Writing Off a Total Crypto Loss: When the Tax Office Recognises Worthless Coins

A token that has lost 98 percent of its value feels like a tax case. For the tax office it is initially nothing at all. As long as you leave the crypto assets concerned sitting in your holdings, nothing has happened for tax purposes, however far the price has fallen and whether or not anyone is still bidding for them. This gap between economic damage and tax effect is why many investors give their losses away. The cause is no special rule for cryptocurrencies but the logic of the private disposal transaction. Anyone who understands it can shift several thousand euros of tax burden in a bad year. Anyone who overlooks it pays the full rate on later gains, even though the loss was borne economically long ago. This article explains when a total crypto loss is recognised for tax, what applies in a delisting and an exchange insolvency, how offsetting against other gains works and which steps in the tax return are actually needed. It is no substitute for tax advice; with larger amounts and unresolved circumstances the case belongs in the hands of a tax adviser. No disposal, no crypto loss: why Section 23 of the Income Tax Act ignores a falling price For crypto assets held privately, Germa...