If you think the authorities have no interest or ability to see the profits of crypto traders, you will be sorely mistaken. With the growing popularity and strong price rises they have become the target of the tax investigation. So it’s important to deal with your taxes early so as not to run the risk of being penalized.
The easiest way to do this is with a tax tool like Accointing.com – here you can import all transactions and the software will create a Winheller-certified tax report for you. In most cases there is no discussion of the tax situation: if there is less than a year between buying and selling the cryptocurrencies, the profits must be taxed.
Can the tax authorities access my trades?
It does not have to be the tax authorities become directly attentive to investor trades. However, almost all crypto exchanges now have strict KYC conditions, meaning that it is no longer unknown where the Fiat money comes from and who receives it. So if there is a bank transaction to an exchange, it is no longer unknown at first.
Closer viewing of the individual can be through suggestions to the tax authority or through accidental discoveries. What must be clear to everyone: The blockchain is not forgotten. With it, all transactions ever made can be traced. Tracking is possible through the various cryptocurrency addresses. Of course a reference cannot be given to a person in every case, but there are often some transaction patterns that can point to a specific person.
What can happen in the worst case?
Even if it’s not clear to many – the tax authority is increasingly focusing on the crypto sector. But what are the real consequences if profits from the trade with cryptocurrencies are not taxed?
- Estimate – if the tax office has found that there is a profit from the crypto trade, but cannot determine the exact amount of this profit, they have to estimate it. This estimate is usually very high for weight gain.
- Penalty – potentially a prison sentence of up to 5 years or a fine. Tax evasion is present if incorrect or incomplete information is given or the tax authorities are not informed of tax-relevant facts contrary to their duties. The attempt alone is already punitive.
- Administrative offense – A fine of up to 50,000 Euros can be imposed if it is a minor offense, known as “frivolous tax relief”.
Can I report myself so as not to be penalized?
For some years the tax authorities have been investigating tax evasion in the field of cryptocurrencies. The more time that goes by, the more experienced the tax researchers become in handling Bitcoin and others. In the meantime many traders who made significant profits with cryptocurrencies might not in any way reduce the motivation of those involved.
It can only be recommended to deal with the subject of self-publishing who operates with cryptocurrencies and notifications today that paid no taxes on all profits. The legal system maintains that as well thereafter the door remains open to enforcement.
Sleep peacefully with the right taxidermy
If you use a crypto-taxation tool and record your transactions early, you can look forward to the tax issue with complete peace of mind. No more need for endless Excel lists and hours of troubleshooting. Rely on the best tool on the market and test Accointing.com now for free. 