Lesson 10
4 min

Do I have to pay taxes when I buy or sell Bitcoin?

The short answer to whether you have to pay taxes when buying or selling Bitcoin is: yes.

  • In almost all countries, you have to pay taxes on the trade of most commodities

  • The regulatory framework for taxation of cryptocurrencies differs from country to country

In this article, you will learn the basics of taxation for cryptocurrencies.

In most countries, you pay tax on the trade of most commodities but the situation is different in every country. As it gets quite complicated and every country has its own legislation, we strongly advise you to contact your personal tax advisor for further information about your individual situation

We strongly advise you to contact your personal tax advisor for further information about your individual situation.

Buying a cryptocurrency like Bitcoin on a platform like Bitpanda with fiat currency is a very easy process. But things get more complicated once you transfer your cryptocurrency to an exchange in order to exchange it into another cryptocurrency. 

In most countries, this act is considered a “taxable event” by law like any transaction involving a commodity, meaning that you will have to pay taxes because the event produces capital gains (or losses). 

When investors buy a cryptocurrency asset like Bitcoin, they generally do not incur immediate tax liabilities. Taxation often occurs when these assets are converted into fiat currency through a sale.

This is where understanding the crypto market developments and mechanisms like the Bitcoin halving becomes crucial for investors. Historically, Bitcoin halving events, which reduce the reward for mining new blocks, have led to a significant increase in Bitcoin's value. This increase can result in substantial profits when the Bitcoin is eventually sold.

Investors should keep an eye on the Bitcoin halving countdown to strategically plan their investments and sales. The profit made from selling Bitcoin at a higher price post-halving is typically what attracts tax obligations. In most regions, the tax amount is directly linked to the profit margin, meaning that the greater the profit, the higher the potential tax liability.

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While buying Bitcoin may not trigger taxes, the eventual sale, especially post-halving, is a taxable event that investors must prepare for.

Spending cryptocurrencies is also a potentially taxable event, which again depends on the country you live in and respective regulations. 

In Austria, cryptocurrencies are considered private assets. Thus profits from the sale of cryptocurrencies are tax-relevant. Your individual tax situation depends on the gains you made, as well as on the holding period (how long you have been holding your crypto) and other factors. You should only be paying taxes on gains. Losses can also offset gains. 

In Austria, profits from the sale of cryptocurrencies, which are considered private assets, are tax-relevant.

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Keeping track of your portfolio with Blockpit

You should keep track of the cryptocurrencies you have bought for a number of reasons, such as making sure that you record your transactions for your taxes correctly. One option is to create a spreadsheet and add all the details you need for taxes right once you buy, trade or sell. You can either keep track of your transactions manually or download your trade history as a .csv file on your personal Bitpanda profile to import all relevant information into your spreadsheet. 

However, keeping track of all your transactions manually can be tedious and time-consuming. In order to make it easy for our users to file their tax reports, Bitpanda has teamed up with Blockpit, a provider for tax compliance solutions. Just set up an account with Blockpit, synchronise your account on Bitpanda via API, monitor your transactions and generate tax reports.

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This article does not constitute investment advice, nor is it an offer or invitation to purchase any crypto assets.

This article is for general purposes of information only and no representation or warranty, either expressed or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of this article or opinions contained herein. 

Some statements contained in this article may be of future expectations that are based on our current views and assumptions and involve uncertainties that could cause actual results, performance or events which differ from those statements. 

None of the Bitpanda GmbH nor any of its affiliates, advisors or representatives shall have any liability whatsoever arising in connection with this article. 

Please note that an investment in crypto assets carries risks in addition to the opportunities described above.