In this article, we answer the most important questions about capital gains tax (KESt) and explain through practical examples how the selling process works in detail, how much tax is withheld, and whether you need to include the sale in your tax return.

Important Disclaimer:

We have made great efforts to carefully prepare this comprehensive guide for you. Additionally, wherever possible, we provide direct links to official sources so you can conduct further research.

However, please note that we cannot assume responsibility for the currentness or content of the information we have provided to the best of our knowledge and belief.

This article is for informational purposes only and does not constitute tax, legal, or financial advice. It cannot replace a detailed and individual consultation with a tax expert. Coinfinity assumes no liability for the accuracy, currentness, and completeness of this article or for actions taken based on the information in this article.

As a company, we are happy to assist you but must rely on the information you provide to us. The responsibility for its accuracy lies with you, so please check it carefully.

With the introduction of the eco-social tax reform in March 2022, the Austrian government decided to place Bitcoin on the same level as traditional capital assets in terms of capital gains tax (abbreviated as "KESt").

As of January 1, 2024, Austrian Bitcoin brokers are required to withhold capital gains tax when selling cryptocurrencies that were acquired after March 1, 2021. This also applies to your Bitcoin sales against Euro through Coinfinity if you have your main residence or habitual abode in Austria. To correctly calculate the capital gains tax, we need information about acquisition times and costs, which must then be checked by us for plausibility. You can find the specific legal text here.

KESt refers to capital gains tax. It applies to income from capital assets, and most of us have actually paid KESt at some point in our lives.

Capital assets include various types of assets, including money in current and savings accounts, as well as investments in stocks, ETFs, funds, and now cryptocurrencies like Bitcoin.

KESt applies when you make a profit from such investments. This means when you receive interest on your savings or current account, or when you sell stocks and Bitcoin at a higher price than you bought them for. The KESt rate is 25% for current and savings accounts and 27.5% for other forms of investment, such as stocks and Bitcoin.

It's crucial to understand that KESt only applies to profits. For example: If you buy a Bitcoin for €100,000 and sell it for €110,000, the KESt only applies to the profit of €10,000. Of this, 27.5% (€2,750) must be paid as tax. The remaining €7,250 is "finally taxed" for you and doesn't need to be declared in your tax return.

If you bought a Bitcoin for €100,000 and sell it again for €90,000, you haven't made a profit, and in such a case, no KESt needs to be paid.

Austrian banks automatically deduct the KESt for you. That's why many people don't even notice it in their daily lives. With the eco-social tax reform, regulated Bitcoin brokers like Coinfinity are now also obligated to withhold and pay the appropriate KESt in case of a profit.

You'll learn shortly what information we need from you for this purpose.

For KESt purposes, the question isn't about which citizenship you hold. Instead, what matters is where your tax residence is. The basic principle is: If you have your residence or habitual abode in Austria, you are subject to unlimited tax liability. A registered main residence is not strictly necessary for this.

This means that all your income, both from domestic and foreign sources, is taxable in Austria.

If you are not tax liable in Austria, we only need information about the country where you are actually tax liable to enable the Bitcoin sale without further inquiries.

However, if you are tax liable in Austria, we first need your tax number. A tax number always has the following format: XX/XXX/XXXX.

If you don't know how to get your tax number, after consulting with the tax office, there are the following options:

Some might consider selling their Bitcoin through non-Austrian providers, hoping to avoid capital gains tax (KESt). However, even if these providers don't directly deduct the KESt, the tax liability in Austria remains. Simply put: You must pay the same amount to the Austrian tax office but are on your own in this process.

In order to avoid such complicated situations, we offer you our comprehensive support.

In this case, you have two options:

The legislator distinguishes between so-called "old stock" and "new stock" within the framework of KESt.

"Old stock" are defined as all cryptocurrencies acquired before March 1, 2021. These are exempt from KESt – meaning profits remain entirely with you. Nevertheless, due to legal requirements, we need information about the acquisition date and costs, even if it's old stock.

"New stock" are all cryptocurrencies acquired from March 1, 2021 onwards. These are subject to KESt. Here too, we need information about the acquisition date and costs to process the sale.

