LBF NRW steps up action against tax evasion with cryptocurrency
The North Rhine-Westphalia State Office for Combating Financial Crime (LBF NRW) is currently analysing a comprehensive data package on trading in crypto assets. The data set currently comprises around 4,000 potential tax cases.
Background
In 2023, the North Rhine-Westphalian tax administration had already received and centrally analysed data from a German crypto trading platform by way of a collective information request. According to recent press reports, the majority of these cases have already been processed and have led to Back taxes in the „high single-digit million range“ led.
The LBF NRW prepares the new data records centrally and sends them to the relevant tax offices throughout Germany for further checking.
Tax categorisation
In the Private assets profits from the sale of crypto assets may be taxable as private sales transactions (Section 23 EStG) if the period between acquisition and sale is less than one year; exchange and payment transactions are deemed to be sales.
Income from commercial trading in crypto assets as well as from activities such as mining, staking or the acceptance of cryptocurrencies as a means of payment are regularly Operating income and recognised in the profit calculation (Section 4 (1) or Section 5 EStG). Depending on the legal form, profits are subject to income tax or corporation tax and, if applicable, trade tax.
The pure exchange of cryptocurrencies into legal tender or other cryptocurrencies is, according to the case law of the ECJ (judgement of 22.10.2015 - C-264/14, Hedqvist) VAT-free. Providing companies but services against payment in the form of cryptocurrencies, these are Taxable and regularly taxable transactions within the meaning of § 1 UStG.
Outlook
With the EU Directive DAC8, which will apply from 1 January 2026, will create an EU-wide reporting obligation for crypto service providers. This will further expand the cross-border exchange of information - the transparency of crypto transactions will increase and the level of scrutiny is likely to rise further.
Those affected who have earned crypto income in the past and have (possibly) not declared it in full should promptly review the correction of their declarations - if necessary, taking into account the possibilities and limits of a voluntary disclosure. Our Tax consultant and Specialist lawyers for tax law will be happy to support you.
