocurrency investment is losing value, you should consider selling it before one year has passed. In such a case, it is also advisable to consult a tax counsellor first, because there might be some pitfalls (a certain period between selling and re-investment might be necessary; problems might arise when an account is older than a year, though the main investment is not; not all losses can be offset against all others, etc.).
Another pitfall is that the foreign currency account must not be interest-bearing. In such a case the holding period of one year is extented to ten years.
Not sure if this has anything to do with currencies. The rule in question applies to any sale of an asset in the private domain (“Privatverkauf”). It is the same rule that would apply to reselling a house or a car or a washing machine. This is in contrast to capital gains, which are being taxed according to different rules, and where there is no such 1-year deadline. Capital gains are profits from the selling of stock, and also interest on money in your bank account. So essentially, the way the rules are being applied to cryptocurrency is simply telling us that cryptocurrency isn’t being recognized as any special form of capital, and is instead treated no different than a washing machine or a coin collection.
Which is very interested because now there's a "demand" for crypto currencies that are fixed to ... SPY say, or VTI.
I wonder how long it would take the Germans to work that trick out and come down hard.
I also wonder how tiny a crypto currency could be ...
I wonder how long it would take the Germans to work that trick out and come down hard.
I also wonder how tiny a crypto currency could be ...
Would be interesting if there was crypto fixed to individual stocks. But even then, of course, you’d be left with the risk of who guarantees the price, and who guarantees the liquidity.
Note that as far as I know this only applies to private buying and selling, if that is the case people which frequently buy and sell crypto also have to be careful that their doing is not classified as commercial.
E.g. there are similar rules for privately selling art (through it's I thing noticeable longer then 1y) and there had been cases where people where not careful enough and it was classified as commercial activity.
E.g. there are similar rules for privately selling art (through it's I thing noticeable longer then 1y) and there had been cases where people where not careful enough and it was classified as commercial activity.
I get why they would do that, to curb speculation, but it seems backwards to my intuition.
Just converting money back and forth should not be taxable. And if I make an advantageous trade with somebody, and a day later I make a disadvantageous trade, it should be a no-op. If you take it to the extreme, a market maker or an algorithmic trader makes thousands of trades a day, creating liquidity and determining prices, and they would be taxed a lot.
My gut feeling is instead you should tax people who use it as an investment and their long term gains.
Just converting money back and forth should not be taxable. And if I make an advantageous trade with somebody, and a day later I make a disadvantageous trade, it should be a no-op. If you take it to the extreme, a market maker or an algorithmic trader makes thousands of trades a day, creating liquidity and determining prices, and they would be taxed a lot.
My gut feeling is instead you should tax people who use it as an investment and their long term gains.
I don't know if Germany has capital loss discounts, but in Australia at least, a capital loss can be used to offset a gain (or a future gain). So the fact that you can make a capital loss doesn't make taxing profits ridiculous. Forex trading is the most analogous thing to crypto trading, and it is taxed in a very similar way. And algorithmic traders absolutely are required to pay taxes on their profits.
Encouraging people to not hold assets long-term (by making short profits tax-free as you suggest) is not a good idea -- it encourages speculation and speculative bubbles. Most countries treat long-term capital gains more favourably through tax discounts for that reason.
Encouraging people to not hold assets long-term (by making short profits tax-free as you suggest) is not a good idea -- it encourages speculation and speculative bubbles. Most countries treat long-term capital gains more favourably through tax discounts for that reason.
> a capital loss can be used to offset a gain
Same in Germany. It's a bit more complicated, because you can only offset certain asset classes against each other. Most prominently, losses in individual shares cannot be reconciled by gains in ETFs.
Same in Germany. It's a bit more complicated, because you can only offset certain asset classes against each other. Most prominently, losses in individual shares cannot be reconciled by gains in ETFs.
You are taxed on net capital gains, not only on trades that were for a gain.
The number of trades plays no role in how much taxes you have to pay. Your net gains do. Thus, winnings do in fact get canceled out by losses.