The legislator allows you to freely decide which Bitcoin you want to sell. So you can certainly sell Bitcoin that qualifies as new stock before Bitcoin from old stock. See also the text on the Cryptocurrency Regulation.

Since old stock and new stock are taxed differently, they cannot be sold in the same step. To avoid any confusion here, we will specifically ask you about this at the beginning of the sales process.

Please separate your Bitcoin clearly beforehand and then provide us with the respective desired values.

Of course, you can sell Bitcoin from all common self-hosted wallets with us. However, please note that for technical reasons, Bitcoin from only one wallet can be sold per transaction.

If you want to sell Bitcoin from different wallets, you can simply start a separate sale for each wallet.

For your security, we automatically check the acquisition costs you enter for plausibility against the historical Bitcoin price.

If the reported acquisition costs are unrealistic, for example, if you specify acquisition costs of €1,000 for a whole Bitcoin in 2023, our plausibility check fails and you receive an error message.

In this case, please check your input for possible errors or typos so that your KESt information can be recorded correctly.

For cases where you can no longer determine when or at what acquisition costs you bought your Bitcoin after March 1, 2021, the legislator has also created a regulation.

In this case, you must specify "Unknown" rather than "Old stock" or "New stock" in the sales process. The legislator automatically sets 50% of the sales proceeds as fictitious acquisition costs here. The remaining amount is subject to capital gains tax (KESt). For example, if you sell Bitcoin worth €100,000 under "Unknown," €50,000 is credited as fictitious acquisition costs. The remaining €50,000 is your fictitious profit, which is taxed at 27.5% KESt, resulting in a tax of €13,750.

Important: Unlike old stock and new stock, taxation under "Unknown" is not legally considered as finally taxed. You must therefore declare this sale in your income tax return. This option should only be considered as a last resort.

You must inform us of the acquisition period and the average acquisition costs.

Just a reminder: KESt only applies to "new stock." For all Bitcoin acquired before March 1, 2021, this is not relevant. In this case, simply select the "Old stock" option at the beginning of the sales process. While we are obligated to ask for the purchase date and acquisition costs, they remain KESt-exempt.

For multiple purchases in chronological order and storage on the same Bitcoin address or wallet, the legislator prescribes the use of the moving average price method ("GLD") (see § 2 of the Cryptocurrency Regulation).

You can find the definition of GLD on Wikipedia.

This is a calculation method that determines the average price of your Bitcoin, taking into account purchases and sales over a specific period. The GLD is only relevant for new stock.

The average acquisition costs are calculated using this formula:

Average acquisition costs = Number of BTC to be sold x GLD

To calculate the GLD correctly, you must consider the history of your Bitcoin address or wallet, taking into account all purchases and sales of new stock. Any old stock is not considered and should be viewed separately.

The GLD is recalculated with each purchase using this formula:

New GLD = (Old GLD x Old inventory + Purchase quantity x Purchase price) / Inventory

Note that the GLD remains constant during a sale and does not change. Only the total inventory of Bitcoin changes during a sale.

Here's a fictional example for illustration. In this example, Bitcoin was bought and sold multiple times between January 10, 2023, and August 30, 2023. This is therefore new stock.

The GLD is recalculated after each purchase, while during a sale, the GLD remains the same, only the inventory quantity changes.

If we want to sell 0.5 BTC in this fictional example on August 31, 2023, we proceed as follows: Average acquisition costs = 0.5 BTC x 25,172 EUR = 12,586 EUR

The average acquisition costs for selling 0.5 BTC in this example are therefore 12,586 EUR.

For a sale in our example, we first select "New stock":

In the second step, we enter the amount of Bitcoin to be sold (0.5).

In the third step, we specify the wallet's observation period, i.e. from 10.01.2023 to 30.08.2023:

In the fourth step, we enter the previously calculated value of EUR 12,586 as the acquisition cost:

If you want to sell Bitcoin from pure old stock, no KESt is due. Nevertheless, you must provide the acquisition period and acquisition costs during the sales process.

Unlike with new stock, you don't need to use the moving average price for the acquisition costs but can state the actual purchase price of the Bitcoin.

Yes, fees (e.g., service and network fees) can be added to the acquisition costs as incidental acquisition costs.

If you have any further questions, our Customer Success Team is happy to help via chat or at support@coinfinity.co.