German Crypto Tax Reform Hits Hard on Unproven Gains

The German government is proposing a new crypto tax reform that would impose harsher penalties on individuals who cannot prove their acquisition cost when selling cryptocurrencies. According to the draft bill, if an individual sells their coins and cannot provide proof of purchase price, they will be taxed on half the sale proceeds under the substitute assessment.

This means that even if an individual's real gain is only 1,000 euros, the tax authority would assume a gain of 5,000 euros. At a tax rate of 25%, this would result in around 1,000 euros in taxes being paid unnecessarily.

The comparison with equities is stark, as securities are subject to a substitute assessment of only 30% when the bank does not know the acquisition data.

The draft bill also introduces a new term, 'exchange crypto asset', which would cover cryptocurrencies such as Bitcoin and Ether. However, tokens that qualify as securities or payment tokens with a central bank link would be exempt from this new regime.