On the face of it this would seem to create further disincentives to use crypto for its intended purpose.
The intended purpose is to move real human money from late entrants to early entrants. This helps further the intended purpose.
Can you provide a source for your statement? Nothing in the Satoshi white paper says that was the purpose, and Satoshi wasn't even sure if the project would work as digital cash, much less enable wealth transfers.
Oh it's got nothing to do with what it started as, and everything to do with what it is today.
Satoshi didn't mention:
- Substantially everyone never making on-chain transactions and instead using centralized, trusted, censorable, KYC-required custodial exchanges to speculate on the price of cryptos. Where they're not even segregated in the event of exchange insolvency.
- Have BNY Mellon and Fidelity custody your coins.
- Run your crypto transactions using a Visa debit card.
- The biggest players in the space being Cumberland/DRW, Alameda and Jump Crypto.
- Have transaction fees as high as $60 - $250+ if you factor in block reward.
- 100X leverage trading at off-shore bucket shops denominated in synthetic dollar derivatives that simply evaporate if you look at them sideways.
- [edit] using a country worth of power to guess random numbers by machines that will 97% of the time never guess a single random number right in their entire productive lives.
Wall Street owns crypto, and Satoshi would be horrified.
Satoshi envisioned a "Peer-to-Peer Electronic Cash System" - not a store of value, not digital gold, not a wild number-go-up-machine.
Today's thought leadership has different goals.
Satoshi didn't mention:
- Substantially everyone never making on-chain transactions and instead using centralized, trusted, censorable, KYC-required custodial exchanges to speculate on the price of cryptos. Where they're not even segregated in the event of exchange insolvency.
- Have BNY Mellon and Fidelity custody your coins.
- Run your crypto transactions using a Visa debit card.
- The biggest players in the space being Cumberland/DRW, Alameda and Jump Crypto.
- Have transaction fees as high as $60 - $250+ if you factor in block reward.
- 100X leverage trading at off-shore bucket shops denominated in synthetic dollar derivatives that simply evaporate if you look at them sideways.
- [edit] using a country worth of power to guess random numbers by machines that will 97% of the time never guess a single random number right in their entire productive lives.
Wall Street owns crypto, and Satoshi would be horrified.
Satoshi envisioned a "Peer-to-Peer Electronic Cash System" - not a store of value, not digital gold, not a wild number-go-up-machine.
Today's thought leadership has different goals.
- Have transaction fees as high as $60 - $250+ if you factor in block reward.
This goes so far outside the original vision, that makes me wonder if current believers in crypto even read the paper. Satoshi's vision was that existing ways to transfer money on the internet had too high overheads, which made micropayments impossible.
This goes so far outside the original vision, that makes me wonder if current believers in crypto even read the paper. Satoshi's vision was that existing ways to transfer money on the internet had too high overheads, which made micropayments impossible.
lol I meant its supposed purpose
This makes no sense. Why should there be less taxes on crypto than on stocks and similar things?
They are treated like ordinary everyday things, like shoes, pants or silverware, not as investments.
edit edit: I have to reinvestiage again... I messed up twice already in correcting myself
final edit: Until further notice, I stand by the claim that cryptocurrencies are treated as collectibles and other non-everyday assets for tax purposes in germany. The original statement was, however, a wrong oversimplification.
They are not actually "everyday items" as those would be tax free i reselling according to [1] which lists as "everyday items" that are tax free for resale: baby clothes, books or private cars. They list as non "everyday items" that are taxed (to some degree) on gains: Limited sneakers or handbags, rarities and collectables, jewlery, precious metals and antiquities.
[1] https://taxfix.de/steuertipps/ebay-steuern-zahlen-privat-ode...
edit edit: I have to reinvestiage again... I messed up twice already in correcting myself
final edit: Until further notice, I stand by the claim that cryptocurrencies are treated as collectibles and other non-everyday assets for tax purposes in germany. The original statement was, however, a wrong oversimplification.
