Austria Crypto Tax Reform: What You Need to Know

The Austrian Ministry of Finance (Bundesministerium für Finanzen) has announced a crypto tax reform for 2022 - with the main headline being that crypto tokens will be taxed as stocks. But there are some other big changes coming too, which you should know about because it all affects your tax bill. In fact, you may even be able to reduce it by opting into the new rules early.

Austria has announced crypto coins and tokens will be taxed like stocks and other mainstream investments like bonds. The BMF is hopeful the changes will boost confidence in the crypto market.

The main change is that crypto will be subject to the same 27.5% tax rate that financial assets like equities, dividends, bonds, and derivatives are in Austria. Prior to this, crypto was taxed under Income Tax in most instances.

The changes come into effect on the 1st of March 2022. However, investors can request to opt into the new crypto tax rules from the 31st of December 2021 to simplify their tax reporting next year. In fact, opting in early can reduce your tax bill.

What’s in the Austria crypto tax reform?

A quick recap on how crypto was taxed in Austria (or learn more in our Austria Crypto Tax Guide). Austria taxed crypto either under Income Tax or in some instances with a special interest-bearing tax of 27.5%.

What this means is when you sold, traded, or spent crypto you'd held less than a year in Austria - you would pay Income Tax at your regular Income Tax rate on any capital gain. Mined crypto was also subjected to Income Tax. Meanwhile, staking, lending, and other crypto investments that are viewed as interest were all subject to the 27.5% tax rate at the point you received a new coin or token. Of course, you’d then pay tax again if you later sold, spent, or traded mined coins or staking rewards. However, there was no tax on any crypto you sold, traded, or spent if you’d held it for more than one year.

From the 1st of March 2022 - the new crypto tax rules come into effect and there are quite a few changes. For starters, crypto to crypto trades will be tax free.

As well as this, crypto will no longer be subject to Income Tax. Instead, all crypto transactions are subject to the same 27.5% tax rate that financial assets are in Austria. So now when you sell or spend crypto - you’ll pay 27.5% tax on any capital gain, but no tax on trades.

Some crypto transactions are still viewed as a kind of additional income - so for some specific transactions, you’ll pay the 27.5% tax rate at the point you receive a new coin or token. This includes:

• Mined crypto

• Staking rewards

• Lending crypto

• Bounty and affiliate rewards

We’ll elaborate a bit further on staking - because this isn’t always the case. Staking rewards as part of a consensus algorithm - like proof of stake - are now tax free at the point you receive them as they're seen as an acquisition from a tax perspective. However, this only applies for direct staking as part of a consensus mechanism - for example, if you were using Yoroi or Daedalus to stake ADA. If you're conducting other kinds of staking - whether that's through a third party like Binance or Coinbase or staking via a DeFi protocol, then you’ll still pay tax on new coins or tokens at the point you receive them.

One of the biggest and least popular changes from the crypto tax reform is that long-term gains will now be taxed at the 27.5% rate. But before you panic sell all your crypto ahead of the 1st of March - this doesn’t affect so-called “legacy holdings”. So crypto you bought before the 28th of February 2021 will still benefit from tax free long term capital gains.

Finally - you can now offset crypto capital losses against capital gains. You couldn’t do this previously so it’s good news for those looking to reduce their tax bill. However, you can only offset losses against gains under the same tax rate. So you can offset crypto losses against gains taxed at the same 27.5% rate.

On the face of it - it doesn’t all look like good news, but provided you’re earning more than €18,000 a year, you’ll actually pay less in tax.

Pay less tax with the new crypto tax rules

Because crypto used to be taxed under Income Tax in most instances - this meant anyone earning more than €18,000 a year was already paying 35% tax on crypto gains. So for many crypto investors - the new 27.5% is going to be a lot lower.

As well as, this crypto to crypto trading being tax free will be a welcome change for many crypto investors. Most tax authorities subject these trades to Capital Gains Tax - so Austria is a rarity!

Whether you like the changes or not - they're coming. But investors can request to opt into the new crypto tax rules from the 31st of December 2021, ahead of the official change on the 1st of March 2022. This could potentially save you hundreds of euros in tax if you’re an active trader or in a high income tax bracket!

What does this mean for your tax return for the 2021 financial year?

Not much actually.

The effective date of the new bill is the 1st of March 2022 (unless you requested to opt in for the new rules from the 31st of December 2021).

Crypto acquired before the 1st of March 2021 are "legacy holdings" and exempt from the new rules upon disposal, so long-term gains from this crypto will always be tax exempt. Crypto acquired after the 28th of February 2021 would be taxed as a short-term capital gain, which was already subject to tax.

Koinly's Head of Tax, Tony Dhanjal says, "The tax obligation for cryptocurrencies came into force on March 1, 2022 and is applicable to cryptocurrencies acquired after February 28, 2021 (new stock). If cryptocurrencies are acquired after February 28, 2021 and sold before March 1, 2022, the provisions relating to old assets (speculative transactions) still apply."

In other words, any new stock crypto to crypto exchanges that happened up until the 28th of February 2022 (unless you opted in for the new rules) are still covered under the old provisions and therefore taxable.

This means your tax return this year (for the 2021 financial year) should follow the old crypto tax rules. It is your tax return for the 2022 financial year that will be impacted by the rule change. Unless you requested to opt into the new rules from the 31st of December 2021, your crypto tax reporting for the 2022 financial year will have to be split between old stock and new stock in accordance with the acquisition date.

How Koinly can help

Need to get your crypto taxes done? You can calculate them in no time at all with Koinly.

All you need to do is sync the wallets and exchanges you use with Koinly using API or by importing a CSV file of your transaction history. Then Koinly will calculate your capital gains, losses, any income, and expenses and generate a complete crypto tax report - ready for you to download and use to complete your tax return.