Spot trading
Spot trading is one of the most basic and widespread methods of trading cryptocurrencies.
Spot trading with cryptocurrencies - What applies to spot trading for tax purposes
An overview
Spot trading is one of the most basic and widely used methods of trading cryptocurrencies. Unlike other forms of trading such as futures and options, spot trading involves buying and selling cryptocurrencies for immediate delivery. Below you can find out more about what spot trading is, how it works, what advantages it offers and what tax aspects need to be taken into account in Germany.
What is spot trading?
In spot trading, cryptocurrencies are traded at current market prices and transactions are settled immediately. This means that buyers and sellers trade at current prices without the need for future contractual agreements as with futures.
Features of spot trading
Immediate processing
Transactions are completed immediately, i.e. the buyer receives the purchased cryptocurrency immediately in their wallet.
Market price
Cryptocurrencies are traded at the current market price, which is determined by supply and demand.
Liquidity
The spot market offers high liquidity, as buyers and sellers are constantly active.
How does spot trading work?
Account opening
Registration and verification on a crypto exchange
Deposit
Deposit of fiat currencies or cryptocurrencies into the account of the exchange.
Deposit order
Placing a buy or sell order for the desired cryptocurrency.
Matching and processing
The exchange matches the orders and the transaction is processed immediately. The purchased cryptocurrency is credited to the buyer's wallet on the exchange.
Withdrawal
The user can transfer the purchased cryptocurrency to their personal wallet.
Advantages of spot trading
Simplicity
The process is straightforward and easy to understand for beginners.
Transparency
Prices are transparent and are determined by supply and demand.
Liquidity
High liquidity makes it easier to buy and sell cryptocurrencies at fair market prices.
No leverage effect
There is no risk of margin calls in spot trading as no leverage is used.
Tax treatment of spot trading in Germany
The tax treatment of profits from spot trading in cryptocurrencies is subject to specific regulations in Germany. Here are some basic guidelines:
Income tax
- Private individuals:
Profits from trading in cryptocurrencies are considered private sales transactions in accordance with Section 23 EStG. These are subject to income tax if they are sold within one year of purchase. Profits are tax-free up to an exemption limit of EUR 1,000. - Speculation period:
If cryptocurrencies are held for longer than one year, gains from their sale are tax-free. - Losses:
Losses from trading can be offset against gains from private sales transactions in the same year.
Commercial activity
- Commercial traders:
If cryptocurrencies are traded on a commercial scale, the profits are deemed to be income from commercial operations and are subject to trade tax and income tax.
Value added tax
- No VAT:
The purchase and sale of cryptocurrencies is considered VAT-free in Germany.
Documentation and obligation to provide evidence
It is important to document all trading activities and transactions precisely. The burden of proof lies with the taxpayer. The following information should be recorded:
- Date of purchase and sale
- Quantity and type of cryptocurrency
- Purchase and sale price in euros
- Profits and losses
- Exchange logs and wallet addresses
Summary
Spot trading is a basic and widely used method of buying and selling cryptocurrencies instantly at current market prices. It offers simplicity, transparency and high liquidity. In Germany, profits from spot trading are subject to income tax if they are realized within one year and must be carefully documented.
This information serves as a general guideline and cannot replace individual tax advice from our experts. The tax treatment may vary depending on your specific situation and the current tax regulations. It is strongly recommended that you contact our lawyers to clarify your personal tax situation and comply with the legal requirements.