They are not actually "everyday items" as those would be tax free i reselling according to [1] which lists as "everyday items" that are tax free for resale: baby clothes, books or private cars. They list as non "everyday items" that are taxed (to some degree) on gains: Limited sneakers or handbags, rarities and collectables, jewlery, precious metals and antiquities.
[1] https://taxfix.de/steuertipps/ebay-steuern-zahlen-privat-ode...
Citation needed, I'm 99% confident they're classified as investments worldwide now.
The source is right in the article: Crypto currencies fall under §23 EStG (= Germany's income tax law) which is concerned with selling "ordinary everyday things".
[deleted]
So, I spent some time now to not just find sources that verify my own opinion, but also some that discuss the possibile changes.
My previous opinion: Cryptocurrencies are treated similar to PS5s and rare sneakers [1]. [2] says:
> Kryptowährungen sind kein gesetzliches Zahlungsmittel. Vielmehr werden sie – zumindest im Ertragsteuerrecht – als immaterielle Wirtschaftsgüter betrachtet.
Cryptocurrencies are intangible assets. This is confirmed by courts in 2021 at least [3] and rephrased by others [4]:
> Virtuelle Währungen zählen rechtlich nicht als (Fremd-)Währung oder Kapitalanlage, sondern als sonstige Wirtschaftsgüter.
Austria changed their laws recently [5] classifying cryptocurrencies as investments and charging capital gains taxes. [6] discusses in decembre 2021 that it is unlikely that germany will follow this. This seems to hold as [7] from april this year also states:
> Der Handel mit Kryptowährungen wie Bitcoin ist in Deutschland steuerlich dem Handel mit Kunstwerken und anderen Wertgegenständen gleichgestellt. Es gelten die gesetzlichen Vorgaben zum privaten Veräußerungsgeschäft nach Paragraf 23 Absatz 1 des Einkommensteuergesetzes.
I also can't find any changes to classifying crypto as investments in germany, so I'd ask you in return: Please provide a citation so I can update my knowledge.
[1] https://taxfix.de/steuertipps/ebay-steuern-zahlen-privat-ode...
[2] https://www.winheller.com/bankrecht-finanzrecht/bitcointradi...
[3] https://www.haufe.de/steuern/rechtsprechung/veraeusserungsge...
[4] https://www.smartsteuer.de/online/steuerwissen/kryptowaehrun...
[5] https://futurezone.at/digital-life/krypto-steuer-gesetz-oest...
[6] https://www.cmshs-bloggt.de/steuerrecht/ertraege-aus-kryptow...
[7] https://www.computerbild.de/artikel/cb-Tipps-Internet-Bitcoi...
My previous opinion: Cryptocurrencies are treated similar to PS5s and rare sneakers [1]. [2] says:
> Kryptowährungen sind kein gesetzliches Zahlungsmittel. Vielmehr werden sie – zumindest im Ertragsteuerrecht – als immaterielle Wirtschaftsgüter betrachtet.
Cryptocurrencies are intangible assets. This is confirmed by courts in 2021 at least [3] and rephrased by others [4]:
> Virtuelle Währungen zählen rechtlich nicht als (Fremd-)Währung oder Kapitalanlage, sondern als sonstige Wirtschaftsgüter.
Austria changed their laws recently [5] classifying cryptocurrencies as investments and charging capital gains taxes. [6] discusses in decembre 2021 that it is unlikely that germany will follow this. This seems to hold as [7] from april this year also states:
> Der Handel mit Kryptowährungen wie Bitcoin ist in Deutschland steuerlich dem Handel mit Kunstwerken und anderen Wertgegenständen gleichgestellt. Es gelten die gesetzlichen Vorgaben zum privaten Veräußerungsgeschäft nach Paragraf 23 Absatz 1 des Einkommensteuergesetzes.
I also can't find any changes to classifying crypto as investments in germany, so I'd ask you in return: Please provide a citation so I can update my knowledge.
