The tax authorities are targeting investors who have traded in cryptocurrencies. Anyone who has not properly declared their profits may still file a voluntary disclosure for tax evasion.
Investors who have made profits from trading cryptocurrencies such as Bitcoin, Ethereum, and others and have not reported these profits in their tax returns face trouble. They come into the focus of the tax authorities. They check whether profits have been properly taxed. If this is not the case, a charge of tax evasion may follow. An escape route for the affected investors is the voluntary disclosure that provides exemption from punishment, explains the business law firm MTR Legal Rechtsanwälte.
As reported by the “Spiegel” on June 9, 2023, the tax authorities could investigate the users of a major cryptocurrency trading platform. This is because the tax administration of NRW obtained a court order for the release of the data. Which trading platform specifically is involved is not yet known. The North Rhine-Westphalian tax administration has since shared the data with other federal states.
Thus, investors who have traded cryptocurrencies and have not reported the profits to the tax office must expect investigations nationwide by the corresponding tax authorities.
Profits from trading cryptocurrencies must be independently reported by investors in their tax returns. They must at least be disclosed if they arose from trading cryptocurrencies within a year. This means: The profits are taxable if less than 12 months elapse between the purchase and sale of the cryptocurrency.
The tax obligation has also been confirmed by the Fiscal Court of Cologne (Ref.: 14 K 1178/20) and the Fiscal Court of Baden-Württemberg (Ref.: 5 K 1996/19).
If the profits were not reported to the tax office, the facts of tax evasion may have been fulfilled and severe penalties may be imminent. The voluntary disclosure offers a way out.
For a voluntary disclosure to have an exempting effect, it must meet various requirements. It must be complete and submitted in a timely manner before the tax authorities have discovered a crime. Since even small mistakes can lead to the ineffectiveness of the voluntary disclosure, experienced lawyers in tax law should be consulted.
MTR Legal Rechtsanwälte advises on tax law and voluntary disclosure.
