The draft of the ecosocial tax reform law 2022 part I (Ökosoziales Steuerreformgesetz 2022 Teil I) contains explicit tax provisions for the taxation of crypto currencies. It is planned that the taxation of crypto currencies shall be comparable to the taxation of capital assets with regard to capital income and capital gains. Furthermore the definition of the agent obliged to withhold the capital yield tax (KESt) shall be extended.
According to the draft law, a crypto currency is defined as a digital representation of a value that has not been issued by any central bank or public entity and is not necessarily linked to a legally defined currency. Furthermore, it does not have the legal status of a currency or money but is accepted as a medium of exchange by natural or legal persons. It can be transmitted, stored and traded electronically (§ 2 Z 21 Financial Market Money Laundering Act).
From March 1, 2022 onwards, income from capital assets shall be extended by income from crypto currencies.
The income from crypto currencies includes the following:
Current income includes, in particular, payments from the provision of crypto currencies, which can be made both in crypto currencies themselves and in other services such as fiat money (e.g., EUR).
In case of capital gains from crypto currencies against EUR, the difference between the sales proceeds and the acquisition costs shall be applied primarily. The exchange of crypto currencies for other assets and services also results in capital gains. In practice, this includes paying bills in crypto currencies without a previous separate exchange for fiat money. Details on the determination of acquisition costs and sales proceeds shall be regulated in a separate decree.
However, an exchange of a crypto currency for another crypto currency does not constitute a taxable event. In such a case, the acquisition costs of the exchanged crypto currency shall be transferred to the crypto currency received.
If the transaction processing service involves the use of already existing crypto currencies (staking) or if these are transferred without or only for an insignificant consideration (air drops, bounties), acquisition costs of zero can be assumed for the crypto currencies received. In the event of a later sale, this results in the taxation of the entire increase in value.
Crypto currencies held by mutual funds shall be treated according to the same tax regulations as a direct investment due to the so-called transparency principle.
Income from crypto currencies should be subject to the special income tax rate of 27.5% for natural persons if the underlying contracts are publicly offered in legal and actual terms and if the capital gains from crypto currencies does not constitute one focus of a business activity. There is a duty to deduct capital yield tax if a domestic obligated agent exists.
In addition to domestic debtors of cryptocurrencies, the group of agents obliged to deduct capital yield tax shall also include domestic service providers in accordance with section 2, subparagraph 22 a and b of the Financial Market Money Laundering Act (FM-GwG). These service providers are service providers with headquarter, domicile, or place of management in Austria as well as domestic branches or permanent establishments of foreign service providers who are providers of electronic wallets or offer the exchange of crypto currencies for fiat money or vice versa. The before mentioned agents shall be obliged to deduct the WHT (i.e. KESt) if they have the required information or data and access to the income or the fiat currency. KESt on capital gains from crypto currencies shall only be withheld if the domestic service provider has also carried out the realization of the capital gain, ie is involved in the transaction.
In accordance with the legal regulations already in place, losses can also be offset against other capital income subject to special income tax rate, except for savings account interest and contributions from private foundations - in case the special income tax rate of 27.5% is applicable.
In contrast to the payment for other capital income, the KESt on crypto currencies is paid only once a year, on February 15 of the following year. By this date, the loss compensation should also have been carried out. As with other income from capital assets, a loss compensation certificate shall be issued for this purpose.
Taxes on income from crypto currencies that are subject to KESt withholding should also be subject to final taxation, ie the taxpayer does not have to include this income in his tax return.
The tax liability for income from crypto currencies shall enter into force on March 1, 2022 and apply for the first time to crypto currencies purchased after February 28, 2021. Crypto currencies that were acquired before that date are not subject to the new taxation regime as they shall qualify as old assets. In accordance with the current legal situation, the sale of old assets is only considered to be a speculative transaction within one year and is subject to the progressive income tax rate.
The obligation to withhold capital yield tax is only mandatory for capital income that accrues after December 31, 2022. However, agents obliged to deduct KESt should be free to opt to withhold KESt voluntarily on capital income and gains in the 2022 calendar year already.
The review period for the draft of the ecosocial tax reform law shall end on December 6, 2021. We are looking forward to any final amendments or additions will be included in the final draft law and/or which detailed questions will be regulated in a separate decree. 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.