[1] https://taxfix.de/steuertipps/ebay-steuern-zahlen-privat-ode...
[2] https://www.winheller.com/bankrecht-finanzrecht/bitcointradi...
[3] https://www.haufe.de/steuern/rechtsprechung/veraeusserungsge...
[4] https://www.smartsteuer.de/online/steuerwissen/kryptowaehrun...
[5] https://futurezone.at/digital-life/krypto-steuer-gesetz-oest...
[6] https://www.cmshs-bloggt.de/steuerrecht/ertraege-aus-kryptow...
[7] https://www.computerbild.de/artikel/cb-Tipps-Internet-Bitcoi...
Your comment should be farther up. Thanks for the research!
Depending on the country trading the FOREX can be taxed differently than trading stocks (for example not taxed at all). If crytocurrencies are considered, somehow, currencies (no matter how volatile they are), then it may explain it.
Isn’t this incentivizing “investing” into something much more volatile and risky than stocks from which profits always are taxed at 25%?
Even if there haven’t been taxes on this yet, making crypto “more attractive” than stocks sounds like rallying all greater fools there are to create even more defaults - which in return will hurt society as a whole.
Even if there haven’t been taxes on this yet, making crypto “more attractive” than stocks sounds like rallying all greater fools there are to create even more defaults - which in return will hurt society as a whole.
I think the more important question is, “Can I deduct losses?”
I would assume the answer is no.
I would assume the answer is no.
Why is it more important?
Anyone would take no tax on gains over loss deduction any day
No taxes on gains are more important in a bull market.
Loss deduction is more important in a bear market (which crypto is in right now)
No, the loss deduction is capped at 100% of your investment, no tax benefit can go infinite. And also assuming the market over time goes up...
I don’t know what point you are trying to make, but if you invested $100,000 on a crypto and it dropped 100% and you couldn’t deduct that $100k, then you would be fine with it?
Over time, you have no clue whatsoever how the crypto market will do. It could go to $0 for all you know
Over time, you have no clue whatsoever how the crypto market will do. It could go to $0 for all you know
No words on this in the document unfortunately
If I hold physical gold bars in my basement for more than a year and sell at a profit, how is that taxed? Should be the same, right?
Maybe? But now consider "tokenized stocks" (setting the legality of it aside for a moment) – should these be taxed as property instead of investments too?
Yes, and it is.
Not in Germany. If you hold your gold bars for longer than a year and you sell'em -- no taxes. German capital gains tax applies to stock and derivates (i.e. papers) but not to commodities (physical things like gold, cars or other hardware). So even while cryptos are non-physical they are treated like physical items. And that kind of makes sense if you believe Bitcoin is like digital gold. However, there will be a dispute at some point I guess when it comes to typical government tokens because they resemble very much a stock shares with voting rights.
Hasn't this always been the case? In Austria that was the norm until the government changed the laws this year. I've assumed in Germany they also had a "SpekulationsSteuer" (a tax of which they've pretended that it helped against rich speculators, which of course it didn't, because that's nonsense).
What happens if the coins were acquired in a different tax jurisdiction but disposed in Germany?
I would assume it doesn't matter where they were bought. If you sell crypto while falling under German tax law (due to residency etc.), the cited article 23 of the income tax law will apply.
> Additionally, Germany has 1,430 Bitcoin nodes, representing 9.08% of the total global nodes, putting it in second place in nodes held just behind the United States and ahead of France, with only 3.35%.
This doesn't sound like something Germany should be proud of. Haven't they been shutting down their nuclear plants and relying on/expanding coal usage to keep up with demands (while slowly trying to replace supply with alternatives)?
> One study found that the nuclear phase-out caused $12 billion in social costs per year, primarily due to increases in mortality due to exposure to pollution from fossil fuels. [0]
And it's reliance on Russia for gas and coal... it seems like Bitcoin mining is something they ought to be discouraging.
