For larger profits from trading cryptocurrencies, the benefits of a German trading limited liability company (Trading GmbH) are suitable. In a bear market, the decision to establish such a trading GmbH can be even more important. While the majority of private investors have to endure stock market insolvencies or scams in addition to price losses, the losses are not realized due to a lack of sale and are accordingly not taken into account for tax purposes. In addition, the restriction on offsetting losses for margin trades, futures and derivatives has had a very restrictive effect in the private sector since 2021 at the latest. This can be prevented with the trading GmbH.
Lower tax rates for corporate taxation
- If you actively trade cryptocurrencies, you pay 15 percent corporate income tax and about 15 percent trade tax. Your cryptocurrencies appear predominantly in the other assets of the current assets of your balance sheet.
- If you use the GmbH only for asset management, the tax liability is limited only to the 15 percent corporate income tax. The prerequisite is that the cryptocurrencies must be permanently allocated to the business assets. Exceeding the regular asset management would be excluded. However, you then enjoy exemption from trade tax. Your cryptocurrencies are then to be allocated to fixed assets.
- If you distribute dividends, you will only be taxed at the rate of 25 percent as capital gains tax. If you have larger income-related expenses, there is the possibility of taxing a maximum of 60 percent of your profit at the personal tax rate through the partial income procedure.
Formation of a trading GmbH up to eight months retroactively
Action is needed right now. If the private investor decides to set up a trading company in Germany, complex questions quickly arise regarding the foundation, administration and, of course, the tax advantages.
If you decide to establish a trading limited liability company, this can possibly even be done retroactively for up to eight months. Loss periods can be optimally fed in this way. If you want to simplify the formation procedure, you can buy a shelf company.
Tax optimization in a bear market is imperative
- If insolvencies or scams in private assets are not taken into account due to the lack of a sale, the accounting may allow more leeway, e.g. through write-offs, and may allow indirect loss recognition.
- If you trade e.g. with futures, derivatives or margin trading, the loss offset restrictions in your GmbH are irrelevant.
- Losses can be deducted up to EUR 1 million without restrictions in the previous year or subsequent years. Further losses can be offset at 60 percent.
- Due to the commercial nature, you waive the one-year holding period for tax exemption, but you can benefit from the loss allowance for more than one year.
Accounting for cryptocurrencies becomes easier for you
Contribution and record-keeping obligations do require professional financial accounting and the data preparation of crypto transactions and the transfer to financial accounting bring major challenges. We take care of these steps for you and use our in-house tool CoinRacoon. We prepare the crypto transactions as an import file for your tax advisor’s accounting or optionally, of course, we also take care of the entire annual financial statement for you.
Inheritance and gifting of crypto shares possible
If you bequeath or give away the GmbH shares, this may be possible tax-free due to the classification as administrative assets. The prerequisites are the classification of the cryptocurrencies as administrative assets and the transfer of the private keys as well as a minimum shareholding of 25 percent. We will be happy to advise you! Please contact us at any time with your questions.