Bitcoin Across Multiple Wallets: How Austria Works Out the Acquisition Cost

Bitcoin across multiple wallets: how Austria works out the acquisition cost

Many bitcoin investors spread their holdings across several wallets: some sits on a hardware wallet, some on a crypto exchange, and further coins perhaps on an additional address. For tax purposes, the question then becomes whether Austria pools all bitcoin into a single average price.

The short answer is no. Under Austria's crypto currency regulation, the rolling average price is generally worked out for units of the same crypto currency on the same crypto currency address. If the coins are held in a wallet, the wallet as a whole can be used as the reference unit instead.

Multiple wallets can carry different acquisition costs

Anyone holding bitcoin across two separate wallets, for example, can therefore have different tax-relevant average prices.

A simplified example:

Wallet A

• 0.5 BTC bought for 10,000 euros
• average acquisition cost: 20,000 euros per BTC

Wallet B

• 0.5 BTC bought for 25,000 euros
• average acquisition cost: 50,000 euros per BTC

The two holdings are not automatically merged into a common acquisition price of 35,000 euros per bitcoin just because both wallets belong to the same person. What counts is the crypto currency address in question or, where used accordingly, the individual wallet.

What "rolling average price" means

Where bitcoin of the same type is bought one purchase after another and held at the same address, the acquisition costs are pooled.

Example:

• 0.1 BTC for 2,000 euros
• later, another 0.1 BTC for 4,000 euros

That gives a total of 0.2 BTC with acquisition costs of 6,000 euros. The tax-relevant average price is therefore 30,000 euros per bitcoin. If the investor then sells part of that stack, its acquisition costs are worked out on that average price. The rule applies to income from realised gains on crypto currencies that accrues after December 31, 2022. 

An exchange can treat the whole wallet as one unit

The Austrian rules allow a specific option: where bitcoin is kept in a crypto currency wallet, the rolling average price can be calculated instead for all units of the same crypto currency inside that wallet.

That can matter where a wallet technically uses several blockchain addresses. If a provider under the Austrian withholding obligation has decided to use the whole wallet as the reference unit, that calculation, under the crypto currency regulation, is binding for the later income tax assessment as well. There is no going back afterwards and picking a different method for the tax return.

What happens on a transfer between your own wallets?

Merely moving bitcoin from one of your own wallets to another is, in principle, not a taxable disposal. The coins are neither exchanged for euros nor for another asset. The tax-relevant acquisition costs are not lost, however. The investor must still be able to trace which bitcoin were transferred with which historic acquisition costs.

That is why clean documentation is decisive on transfers between wallets. The blockchain shows the movement of the bitcoin, but does not automatically know their original purchase price.

Do acquisition costs merge on the new wallet?

Anyone bringing bitcoin from different sources onto the same wallet may then get a new rolling average price for the tax-relevant new stack held there.

Example:

• 0.5 BTC with acquisition costs of 10,000 euros is moved to Wallet C.
• A further 0.5 BTC with acquisition costs of 25,000 euros ends up there as well.

If both holdings then sit on the same reference wallet or address, the acquisition costs for the relevant units are pooled.

Total stack:

• 1 BTC

Total acquisition costs:

• 35,000 euros
• The new rolling average price is therefore 35,000 euros per BTC.

The takeaway: a tax-neutral wallet transfer cannot itself trigger tax, but it can shift how acquisition costs are worked out later. 

Legacy holdings are not simply rolled in

One particularly important exception concerns bitcoin acquired up to and including February 28, 2021.

Under Austrian administrative practice, that legacy stock is not folded into the rolling average price of the tax-relevant new stack. Where both legacy and new holdings sit on the same wallet, they remain, in principle, separate for tax purposes. 

That matters, because legacy holdings may, under certain conditions, still be sold tax-free under the earlier Austrian tax rules. Anyone keeping old bitcoin on the same wallet as newly bought coins does not automatically lose the legacy status. The historic allocation must remain provable, however.

Flat-value bitcoin is also treated separately

A further exception covers crypto currencies where the withholding provider had to apply flat acquisition costs for lack of reliable tax data. Under Section 2 of the crypto currency regulation, such holdings likewise do not flow into the normal rolling average price. 

That can matter, for example, where bitcoin was moved from a foreign exchange to an Austrian crypto services provider and the original acquisition costs could not be evidenced in time.

Multiple exchanges likewise mean separate data pools

Anyone holding bitcoin at several crypto exchanges at once should not assume that all providers work off a common average price.

An Austrian platform, in principle, sees only the holdings and tax data available to it or supplied to it by the investor.

Anyone who, for example, holds:

• bitcoin at an Austrian exchange,
• further BTC on Binance or Kraken,
• and additional bitcoin on a hardware wallet

can therefore end up with several different tax-relevant cost bases.

On a later move between platforms, the acquisition costs have to travel with the respective holdings and be documented.

The data investors should keep

Anyone using several wallets should record, at a minimum:

• acquisition date of the bitcoin
• original acquisition costs in euros
• the BTC amount acquired in each case
• the wallet or crypto currency address
• transfers between your own wallets
• transaction IDs
• fees
• legacy or new stack status
• earlier crypto-to-crypto trades
• where applicable, the average prices used by the Austrian provider

What matters most is preserving the history before merging several wallets.

Bottom line

Austria does not, as a rule, work out the acquisition costs of bitcoin across all of an investor's wallets combined.

For bitcoin of the same type bought in sequence, the rolling average price applies at the level of the same crypto currency address. Where wallets are used, the whole wallet may serve as the reference unit instead. 

Bitcoin on different wallets can therefore start out with different tax-relevant acquisition costs. If the holdings are later brought together on a common wallet, a new average price can result for the new stack held there.

Legacy holdings from before March 2021 and certain flat-valued holdings are not simply rolled into the normal average price.

For investors with several exchanges and hardware wallets, the decisive point is one: the acquisition costs must remain traceable across every transfer.