What's the reasoning behind a move like this?
[0] https://en.wikipedia.org/wiki/Energy_in_Germany
This doesn't sound like something Germany should be proud of. Haven't they been shutting down their nuclear plants and relying on/expanding coal usage to keep up with demands (while slowly trying to replace supply with alternatives)?
> One study found that the nuclear phase-out caused $12 billion in social costs per year, primarily due to increases in mortality due to exposure to pollution from fossil fuels. [0]
And it's reliance on Russia for gas and coal... it seems like Bitcoin mining is something they ought to be discouraging.
What's the reasoning behind a move like this?
[0] https://en.wikipedia.org/wiki/Energy_in_Germany
Bitcoin Nodes are often simple computers. You can run your own node on cheap commodity hardware and they are not particularly resource intensive. The main concern with these machines is drive space.
Bitcoin miners are the big energy consumers. Nodes help validate the network but they do not perform the intensive proof of work calculations.
Bitcoin miners are the big energy consumers. Nodes help validate the network but they do not perform the intensive proof of work calculations.
You can run a node on your phone... Node is a different thing from a miner.
One day we'll have the conversation about how the anti-crypto conversation is mostly gross groupthink and at least two or three struggling devrel influencers are now anti-crypto media darlings. If you're going to push an agenda at least make it one that wasn't handed to you shrink wrapped.
?? If one isn't all-in on cryptocurrency, it only must be because they're influenced by anti-crypto shills?
I've been thinking about digital money for 25 years. I have an early proof-of-work patent. I very much think for myself.
I really don't like proof-of-work for ledgers: they're resource intensive and wasteful. I don't really like abrogating the power of states and central banks to mint unbacked currency to various coalitions. And this looks like a scary, poorly regulated asset bubble that may pop with rather extreme effects.
I've been thinking about digital money for 25 years. I have an early proof-of-work patent. I very much think for myself.
I really don't like proof-of-work for ledgers: they're resource intensive and wasteful. I don't really like abrogating the power of states and central banks to mint unbacked currency to various coalitions. And this looks like a scary, poorly regulated asset bubble that may pop with rather extreme effects.
Defense overspending is wasteful. Plastic wrapping everything is wasteful. Not using public transport is wasteful. People streaming media is wasteful.
Proof of work? The entire worldwide bitcoin network uses less power that all the appliances in stand-by mode just in America, and I still have to see someone complaining about how wasteful stand-by mode is. Now, suddenly, the Bitcoin network is wasteful.
This is not ecological consciousness. This is Luddism all over again. A bunch of old people scared about the world changing.
Proof of work? The entire worldwide bitcoin network uses less power that all the appliances in stand-by mode just in America, and I still have to see someone complaining about how wasteful stand-by mode is. Now, suddenly, the Bitcoin network is wasteful.
This is not ecological consciousness. This is Luddism all over again. A bunch of old people scared about the world changing.
Appliances serve clear purposes for the entire population. I am yet to here of a meaningful Bitcoin purpose, even for the small handful of “investors.”
Well, here's a meaningful purpose by yours truly. I live in Spain and in Argentina. I have to regularly send money to Argentina. International transfers to Argentina are really expensive. Also, in Argentina the currency exchange is being manipulated by the government, like what happens in Venezuela. And all transfers have to be at the exchange rate dictated by the government.
Except for crypto currencies. They operate in a grey market, not forbidden, not approved.
Without bitcoin, I'd have to transfer money at the oficial rate, and I'd have to have another person on the other side filling the endless paperwork they require. With bitcoin (litecoin nowadays, cheaper transactions) it's done in a few hours.
Except for crypto currencies. They operate in a grey market, not forbidden, not approved.
Without bitcoin, I'd have to transfer money at the oficial rate, and I'd have to have another person on the other side filling the endless paperwork they require. With bitcoin (litecoin nowadays, cheaper transactions) it's done in a few hours.
