What is included in private sales transactions?
Private sales transactions are classified as other income and are regulated by Section 23 of the Income Tax Act (EStG). This involves the sale of certain assets where profits become taxable under specific conditions.
What counts as private sales transactions?
Private sales transactions particularly include the following types of sales:
1. Sale of non-owner-occupied property
If you sell a property that is not owner-occupied (e.g. rented out) within ten years of purchase, the profit from the sale is taxable.
2. Sale of other private assets
Private assets sold within one year of purchase may also be taxable. These assets include:
- Gold bars and coins
- Foreign currencies
- Rented transport vehicles
If you earn income from these assets (e.g. through renting), the speculation period is extended to ten years.
Exceptions: Other types of income and capital assets
Profits or losses that can already be attributed to another type of income are not considered private sales transactions. In particular, sale of securities and capital assets are not subject to this regulation. These profits are taxed at the withholding tax rate.
Cryptocurrencies and private sales transactions
Cryptocurrencies such as Bitcoin and Ethereum are considered private sales transactions according to Section 23 (1) No. 2 EStG. The key regulations are:
- Sale within one year: If you sell or exchange cryptocurrencies within one year of purchase, the profit is taxable if it exceeds 600 Euro.
- Tax exemption after one year: If you hold the cryptocurrencies for more than one year, the sale is tax-free, even if they were used for purposes such as lending or staking.
Special regulations for cryptocurrencies
The Federal Ministry of Finance clarified the taxation of cryptocurrencies and digital tokens in a letter dated 10 May 2022. Key points include:
- Private sales transactions: Cryptocurrencies sold within one year are taxable if the profit exceeds 600 Euro.
- Business assets and commercial trading: If cryptocurrencies are traded regularly or used intensively, they may be considered business assets, changing their tax treatment.
- Block creation through mining or forging: These activities are not considered private asset management and are regarded as commercial activity.
- Income from block creation: Income from block creation is taxable if it exceeds 256 Euro per year.
Legal rulings on cryptocurrencies
The Federal Fiscal Court (BFH) ruled on 14 February 2023 that profits from the sale of cryptocurrencies made within one year are taxed as private sales transactions (BFH ruling of 14.2.2023, IX R 3/22). Cryptocurrencies such as Bitcoin, Ethereum, and Monero are considered assets and are taxable on speculative gains.
