Gifting Bitcoin to Children: Tax Rules in Austria

Gifting bitcoin to children: the tax rules that apply in Austria

Transferring bitcoin to your own children is generally possible in Austria without the gift alone triggering income tax on any price gain accrued up to that point. There is no general gift tax either.

Even so, a larger transfer is not automatically without tax consequences. For one thing, a gift reporting obligation can arise. For another, in the case of a genuine gift the child generally takes over the tax history of the bitcoin, including the parent's acquisition costs.

The 50,000 euro threshold applies to parents and children

Children belong to the circle of relatives covered by the Austrian gift notification rules.

Gifts between relatives are generally exempt from the reporting obligation as long as the fair market value of the transfers between the same persons within one year does not exceed 50,000 euros in total. If that threshold is exceeded, the gift generally has to be reported.

Example:

• A parent gifts bitcoin worth 30,000 euros: generally no report on the basis of this gift alone.
• Later in the same relevant period, further bitcoin worth 25,000 euros follow.
• Total value: 55,000 euros.

The reporting threshold may thus have been exceeded.

Which bitcoin value counts?

For the gift reporting obligation, what generally counts is the fair market value at the time of the transfer. With bitcoin this can regularly be determined from a traceable market price.

• The following should therefore be documented:
• date and time of the gift,
• the amount of BTC transferred,
• the euro price used,
• the price source,
• wallet addresses,
• transaction ID.

This data can also help later on to demonstrate the origin of the bitcoin to the tax office.

The child does not get a new tax cost base

The later taxation is particularly important.

A genuine gift does not mean that the bitcoin market value on the day of the gift automatically becomes the new acquisition cost. Under the Austrian income tax guidelines, the recipient instead continues the acquisition costs of the donor.

Example:

• The parent bought bitcoin for 10,000 euros.
• At the time of the gift they are worth 30,000 euros.
• The child later sells them for 40,000 euros.
• The tax base value generally remains 10,000 euros, not 30,000 euros.

With taxable new holdings this can produce a gain of 30,000 euros on the later sale.

Legacy holdings also remain relevant for tax

The same principle makes the date of acquisition particularly relevant. If the transferred bitcoin were already acquired before March 1, 2021, their status as legacy holdings for tax purposes can likewise remain significant. A gratuitous transfer generally does not simply reset that history. Parents should therefore hand the child not only the bitcoin but also the historical purchase records.

Three months to file the report

If the reporting threshold is exceeded, the gift generally has to be reported within three months. If the threshold is only exceeded through several transfers, the deadline starts with the gift that pushes it over the line. The report is generally filed with the Austrian tax office, regularly via FinanzOnline. Wilfully failing to report can carry consequences under fiscal criminal law.

Conclusion

Bitcoin can generally be gifted to children in Austria without the gift alone realising a bitcoin price gain. With larger amounts, however, the gift reporting obligation has to be observed. For relatives the relevant threshold is generally 50,000 euros within one year. More important still for a later sale: in the case of a genuine gift the child generally takes over the parent's acquisition costs for tax purposes. Purchase date, cost basis and transaction history should therefore be documented together with the bitcoin.