Cryptocurrencies – Austria as a pioneer in taxation
04/03/2022
According to the current legal situation, the profit from the agreed cryptocurrency held in private assets is attributed to the progressive tax rate of up to 55 percent. However, this only applies if the death occurs within one year of acquisition, ie the one-year speculation period. If monitored after the one-year speculation period, profits are tax-free.
The government proposal for the Eco-Social Tax Reform Act 2022 Part I (ÖkoStRefG 2022 Part I) published on December 15th, 2021 provides for a comprehensive reform of the taxation of income from cryptocurrencies. This taxation is to be aligned with the taxation of income from classic capital assets (shares, bonds, funds, etc.). Austria is one of the few countries that have clear regulations on the taxation of cryptocurrencies.
According to the government bill, the following should apply to the taxation of cryptocurrencies in the future:
• All profits from the specified cryptocurrencies are to be subject to the special tax rate iHv. 27.5 percent subject. Income from mining activities should also be subject to the special tax rate, provided that the mining activity is not classified as a commercial activity.
• Losses from cryptocurrencies should not only be able to be offset against cryptocurrency profits, but also with all other income from classic capital assets (interest, dividends and profits made).
• Domestic service providers who handle the cryptocurrency transactions (crypto exchanges) should be obliged to pay the tax iHv. Withhold 27.5 percent in the form of capital gains tax (KESt) and pay it to the tax office. The withheld capital gains tax has the effect of a settlement, so it is no longer necessary to include the income in the tax return.
It is clarified that in the case of cryptocurrencies obtained through staking, as airdrops or bounties or as part of hard forks, the acquisition costs are to be set at zero (ie the entire proceeds are taxable in the event of a later increase).
transitional provisions
The new provisions on the taxation of income from cryptocurrencies are to come into force on March 1st, 2022 and will be available for the first time on cryptocurrencies acquired after February 28th, 2021 (new assets). Profits from cryptocurrencies that were acquired before March 1st, 2021 (old assets) continue to be tax-free after the one-year speculation period has expired. Upon application, income from cryptocurrencies realized after December 31, 2021 and before March 1, 2022 should be taxed at the special tax rate of 27.5 percent.
The obligation to deduct capital gains tax is to apply for the first time to income from cryptocurrencies that accrue after December 31, 2023. For income from cryptocurrencies in the calendar years 2022 and 2023, the possibility should be created to voluntarily withhold capital gains tax.
Crypto assets that qualify as derivatives for tax purposes
Income from non-securitised crypto assets that qualify as derivatives for tax purposes (e.g. stock tokens) are subject to the progressive tax rate. With the ÖkoStRefG 2022 Part I, the possibility of a voluntary capital gains tax deduction with a settlement effect is to be created for such derivatives. A prerequisite for such a voluntary capital gains tax deduction is that the domestic service provider (crypto exchange) IS licensed as an investment services company and uses a licensed payment service provider, an e-money institution or a credit institution with regard to the withholding and payment of the capital gains tax. The voluntary capital gains tax deduction should be possible for the first time for investment income accruing after March 31, 2022.
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