Cryptocurrencies such as Bitcoin, Ethereum or Ether, Monero or Litecoin are now widely recognized as valid alternative forms of investment. According to an evaluation by PwC, even crypto hedge funds with assets are now under management has been launched by over $ 2 billion. But what actually happens when a crypto investor dies? Are Bitcoins & Co. inheritable? What tax burdens arise in the event of a gift or inheritance? And should you as an investor make a will in this respect? Answer these and other exciting questions about digital inheritance and crypto assets me in this video. Let's go beyond return! [Beyond Return Intro] And with that, a warm welcome to a new one Edition of Beyond Return! My name is Fabian Arhelger, I am a lawyer in Frankfurt am Main, specializing in corporate and financing law, and here on Beyond Return I regularly report on exciting Topics from the financial and business world. So if you have both feet in business life, I recommend you to this channel subscribe to.
With the triumph of cryptocurrencies, many fundamental legal questions arise at the same time. The legal system has traditionally responded sluggishly to technological advances; Indeed our German civil law with the German Civil Code (BGB) is surprisingly flexible, if it is about the inclusion of facts that have not yet been explicitly regulated. At this point, however, I have to warn you: The following considerations are appropriate here and there in the "legal high bar" category – but it pays to hold out until the end! First of all, a short reference to my new online seminar "Protecting Assets", in which I will show you in detail how you as an investor, entrepreneur and manager can manage your private life Can effectively protect assets against liability risks.
The whole thing, of course, legally secure and tax-optimized. You can find more information about this exciting and practical lecture at www.gutgenschützen.com. In the first step, let's look at the classification of crypto currencies according to German Civil law. To do this, we first have to answer the fundamental question of whether crypto money is really money Meaning of German law. Money in the narrower sense is first and foremost the legal tender, the creditor in Germany must accept by law, i.e. the currency EURO. Money in the broader sense, the so-called traffic money, are all means of payment recognized in legal transactions, which also includes foreign currencies. The law also differentiates between cash and book money. Book money is basically a claim against an account-keeping bank: When you add cash to your account, you are effectively exchanging that cash for a claim for later payment of the deposited credit based on your account contract. So the bank will hold your cash for you until you ask for it to be returned.
Alternatively, you can of course also pay cashless by instructing your bank, for example, transfer an amount of book money to someone else's account. So-called electronic money, or in short: E-money. You can find a legal definition for this in Section 1 (2) Clause 2 of the Payment Services Supervision Act (ZAG): "E-money is any monetary value stored electronically, including magnetic ones in the form of a claim against the issuer, issued against payment of a sum of money is in order to enable payment transactions within the meaning of § 675f paragraph (4) sentence 1 of the civil Of the law and that of other natural or legal persons as accepted by the issuer. " This includes, for example, deposits and withdrawals at ATMs, payment cards and also Paypal. The ZAG is based on the European Directive (EU) 2015/2366, also known as the Payment Services Directive 2, English: Payment Services Directive 2, or PSD2 for short.
In the definitions of PSD2 it says: "" Amount of money "Banknotes and coins, deposit money or e-money within the meaning of Article 2 number 2 of Directive 2009/110 / EC; ". The law thus implicitly makes it clear that crypto currencies such as Bitcoins are currently not can be a suitable subject of payment services. Cryptocurrencies are only electronic units of account and currently not yet means of payment recognized by the legislator. Unlike PayPal: PayPal is based on legally recognized currencies such as the EURO or US dollar and thus, as already mentioned, forms a payment service in terms of PSD2 and the German ZAG.
So cryptocurrencies are not money in the legal sense. But what are they then? A classification as a claim is ruled out because crypto currencies have no claim against embody a third party. A movable thing within the meaning of § 90 BGB is obviously ruled out because you Of course, you can't touch Bitcoins and Co. This does not change even if you put your access key on a CD or save a stick. From the point of view of civil law, therefore, there remains only the qualification as a so-called "other item" left over. The term "other item" is not explicitly defined in the German Civil Code, but it resonates in various legal norms. To put it succinctly, one could say: "Other object" is everything that is an object can be of rights. So let's be clear: According to today's legal status, cryptocurrencies are not money, not E-money, no movable property and no claims either. But at least once other items within the meaning of the German Civil Code.
German inheritance law now follows the so-called principle of universal succession. This comes from the Latin "succedo", which means "to enter" and "unversitas", what "totality" means; thus universal succession, the entering into the whole. Section 1922 of the German Civil Code reads: "(1) With the death of a person (the inheritance), his or her property goes (the inheritance) as a whole to one or more other persons (the heirs). (2) Those who refer to the inheritance find the share of a co-heir (the inheritance) Regulations application.
" In the event of death, the heirs generally assume the legal position of the testator. Hence the technical term universal succession. According to the prevailing opinion today, the so-called digital estate also falls under the Concept of "assets as a whole" in the sense of § 1922 BGB. What is meant by digital estate is the entirety of a person's digital assets, i.e. for example social media accounts, email accounts, electronic files, software, cloud storage and access data to online portals. In this respect, a decision by the Federal Court of Justice (BGH) from the year is clear 2018: In the specific case, the parents of a deceased underage girl wanted access to their Facebook account.
However, Facebook had put the deceased's account in the so-called commemorative state, whereby the parents could no longer log in despite correct access data. The parents now asked Facebook to access their deceased daughter's account, namely with the argument that you are the heirs of the daughter and thus in all legal positions of the deceased have occurred. In the last instance, the BGH confirmed the conviction of Facebook, the parents' access to grant this part of the deceased daughter's digital estate. The judges stated: "The plaintiff is entitled to demand from the defendant the community of heirs has access to the testator's user account and the ones contained therein Grant content.
