One tax declaration With profits from crypto ended up in an account of almost 49,000 euros from IRS. On the route they entered the microscope bonds and other investment products, revealing the traps that may be hidden behind moving money from one investment to another.
In this case, the taxable person had entered in the statement for EUR 2024 42,830,48, claiming that it came from goodwill CryptonomiesThe audit, however, highlighted a much larger issue: purchases of investment products totalling EUR 323,869, which were not declared as acquisition costs.
Among them were a 100,325 euro bond market, placing 64,000 euros in Grayscale Bitcoin Trust EUR 65,980 in Grayscale Ethereum Trust, and market iShares MSCI India EUR 93,564. For the IRS, these amounts were not just money moved from one investment to another. They consisted of securities markets that should have been reflected in the tax return and could be covered by the income or capital of the taxpayer.
This is precisely where the trap concerns much more than this particular case lies. The purchase of shares, bonds, mutual funds shares and other securities is considered to be asset acquisition costs. The amounts are declared under codes 743-744 and are involved in the calculation of the items. Therefore, it is not enough that the money is in the account. It must be possible to justify tax and their origin.
The taxpayer tried just that. He argued that he had not used new money for the markets, but funds derived from the liquidation of previous investments and specific bonds. In simple terms, he sold old titles and used the money to buy new ones.
The explanation, however, was not enough for the TEN. As it considered, the invocation of previous liquidations does not in itself constitute the envisaged method of capital consumption of previous years. In order to cover the presumption, it is necessary to follow the procedure laid down in tax legislation and to obtain the corresponding funds available.
But the same case has a second side, that of krypto. The taxpayer argued that the EUR 42,830,48 it had declared constituted surplus value from cryptocurrency and requested to be treated in accordance with the provisions applicable to surplus value from securities transfer.
And here the TEN response was negative. According to the reasoning of the Decision, the provisions of Articles 42 and 42a of the Income Tax Code they concern specific categories of securities which do not include cryptocurrency in the manner invoked by the taxpayer.
The decision thus comes to be added to a series of cases that highlight the tax gap around crypto. Without a specific and clear framework, taxpayers showing significant amounts of crypto transactions may be faced with problems with how to declare, tax treatment of profits and the possibility of using this money to cover evidence.
In this case, following the findings of the audit a modification declaration was submitted for the tax year 2024 and a new tax determination act was adopted. The final account was set at around EUR 48,865, while the appeal against Directorate for Dispute Resolution It was rejected.
The case also illuminates what should appear in the tax declaration when such moves are made. Codes 743-744 E1 indicate the total amount paid in the year for the purchase of securities. This concept includes, inter alia, shares, bonds, interest notes, mutual funds shares and general products traded on the financial markets.
The amount taken into account is not limited to the net market value. Account shall be taken of the amounts paid for supplies and other costs associated with the acquisition of securities. This means that the amount to be justified may be greater than the nominal value of the investment itself.
Special attention is needed when old titles are sold in the same year and young people are bought. The existence of a previous liquidation does not in itself mean that the new market ceases to be an acquisition cost. In the TEN case, the taxpayer invoked bond liquidations in order to justify its subsequent placements, but the claim was not accepted as a way of covering through capital consumption of previous years.
In practice, the two movements must therefore be taxed separately: on the one hand, the purchase of new securities as acquisition costs and on the other hand, the amounts which can be legally used to cover it. That is where there can be a difference of evidence when the available income and capital recognised tax are not sufficient.
The issue of crypto remains different. In this decision the TEN did not accept that the surplus value of cryptocurrency could be subject to the provisions of Articles 42 and 42a for the transfer of securities. This means that the call for profits from krypto to cover other important markets still meets the main obstacle to the absence of a specific tax framework.
