Beginner
Lesson 14
3 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 lesson, you will learn the basics of taxation for cryptocurrencies.


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Beginners' Quiz

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). 

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. Such profits become taxable if you buy and sell cryptocurrencies within a one-year period. It may therefore be a good strategy to buy and hold cryptocurrencies for at least one year. 

The following events are considered a “sale of cryptocurrency” under Austrian law: if you exchange a cryptocurrency into a fiat currency such as EUR, USD and others, if you pay in a cryptocurrency when buying a product or service, and if you exchange one cryptocurrency for another cryptocurrency or for another crypto-asset.

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

Keeping track of your portfolio

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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FURTHER READING

BOOKS

  • Aleksandra Bal - Taxation, Virtual Currency and Blockchain
  • Anne Boden - The Money Revolution: Easy Ways to Manage Your Finances in a Digital World
  • Werner Haslehner - Tax and the Digital Economy: Challenges and Proposals for Reform

7 FAQs on cryptocurrencies

Blockchain & Cryptocurrency Regulation 2019 in Austria

Portugal Tax Authority Removes Taxation on Crypto Trading and Payments

DISCLAIMER

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.