The government bill of the ecosocial tax reform law 2022 part I (Ökosoziales Steuerreformgesetz 2022) published on December 15, 2021 includes extensions compared to the draft, especially with regard to the definition of cryptocurrencies and related terminology. Furthermore, the obligation to deduct the capital yield tax (KESt) is postponed by one year to income realized as of January 1, 2024, the group of persons obliged to deduct KESt is extended and transitional regulations are added.
The notes to the government bill state that non-fungible tokens (NFTs) which qualify as non- transferable assets, and asset tokens, which are based on real assets (e.g. securities and real estate), shall not to be subsumed under the fiscal definition of a cryptocurrency. Stablecoins, whose value is intended to depend on the value of an underlying legal currency or other asset, shall qualify as cryptocurrency.
It is clarified that only cryptocurrency units acquired through classical staking - i.e., through the use of units to enable the confirmation of a transaction in the course of the (delegated) proof of stake - shall fall under the tax exemption regarding current income from cryptocurrencies. Taxation shall occur at a later date upon disposal or equivalent event (in particular in case of exit tax). Other transactions, even if they are referred as staking, shall not generate current income from cryptocurrencies.
Furthermore, the exemption criteria have been expanded to include the receipt of cryptocurrencies in the context of a spin-off from the original blockchain, the so-called hardfork. Acquisition costs of zero shall be assumed for the cryptocurrencies received, which shall result in a tax liability in the event of a subsequent sale.
The new taxation regime for income from cryptocurrencies shall enter into force on March 1, 2022 and shall apply to cryptocurrencies acquired after February 28, 2021 (“new assets”).
Cryptocurrencies acquired before March 1, 2021 (“old assets”) and used after February 28, 2022 to generate current income from cryptocurrencies under the new taxation regime shall be taxed at the special income tax rate of 27.5%. This shall apply in case the exception of tax exemption regarding current income for Staking, Airdrops, Bounties or Hardforks does not apply. In addition, it is clarified that the cryptocurrencies thus acquired shall constitute “new assets” in any case.
Upon request of the taxpayer, the special income tax rate of 27.5% shall be applied for income from cryptocurrencies realized after December 31, 2021 and before March 1, 2022 instead of the progressive income tax rate of up to 55%. Losses incurred as a result can be offset against other capital income subject to the special income tax rate of 27.5%.
The obligation to withhold capital yield tax shall be mandatory for domestic capital income that accrues as of January 1, 2024. However, agents obliged to deduct capital yield tax should be free to opt to withhold voluntarily the tax on capital income and gains starting already in the calendar years 2022 and 2023, provided that the special tax rate of 27.5% is applicable.
There shall also be a new possibility of a voluntary capital yield tax deduction as of March 1, 2022 for income from uncertificated derivatives, which may also relate to cryptocurrencies, also in those cases in which investment firms make use of a licensed payment service provider, an e-money institution or a credit institution with regard to capital yield tax withholding and payment. Foreign investment firms, payment service providers and e-money institutions are also affected, provided they are domiciled in a country with comprehensive mutual administrative assistance on tax matters and a tax representative has been appointed.
The government bill contains some clarifications and amendments regarding cryptocurrencies. We are looking forward to the final law, which shall be announced in January 2022. Furthermore, it remains to be seen in which form and at what exact date the regulations regarding taxation of crypto funds and the associated tax reporting (distributions and deemed distributed income) will be implemented. We will keep you informed on further developments in the course of the legislative process.
Elke Teubenbacher ist Senior Managerin in der Financial Services Industry Line bei Deloitte und hat mehr als 10 Jahre Erfahrung in der steuerlichen Behandlung von Finanzinstrumenten, insbesondere in der steuerlichen Behandlung von in- und ausländischen Investment- und Immobilienfonds bei diversen Anlegern. Als (Co-) Autorin publiziert sie zur steuerlichen Behandlungen von Kapitalvermögen, Investment- und Immobilienfonds.