Bitcoin spans multiple wallets: How Austria calculates acquisition costs

Bitcoin across multiple wallets: How Austria calculates acquisition costs

Many Bitcoin investors spread their assets across multiple wallets: some in a hardware wallet, some on a cryptocurrency exchange, and some may be at other addresses. From a tax perspective, the question is whether Austria will consolidate all bitcoins into an average price.

The short answer is: No. According to Austria's cryptocurrency regulations, rolling average prices are usually calculated for the same cryptocurrency unit at the same cryptocurrency address. If assets are stored in a wallet, the entire wallet can be used as a reference unit.

Multiple wallets may correspond to different acquisition costs

For example, investors holding Bitcoin in two separate wallets may have different tax-related average prices.

Simplified example:

Wallet A

0.5 BTC purchased for 10,000 euros
Average acquisition cost: 20,000 euros per BTC

Wallet B

0.5 BTC purchased for 25,000 euros
Average acquisition cost: 50,000 euros per BTC

These two assets will not automatically be combined into a common purchase price of 35,000 euros per BTC simply because they are the same holder. The key is the relevant cryptocurrency address, or if applicable, the individual wallet.

Meaning of "rolling average price"

When the same type of Bitcoin is purchased one after another and stored at the same address, the acquisition costs are combined.

Example:

0.1 BTC was purchased for 2,000 euros
and then 0.1 BTC was purchased for 4,000 euros

so that a total of 0.2 BTC was held at an acquisition cost of 6,000 euros. Therefore, the tax-related average price is € 30,000 per BTC. If the investor subsequently sells part of the asset, the acquisition cost will be calculated based on this average price. This rule applies to realized gains of cryptocurrencies generated after December 31, 2022.

Exchanges can treat the entire wallet as one unit

Austrian regulations allow a specific option: If Bitcoin is stored in a cryptocurrency wallet, a rolling average price can be calculated for all cryptocurrency units of the same type in the wallet.

This can be important when wallets technically use multiple blockchain addresses. If a provider under Austria's withholding tax obligations decides to use the entire wallet as a reference unit, then this calculation method will also be binding on subsequent income tax assessments under cryptocurrency regulations. It is no longer possible to go back and choose a different method for tax filing.

What happens if you transfer between your own wallets?

Simply transferring Bitcoin from one wallet to another does not constitute a taxable disposal in principle. These assets were not converted into euros or into other assets. However, tax-related acquisition costs have not disappeared. Investors still need to be able to track which bitcoins were transferred at what historical acquisition costs.

Therefore, when transferring between wallets, clearly records crucial. The blockchain shows the flow of Bitcoin, but does not automatically know its original purchase price.

Will acquisition costs be consolidated into the new wallet?

Moving bitcoins from different sources to the same wallet may generate a new rolling average price for newly held assets in that wallet.

Example:

0.5 BTC (acquisition cost 10,000 euros) was transferred to wallet C.
Another 0.5 BTC (acquisition cost 25,000 euros) was also deposited in the same wallet.

If both assets are located in the same reference wallet or address, the acquisition costs of the relevant units will be combined.

Total holdings: 1 BTC
Total acquisition cost: 35,000 euros
The new rolling average price is therefore 35,000 euros per BTC.

Key points: Tax-neutral wallet transfers will not trigger taxes in themselves, but will change the way subsequent acquisition costs are calculated.

The acquisition cost per bitcoin in the example

column length is scaled numerically, ranging from 0 to 50,000 euros/ BTC.

Wallet A: 0.5 BTC purchased for 10,000 euros → 20,000 euros/ BTC
Wallet B: 0.5 BTC purchased for 25,000 euros → 50,000 euros/ BTC
After the merger: 1 BTC purchased for 35,000 euros → 35,000 euros/ BTC

(Example values are simplified and are not market data.)

Historically held assets will not be simply consolidated

A particularly important exception involves Bitcoin purchases as of February 28, 2021 (inclusive). According to Austrian administrative practice, these historically held assets will not be included in the rolling average price of newly held assets. If historically held assets and newly held assets are kept in the same wallet, in principle they remain tax independent.

This is important because under early Austrian tax laws, historically held assets could still be sold duty-free under certain conditions. Keeping old bitcoins in the same wallet as newly purchased coins does not automatically invalidate historical status. However, proof of historical distribution must be preserved.

Fixed value bitcoins are also processed separately

Another exception concerns cryptocurrencies, where withholding tax providers have to use fixed acquisition costs due to a lack of reliable tax data. According to Article 2 of the cryptocurrency regulations, such holdings of assets will also not be included in the normal rolling average price.

This may be important, for example, when Bitcoin is transferred from a foreign exchange to an Austrian cryptocurrency service provider and the original acquisition cost cannot be proven in a timely manner.

Multiple exchanges also mean independent data pools

Investors holding multiple cryptocurrency exchanges at the same time should not assume that all providers use the same average price. In principle, the Austrian platform only sees the assets held and tax data it holds or provided to it by investors.

For example, investors:

hold Bitcoin on the Austrian exchange,
Holding more BTC on Binance or Kraken,
holding other Bitcoin on a hardware wallet,

may end up having multiple different tax-related cost bases. In subsequent transfers between platforms, the acquisition cost must be transferred and recorded together with the corresponding assets.

Data that investors should keep

Investors using multiple wallets should record at least the following information:

Date of purchase of Bitcoin
Original acquisition cost in euros
Amount of BTC purchased per time
Wallet or cryptocurrency address
Transfer history between your own wallets
Transaction ID
Fees
Status of historical or newly held assets
Previous inter-cryptocurrency transactions
(if applicable) Average prices used by Austrian providers

The most important thing is to maintain historical records before consolidating multiple wallets .

Summary

Austria does not usually combine Bitcoin acquisition costs in all investors 'wallets. For the same type of Bitcoin purchased one after another, the rolling average price applies to the same cryptocurrency address level. If a wallet is used, the entire wallet can be used as a reference unit. As a result, bitcoins on different wallets may have different tax-related acquisition costs. If assets are subsequently concentrated in the same wallet, a new average price may be generated for newly held assets in that wallet.

Historical holdings before March 2021 and certain fixed-value holdings will not simply be included in the normal average price.

For investors with multiple exchanges and hardware wallets, there is only one key point: acquisition costs must remain traceable with each transfer.