The most important facts in brief
If cryptocurrencies are held as private assets and sold (including the swap among themselves) at a profit within one year of their acquisition, this capital gain is subject to income tax. According to the BFH, there is no structural enforcement deficit in the taxation of these gains.
Cryptocurrencies as taxable assets
Gains from the sale of cryptocurrencies held as private assets are only subject to income tax if they can be qualified as taxable assets and the period between acquisition and sale does not exceed one year. It was previously unclear whether cryptocurrencies could be classified as taxable assets.
The concept of a taxable asset includes, in addition to objects and rights within the meaning of civil law, also actual conditions, concrete possibilities and advantages for the business which can be commercialised, are accessible to a special valuation according to the view of the market, generally provide a benefit for several business years and can at least be transferred with the business.
At least in the case of the cryptocurrencies Bitcoin, Ethereum and Monero, the BFH held that they are objectively valuable, independently assessable items that can be transferred both individually and together with the business. They are therefore to be regarded as taxable assets.
According to the BFH, this would not be changed by the fact that the alienability under civil and contractual law raises questions. The decisive factor is whether the commercial practice has found ways of transferring such cryptocurrencies to a third party in return for payment and thereby commercializing them.
It is noteworthy that the BFH equated the exchange of cryptocurrencies among themselves with a sale against fiat money (euro, dollar) without further explanation. Other countries (such as France) come to different conclusions. There, the exchange crypto-to-crypto is not taxable.
No structural tax enforcement deficit
The taxpayer had argued before the BFH, among other things, that the majority of taxable capital gains are not declared to the tax office and therefore remain untaxed. Such inequality in taxation would result in an ‘idiot tax’ and be unconstitutional.
The BFH rejected this argument and held that there was no (unconstitutional) structural tax enforcement deficit. It held that a statutory basis for taxation is only unconstitutional if the legal design of the collection procedure fails in principle to achieve equality of the tax burden. A statistically inequitable burden is therefore not sufficient. Rather, the implementation deficit must either be inherent in the regulation itself or frequent or systematic violations must not be consistently punished and prevented.