> Proof of work? The entire worldwide bitcoin network uses less power that all the appliances in stand-by mode just in America, and I still have to see someone complaining about how wasteful stand-by mode is.
We've spent tons of money and had massive amounts of regulation and standards over the past couple of decades to try and reduce standby power. It's presently estimated at 5-10% of US power, versus 10-20% a couple decades ago. A relatively big share of it is very old devices.
I'm not opposed to distributed ledgers. Proof of stake will be augmented to provide nearly the same level of guarantee as proof of work, without all the power draw.
We've spent tons of money and had massive amounts of regulation and standards over the past couple of decades to try and reduce standby power. It's presently estimated at 5-10% of US power, versus 10-20% a couple decades ago. A relatively big share of it is very old devices.
I'm not opposed to distributed ledgers. Proof of stake will be augmented to provide nearly the same level of guarantee as proof of work, without all the power draw.
that is not by any stretch of the imagination what I am saying. I also am very very far from all in on crypto ideologically and financially.
The poster above was parroting concerns du jour about bitcoin miners to shit on a policy regarding bitcoin nodes. I'm just saying lets be serious in our critiques.
The poster above was parroting concerns du jour about bitcoin miners to shit on a policy regarding bitcoin nodes. I'm just saying lets be serious in our critiques.
[deleted]
Only for privat investors.
If you got paid in crypto, you will get taxed.
And the feds try everything to link crypto you got to some service you provided for it, even if it's just a retweet.
If you got paid in crypto, you will get taxed.
And the feds try everything to link crypto you got to some service you provided for it, even if it's just a retweet.
The German Federal Ministry of Finance has published a document defining and framing the different types of cryptocurrency gains.
"Please don't use HN primarily for promotion. It's ok to post your own stuff occasionally, but the primary use of the site should be for curiosity."
What are capital gains like in Europe / Germany, similar to here in the US?
Europe doesn't have universal capital gains tax. In fact, a country might not have a capital gains tax at all.
Germany has a flat 25% from what I can tell.
Germany has a flat 25% from what I can tell.
I assume they have rules around how you acquire, otherwise ask your company to make you a contractor so you work for $1 but have the right to buy $XXXX of crypto every month for another $1.
If you have the savings to live a year + happy with the risk you could be income tax free?
If you have the savings to live a year + happy with the risk you could be income tax free?
What are Germany's long-term cap gains rules for normal equities?
Always 25% of your profit at the time you sell your equity. They abolished the tax free long time rule 2009.
26.375%, there is no way to get around the 5.5% solidarity surcharge.
Germany doesn't distinguish between long/short term, it's a simple ~25% flat tax no matter what
I believe there is a tax free threshold of 801€ for singles and 1602€ for couples, however.
Another rule benefiting large investment firms and hurting individuals. Nothing surprising here.
What are you talking about? As a German individual, I am very happy with this.
If you trade professionally, you will have to deal with tax implications, but that‘s your job, so it‘s fine.
If you are just a small investor staking some coins, this decreases the burden on you.
How does this benefit big players at the cost of retail investors?
If you trade professionally, you will have to deal with tax implications, but that‘s your job, so it‘s fine.
If you are just a small investor staking some coins, this decreases the burden on you.
How does this benefit big players at the cost of retail investors?
Whom do you believe has a greater capability to hold anything for a longer period of time: the individual, or the investment firm? And for holding for a short period, and thus having to deal with taxes: again, whom do you believe more capable of dealing with that?
Any regulation is an advantage to large over small, at the right level of large vs. small, since the burden of optimizing to win is more easily borne by the former. In some cases, it's just more obvious.
Any regulation is an advantage to large over small, at the right level of large vs. small, since the burden of optimizing to win is more easily borne by the former. In some cases, it's just more obvious.
Either you are misunderstanding me, or I am misunderstanding you.
Previous situation: You had to hold your staking rewards for 10 years to be able to realize your gains tax-free. When simply buying and holding, the term was 1 year.
