Tax treatment of cryptocurrencies

Key Points

• Cryptocurrency holdings are taxed as income from capital assets at a special rate of 27.5%.
• Current income from cryptocurrencies includes remuneration for transferring cryptocurrencies, interest on crypto loans, and rewards for providing liquidity.
• Realized gains from cryptocurrencies include profits from their sale, exchange, or trade.
• Losses can be offset against profits from cryptocurrencies and other capital assets.

Detailed Summary

• Definition of Cryptocurrencies: Any digital representation of value that is accepted as a means of exchange and can be transferred electronically.
• **Income from Cryptocurrencies:**


• Current income: Remuneration for transferring cryptocurrencies, interest on crypto loans, and rewards for liquidity provision.


• Realized gains: Profits from selling, exchanging, or trading cryptocurrencies.
• Taxation: Income from cryptocurrencies is subject to a 27.5% special tax rate, regardless of source (withholding tax or income tax return).
• Losses: Can be offset against profits from cryptocurrencies and other capital assets.
• Commercial Activities: If cryptocurrencies are part of a business's core activities, the special tax rate does not apply.
• International Tax Law:


• Income derived from cryptocurrencies may be taxed as business profits or interest, depending on the specific circumstances.


• Capital gains from cryptocurrencies are generally taxed in the country of residence.
• Value Added Tax (VAT):


• Exempted for the exchange of legal tender for cryptocurrencies and vice versa.


• Not applicable to bitcoin mining due to lack of identifiable service recipient.

Conclusions

• Cryptocurrencies are subject to tax in Austria, with a special rate of 27.5%.
• Both current income and realized gains from cryptocurrencies are taxable.
• Losses can be offset to reduce tax liability.
• International tax law considerations apply to cryptocurrencies.
• VAT treatment of cryptocurrencies varies depending on the specific transaction.