Austrian Tax Authorities Clamp Down on Bitcoin Lending

In Austria, lending Bitcoin through exchanges, platforms, or DeFi protocols is considered ongoing income from cryptocurrencies. This means that tax falls due as soon as the investor can dispose of the rewards, which does not necessarily require selling them for euros.

The tax is calculated on the euro value at the moment of receipt, and if the Bitcoin price falls afterwards, the tax bill can exceed the value the coins still hold later on. This creates a risk for investors, who may need to use part of their lending income to fund the tax that follows.

Ongoing income from cryptocurrencies is subject to a special tax rate of 27.5 percent in Austria. However, if the underlying agreement was not publicly offered, the income can fall under the progressive income tax tariff, which can be lower or higher than 27.5 percent depending on total income.

Products labelled as 'staking' are often interest-bearing crypto products that involve making available assets to the platform or other market participants, and may be treated as lending for tax purposes. Genuine staking, where coins are deployed for blockchain validation, is treated differently in Austria and generally does not give rise to ongoing income.

The Austrian rules also apply to decentralised credit and liquidity pools, which can be considered ongoing crypto income. However, the tax treatment of these products can be more complex due to their technical and legal construction.