New situation: You have to hold your staking rewards for merely a year (like buy&hold) to realize tax-free gains.
Reducing the amount of time before being able to realize tax-free gains benefits both big and small players. (Right?)
However, I think the previous 10 year term was more burdensome on individuals than institutions. Maybe that is where we disagree?
Previous situation: You had to hold your staking rewards for 10 years to be able to realize your gains tax-free. When simply buying and holding, the term was 1 year.
New situation: You have to hold your staking rewards for merely a year (like buy&hold) to realize tax-free gains.
Reducing the amount of time before being able to realize tax-free gains benefits both big and small players. (Right?)
However, I think the previous 10 year term was more burdensome on individuals than institutions. Maybe that is where we disagree?
No, this was my issue here. I am an idiot lately. My apologies, and thank you for your patience. Pray for my brain, please.
This has always been the case.
I've been seeing this spammed all around the internet today. I wonder if there may be some... motivation behind it.
// Edit, for whatever it's worth, I'm CTO at a major hedge fund at NYSE and the CEO literally just sent me the same damn article hosted on a different URL. I pointed out that it has always been the case and he replied with a GIF of a puppeteer.
I've been seeing this spammed all around the internet today. I wonder if there may be some... motivation behind it.
// Edit, for whatever it's worth, I'm CTO at a major hedge fund at NYSE and the CEO literally just sent me the same damn article hosted on a different URL. I pointed out that it has always been the case and he replied with a GIF of a puppeteer.
It does not apply to stocks, bonds, mutual funds, and most other securities, which I would consider somewhat relevant asset classes.
I stand corrected, that is the way it has been before 2009 when I lived in Germany. I've edited the original comment.
It has, however, always been the case for cryptocurrency. This is not a new tax law or anything of significance.
It has, however, always been the case for cryptocurrency. This is not a new tax law or anything of significance.
maybe because crypto is supposed to be currency ;)
I mean its dreadful at that so.
I highly recommend this research article - "The Philosophy of Bitcoin and the Question of Money"
https://journals.sagepub.com/doi/full/10.1177/02632764211049...
https://journals.sagepub.com/doi/full/10.1177/02632764211049...
This is nonsense. E.g. you can sell a house tax-free no earlier than two years after you’ve bought it, and only if you oived in it — if not, you need to wait 10 years for a tax-free sale.
Real estate is not a traditional asset class.
I always used to think that real estate / claim to territory was the most traditional asset of all, dating back way farther than our species.
No other species has the recorder of deeds \ title registrar \ court system to enforce claims over territory in absentia without the continual presence of the beneficiary. Even among humans most of Earth's territory is considered common property and not excludable or conveyable personal property when considering the ocean. Practically speaking something is only an asset in a financial context when ownership can be conveyed on paper and pledged as collateral for a loan.
Many animals use urine to "write" their claim to ownership. Trespassers get punished severely, and they know it. The message implies a high willingnes to enforce their claim, even at significant risk. Rivals usually stay away unless they are either desperate or confident that they are superior.
I would argue that these are the instincts that form the basis for our concept of ownership of assets, and predate our modern justice systems by tens of millions of years.
I would argue that these are the instincts that form the basis for our concept of ownership of assets, and predate our modern justice systems by tens of millions of years.
Funfact, if you move in directly after buying, you can sell it even in the very same year tax-free in the gains.
The two years plus 1 day rule applies only of the curse of 10 years, if you haven't moved in directly.
The two years plus 1 day rule applies only of the curse of 10 years, if you haven't moved in directly.
Two years if you live in it is not very different from one year. The 10 years for secondary houses is about preventing house shortages I guess. People need to be able to buy or rent a place to live: nobody needs to own cryptos.
[deleted]
That's not true. Before, crypto currencies used for staking and lending were only exempt after at least 10 years of holding. This has changed now.
The title literally says "HELD".
I realize that. I was replying to the parent comment that claims that it has always been like this which is not true.
> This has changed now.
Where does it say that?
