I sold some of my crypto within the one year holding period in Germany. Crypto hodled for more than a year in Germany is tax free (neither Capital Gains or Income Tax).
I am a musician and only earn approx 6000Euro per year. This means I pay Zero income tax. I got lucky with crypto, but freaked out and sold as the recent crash started to unfold. My gains if taxed 'as' my income may bring me to a much higher income tax rate (possibly higher than the Capital Gains tax rate). Eg. if your gains were say 70KEuro, would that put you in the highest income bracket and you would have to pay over 42% income tax?
If the gains are taxed at my current income tax level, I will then pay a neglible amount.
Could anyone please tell me which scenario is the likely outcome?
I thought that selling would just incur Capital Gains tax on the sale of approx. 25%, but now it seems it may be linked to the incremental income tax scale which could bring the rate much higher.
Note: Interestingly staking coins in Germany means they must be held for a 10year period before they become tax free assets (avoiding Capital Gains). On the other hand, depositing coins in a crypto bank and earning interest does not jeopordise your 1 year holding period.