Such a claim is hereditary and neither has post-mortem personal rights nor telecommunications secrecy, data protection regulations or general personal rights the communication partner towards the testator. " You can read about this decision in detail in the official collection of the Federal Court of Justice under judgment of July 12th, 2018, Az .: III ZR 183/17. If you transfer the essence of this decision to crypto currencies, it is at least the access authorization of the crypto investor to his wallet is inheritable. This access authorization in turn includes the cryptographic key. If the cryptographic key was stored on a storage medium, then is also this storage medium and its digital content are part of the heritage. If the keys have been deposited with another third party, the heir can gain access request to the portal of this third party.
As a result, we can answer yes to the first main question of this video: the access data to a crypto wallet are the subject of an inheritance as a digital inheritance. And then the corresponding cryptocurrency credit can also be indirectly inherited. In the next step, the question arises to what extent inherited cryptocurrency assets taxation through inheritance or gift tax under the Inheritance and Gift Tax Act (ErbStG) is subject to.
The first important finding here: Inheritance tax law follows civil law: the reason is taxable according to everything that you receive or inherit as a gift according to the provisions of civil law. § 1 paragraph (1) ErbStG reads: "(1) The inheritance tax (gift tax) are subject to 1. the acquisition by death; 2. the gifts among the living; 3. the special-purpose grants; 4. that Assets of a foundation, provided they are essential in the interests of a family or a specific person Families is established […].
"However, only the so-called is taxed Net wealth growth. According to § 10 ErbStG, the purchaser's enrichment is considered a taxable acquisition, insofar as it is not tax-exempt. In other words, you have to check in each individual case which exemptions and specific ones tax exemptions apply and which tax class an inheritance falls into. The tax brackets can be found in § 15 ErbStG, the allowances in § 16 ErbStG. There are also certain tax exemptions in §§ 13 ff. EStG, including the extremely important tax exemption for business Property according to § 13b EStG. For the specific valuation of an inheritance item, Section 12 ErbStG now refers to the regulations of the Assessment Act. At this point, however, there is now a fork in the road: the tax assessment of assets depends largely on whether the specific asset is in the Private or business assets.
If the testator was a classic private investor who did not mine his own, will likely to be held in private assets. However, did the testator trade professionally in crypto currencies and for example If you have your own mining operations on a larger scale, you can of course also hold on to your company's assets are present. The same also applies, for example, if the crypto assets are via a corporation, about a holding GmbH. This demarcation can only be conclusively answered on the basis of the specific individual case. Let us first consider holding in private assets. According to § 9 Paragraph (1) BewG, the valuation of assets is fundamentally to use the so-called common value as a basis, unless otherwise specified is. In fact, you will not find any special provisions in the following provisions of the Assessment Act Special regulations for cryptocurrencies. Accordingly, we have to fall back on the common value here.
§ 9 Paragraph (2) BewG defines the common value as follows: "The common value is through determines the price, which in normal business transactions depends on the nature of the asset would be achieved in the event of a sale. All circumstances that influence the price must be taken into account. Unusual or personal circumstances are not to be taken into account. " In this respect, a comparative value method is obvious, in which the asset is compared with the selling price similar other objects is compared. In the case of classic, listed securities, for example, one can determine the It makes sense to simply base common value on the current market price. Similarly, you can use the current market price for cryptocurrencies To fall back on. In the case of holding in business assets, the valuation right is in principle linked to the principles the taxable profit determination. So here you would have to look how the credit was valued in the last tax balance and make certain adjustments if necessary. A special inheritance tax follow-up question of cryptocurrencies in business assets is also the one after the classification as so-called harmful administrative assets within the meaning of Section 13b (4) ErbStG.
And this question is actually raised by the tax authorities in the inheritance tax guidelines 2019 (ErbStR 2019) affirmed. Consequently, when it comes to crypto money, you should not benefit from Section 13b tax relief to hope. Well, what precautions should you take as a crypto investor to ensure that crypto assets are as legally secure as possible to be passed on to your successors in the event of death? We already deduced at the beginning that all of your assets are automatic pass to your legal heirs according to the principle of universal succession. You don't really have to do anything, because crypto money is your digital one Inheritance belongs and insofar the statutory law of inheritance intervenes. However, as a lawyer, I can only recommend that you regulate your successes while you are still alive, either by anticipating them or by making an order of death. An anticipated line of succession during your lifetime always has the great advantage that you are sent the different allowances and tax brackets of the inheritance and gift tax regulations can take advantage of. However, especially if you hold crypto assets, you should at least draw up a will and attach the access information for the respective wallet in an attachment that you then deposit it in your safe, with your lawyer or a notary, for example.
In this way you avoid disputes afterwards and, last but not least, technical access problems and a disappearance of significant values in digital nirvana. Crypto money is therefore part of the result based on general legal considerations Your digital estate and thus also in accordance with the principle of universal succession hereditary. To be on the safe side, however, you should draw up a will and this during your lifetime The will already include the technical access information, which your heirs will then use at the end can access the respective wallet.
In terms of inheritance tax, crypto investments in private assets are based on common value and taxed accordingly, taking into account the tax class and allowances. If the testator keeps the crypto-assets as business assets, they are considered harmful according to the current status To classify administrative assets within the meaning of § 13b ErbStG. If you have any questions on the subject, you can quickly and easily make a personal appointment make an appointment on my law firm website acorfin.com/termin. Inheritance and family law structuring advice is one of the main focuses of my legal Practice. With this in mind, I wish you all the best, as always, stay healthy and see you through next time, here at Beyond Return. [Beyond Return Outro].