Where does it say that?
Your boss sends you a gif of a puppeteer?
Of course. Yours doesn't?
We’re both executives. Besides, I have to admit that it’s always super funny realizing that we have flatter hierarchies and better work climate at a damn hedge fund than most places.
And we’re not even crooks! Would you believe that. Crazy.
We’re both executives. Besides, I have to admit that it’s always super funny realizing that we have flatter hierarchies and better work climate at a damn hedge fund than most places.
And we’re not even crooks! Would you believe that. Crazy.
maybe they have a good relationship with their boss and communicate in ways that work for them and match the world we live in? does your boss still communicate with you in formal memos?
[deleted]
The title is absurd and should be changed. You will be taxed eventually. Germany is just classifying Crypto as any other long term capital gains.
This is not true; Crypto as well as gold are not taxed by capital gains ever - they are considered special and treated differently on your tax declaration ("Einnahmen aus Veräusserungsgeschäften"). It just happens that the same tax rate of 25% is applied (if held for less than a tear).
So it is not tax-free as the title implies, but fixed 25%?
Yet another attack on peer to peer electronic cash, masquerading as a benefit handed over by the amazing thoughtful overlords to their ignorant peasants. Cryptocurrency is CURRENCY, meant to be spent and replaced and worked for, not “Hodl bro” like idiots everywhere tout.
One interesting aspect of any form of currency that is strictly finite (like most crypto implementations are) is that it will become deflationary over time. Economies, demand, etc will grow but the amount of currency will stay, more or less, the same. So the currency will inherently become worth more.
Good and bad depending on how you look at. As a holder, it's good because your money becomes worth more. But on a macroeconomic level, there's an argument to be made that inflation is good because it basically is a deterrent against 'hodlllll' and a motivator for things like lending and what not, which help the gears of the economy churn. But we're probably going to get to see the endgame of the inflationary fiat game in our lives and I guess we just get to see whether a depressionary crash or an inflationary crash is less awful.
Good and bad depending on how you look at. As a holder, it's good because your money becomes worth more. But on a macroeconomic level, there's an argument to be made that inflation is good because it basically is a deterrent against 'hodlllll' and a motivator for things like lending and what not, which help the gears of the economy churn. But we're probably going to get to see the endgame of the inflationary fiat game in our lives and I guess we just get to see whether a depressionary crash or an inflationary crash is less awful.
This is common folk wisdom, but not exactly what macroeconomists actually believe. It's true that deflationary shocks tend to lead to hoarding money and economic activity freezing. But long-run deflation that's baked into the system and expected appears to have no impact on economic activity.
We know this from the economic history of the 19th century. The entire period from 1815-1914 was broadly deflationary, yet economic growth rates were significantly higher than the 20th century. There was certainly no shortage of massive investment made into industrialization, railroads, electrification, and fossil fuels among other major endeavors.
https://www.nber.org/digest/apr04/good-versus-bad-deflation-...
We know this from the economic history of the 19th century. The entire period from 1815-1914 was broadly deflationary, yet economic growth rates were significantly higher than the 20th century. There was certainly no shortage of massive investment made into industrialization, railroads, electrification, and fossil fuels among other major endeavors.
https://www.nber.org/digest/apr04/good-versus-bad-deflation-...
There are several caveats with this. First of all, this comes from the treasury (executive branch). There is considerable room for interpretation, and courts may apply existing laws differently than the treasury intends.
Furthermore, according to the letter, the tax-free period only applies to currency tokens (which are defined as tokens to be used for payment purposes). The tokens that routinely make the news do not seem to be in that category. Other tokens may be taxed differently. Here's an example: if someone algorithmically pegs the value of a token to some stock index, it is very likely that you still have to pay the usual 25% capital gains tax once you sell it. Undoubtedly someone will set up a coin like that and take fees in anticipation of tax savings, but this will work out only for some time, until the tax office catches up—or not at all, if the token is never classified as a payment/currency token in the first place.