I'm staying in Germany and I have a friend in India. He has a few ether coins in his wallet in India which he bought mid of 2017. He now wants to sell them. But in India, because of taxes, he will not gain much profit. So he asked me if he could send them to my wallet in Germany as a gift. I can sell them in Germany and send him the amount in parts as and when we happen to meet. Since it is a gift and I have not bought the coins I will not have to pay any tax on it in Germany. Is this legal and what are the risks?
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I can't comment on your tax component since I am not familiar with German laws, but your friend will have to pay the tax if the amount is greater than 50,000 INR (about 650 EUR or about 0.5 ETH at the current price) even if it is a "gift" from you to him. It does not matter if you pay him back in cash or bank transfer, he will still be required to declare that as income. Not doing so would be illegal on his behalf.– TanmayCommented Jan 13, 2018 at 20:01
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What is the amount limit that can be given as a gift. Is it only INR 50,000 in a year ? I don't think so– JioCommented Jan 13, 2018 at 20:29
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Just that if the sum total amount of gifts received is greater than INR 50k, then its taxed. There's no upper limit for the amount that can be given as a gift.– TanmayCommented Jan 14, 2018 at 5:44
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What that means is, if the amount exceeds INR 50k, the entire amount gets added to the rest of his annual taxable income and that will be taxed according to the usual tax laws. This law does not apply if you're a direct family member btw.– TanmayCommented Jan 14, 2018 at 5:53
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1I believe that in law It isn't a gift if the sender expects to receive something back in return. In this case you are providing a currency exchange service not simply receiving a gift.– RedGrittyBrickCommented Apr 17, 2020 at 13:39
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2 Answers
I am from Germany and know a bit about the tax situation here.
If gains < 600€ in 1 year, then you don't need to pay taxes. You also don't need to pay taxes if you hold the Ether more than 1 year.
But you still have to include it into your tax report ("Steuererklärung").
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Thanks for your input. But since the coins will be sent.to me by my friend as gift I don't have to pay taxes. There is no tax on gifts in germany. Isn't it ?– JioCommented Jan 13, 2018 at 19:22
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And for the exchanging? I don't think that it's legal. Otherwise, big companies could gift 10,000 BTC to a person in Germany who sells them and sends the euros/dollars back and no one has to pay taxes...– hardforkCommented Jan 13, 2018 at 19:27
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I understand it is not fair. But how is it exactly illegal. ?do you know any law in germany which proves that it is illegal do so. .– JioCommented Jan 13, 2018 at 19:34
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1@Jio It's not a gift. It's part of a larger transaction where you are being given the cryptocurrency in compensation for obligations you will satisfy later. A gift is given out of generosity and not in exchange for any future benefit. Commented Dec 19, 2019 at 7:27
As a general rule:
The person gifting has to declare it in their personal income tax declaration, in the section for capital gains and losses.
In some jurisdictions, the person receiving the gift is expected to declare a specific tax for donations. In some jurisdictions this tax may exist but not be actively prosecuted for small donations. In some jurisdictions it could be actively prosecuted and even be allowed prosecuting the person giving the gift if the person receiving the gift fails to comply with whatever local law requires.
The person receiving the gift, when releasing the gift either by gifting or by selling, has to declare it in their personal income tax declaration, in the section for capital gains and losses.
Being purist, no, what you want is not legal. If I understood you correctly, you are in a case of simulated contract, a contract that, by mutual agreement, does not express the true intent of the parties.
This is not legal advisory.
This problem is completely off topic here. It could be even slightly off topic in Money Stack Exchange. I would suggest starting in Law Stack Exchange.
