Eco-social tax reform creates a framework for the taxation of cryptocurrencies
The draft bill on eco-social tax reform sent for scrutiny on 8 November 2021 also provides, for the first time ever, for the taxation of cryptocurrencies.
“There is currently an imbalance in the way in which cryptocurrencies are treated as compared with classical stocks and bonds. We shall be the first country in the EU to create the framework conditions for the taxation of cryptocurrencies. As part of our tax reforms we will start to move towards their equal treatment, so as to break down the mistrust and prejudices that exist towards the new technologies. At the same time we will ensure greater fairness for investors as well as uniform market conditions. This is an important step towards making this financial product more accessible. This will not only make us pioneers in Austria, but trail-blazers in Europe too,” commented Finance Minister Gernot Blümel.
The draft bill up for scrutiny provides for the integration of cryptocurrencies into the existing taxation scheme for capital assets. Earnings from cryptocurrencies will in principle be subject to the special tax rate of 27.5% and thus to capital gains tax, provided the person/entity involved is liable to tax in Austria. The intention is for the tax liability to come into force on 1 March 2022 and to apply to cryptocurrencies acquired after 28 February 2021.
Cryptocurrencies acquired prior to this date are deemed “legacy assets” and are not subject to the new tax regime. The general tax regulations will continue to apply to these assets (e.g. earnings from speculative transactions if these assets are sold within the one-year speculative deadline). The liability to CGT is intended to apply from 2023; prior to this, tax will be calculated as part of the tax assessment.
Example 1: A purchases cryptocurrencies with a value of EUR 1,000 on 1.1.2021 (“legacy assets”) and sells these for EUR 2,000 on 31.12.2022. A is entitled to keep the profit of EUR 1,000 made from the sale without any tax deductions, as the one-year deadline for speculative transactions has passed.
Example 2: A purchases cryptocurrencies with a value of EUR1,000 on 1.1.2022 (“new assets”) and sells these for EUR 2,000 on 31.12.2023. The profit of EUR 1,000 made from the sale will be subject to the special tax rate of 27.5%, and thus EUR 275 in tax must be paid.
You can find further information on the eco-social tax reform at bmf.gv.at/entlastung (in German)