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The headline is miss-leading. As a German tax-residency I can give some background. Already in the existing tax law, crypto held for more than a year didn't ge
by xmx13 4y ago
The headline is miss-leading. As a German tax-residency I can give some background.
Already in the existing tax law, crypto held for more than a year didn't get taxed. If you sold within the first year your personal income-tax rate got applied. Which is most likely 45% if you work in any tech-related position.
The only exception was if the coins/tokens were used for staking the tax-free holding period got extended to 10 years.
This has changed now. All crypto held for more than one year will not get taxed.
Technically, it is also not a new tax law. The tax-authorities changed their interpretation, how the existing tax-law should be applied for crypto-holdings.
- brazzy 4y ago> your personal income-tax rate got applied. Which is most likely 45% if you work in any tech-related position. The 45% bracket starts at 277.826 € in 2022. That is definitely not the kind of money people in a "tech-related position" in Germany routinely earn.
- luciusdomitius 4y ago99% of techies I know who are also financially literate enough to be stacking sats are in the top 5% bracket income-wise. I know that because I know what sort of offers suggested by me they have rejected. If the 5-th percentile of tech pay in Germany is around that amount, I can't tell.
- xmx13 4y agoYes, you are correct. My fault. It is 42% if your income is higher than 57.918 Euro (2021). Most tech-related positions will achieve that.
- nosianu 4y agoThe 42% income tax is the marginal rate and it's the one for singles. Try https://www.bmf-steuerrechner.de/ekst/eingabeformekst.xhtml https://www.bmf-steuerrechner.de/ekst/eingabeformekst.xhtml As an example, for 60,000 Euros (a more typical magnitude) your tax rate will be 26.55% if you are single, 16.73% if you are married (using splitting).
- blfr 4y agoSo the crypto gains will be taxed at 42% because these are presumably on top of your salary.
- chaosite 4y agoMoney is fungible. You could equally say the crypto is taxed at a lower rate but then (a larger part) of your salary would be taxed at the higher bracket.
- blfr 4y agoIncome streams on the other hand are not nearly that fungible. You can either work full time or not at all most of the time. So unless you can turn crypto trading into a full time (or more precisely minimum salary) gig, it is a marginal activity taxed at the marginal tax rate.
- felixge 4y agoYup. But that's marginal tax rate. Average tax rate for e.g. 150k EUR income is 37.8%. See https://www.bmf-steuerrechner.de/ekst/eingabeformekst.xhtml https://www.bmf-steuerrechner.de/ekst/eingabeformekst.xhtml
- Ar-Curunir 4y agoThat’s surprisingly low, not too different from US tax rates!
- SZJX 4y agoThe employee has to pay a ton of social security contributions and insurance in Germany, which in many other countries are paid by the employer, making the net salary most likely about half of the gross salary.
- felixge 4y agoTrue! But it's also worth noting that those contributions are capped in Germany. This is different from other EU countries such as Portugal. For pension the cap is ~85k. For public health insurance is ~58k EUR, but you can opt out of this and get private health insurance instead as well.
- ars 4y agoThe decimal as a thousands separator made me read that as a much smaller number, and I was surprised that Germany calculated tax rates to 3 decimal digits. For other confused people, read that as: €277,826.
- brazzy 4y agoUh, yeah. I copied that straight out of German Wikipedia without paying attention to the number formatting.
- vmception 4y agoAre there state level and municipal level income taxes as well?
- lxgr 4y agoNo.
- brazzy 4y agoNope. The income taxes are distributed in a fixed ratio, 15% goes to the municipality/county, and 42.5% each to the state and the federal budget.
- Aachen 4y agoThere is - TV tax (also if you don't own a TV), - pension tax (also if you have ETFs of your own), - care and health insurance are two things separately deducted before money makes it into your bank account, - iirc until 2021 eastern germany taxes to help poorer regions, - church taxes if your parents signed you up for it -- until you pay a fee to get unregistered from the church. This is all separate from income tax. And of course if you own a car or want to use public transport that's separate still. Not sure what my landlord pays for waste management, in NL I think you pay separately for that, can't quickly find it for Germany (German Wikipedia about Kommunalabgaben says Abwassergebühren are indeed a municipality or city circle thing, but then two others said you don't pay anything to the municipality so I'm not confident I'm reading this German article correctly).
- valenterry 4y agoLet's clarify a bit here. - There is no "TV tax". There is a fee that most households (not people) must pay. It's always the same, no matter what your personal marginal tax rate is. - pension premiums are not a tax. For employees they get deducted from your gross income and effectively lower your tax - and gains from ETF are not considered. - For care and health insurance it's the same as for pension. - Yes, there's still a tax for western Germany to help eastern Germany - Yes, there's church tax (if you are already e.g. catholic) and yes you have to be a fee to get out of it. In addition, for employees (and some others) there are: - Mandatory unemployment premiums - Additional premiums for care insurance if you are single - Mandatory accident insurance (paid by the employer though)
- stjohnswarts 4y agoThat doesn't make any sense to me if I'm understanding it correctly. If you buy $100 in bitcoin and sold for $120 then you'd have to pay $54 in taxes? That can't be right unless it's 45% on the $20 extra that you "profited" ?
- archi42 4y agoIANAL (but German): I am only aware that you have to pay taxes on gains. I'd be pretty sure (or very much surprised) if you had to pay e.g. $50 in taxes after buying $200 of crypto, losing half of it and then converting the remaining $100 back to cash. So given your example you report $20 gained on the transaction and pay $10 in taxes. If you've to pay taxes in German and move serious amounts of money (be it stock or crypto): Get a tax accountant and setup some tax avoi... optimization. I feel like our system essentially demands this. Oh, I'm lazy and always do tax estimates with 50% instead of 45%.
- _whiteCaps_ 4y agoYou've only made an income of $20, so you're only taxed on that.
- deleted 4y ago[deleted]