Tax assessment related to the bankrupt Mt. Gox’s crypto assets
Mt. Gox was a crypto exchange based in Japan. Its customers were able to deposit bitcoin balances and use bitcoins for various trading transactions. In 2014, Mt. Gox declared bankruptcy due to an external hacker attack that caused financial losses. After the shutdown, the balances held by many customers worldwide became “locked”.
During the years after 2014, action was taken to compensate for some of the lost bitcoins. The past tax year 2024 saw several refunds arriving to Mt. Gox’s former customers. This page contains information on the income-tax treatment of the money received in conjunction with the trustee’s rehabilitation plan of Mt. Gox.
It is possible that a great number of individual taxpayers – former customers – sold their Mt. Gox contracts to a third-party buyer before the bankruptcy trustee began repaying the locked balances. The consequence of selling the contract is that those customers will have no repayment.
Taxation of the repayment income from Mt. Gox
The tax treatment depends on whether your repayment was made in crypto assets or in money into your bank account.
(A) Repayment in crypto assets
If you are a former Mt. Gox customer and part of the crypto assets were recently repaid, no income subject to capital-gains tax has yet emerged for you. The point in time when a taxable gain starts to exist is when you sell, exchange, or otherwise use the repaid crypto assets.
If you bought or otherwise received the crypto assets in several instalments, each one of them has a specific acquisition price and a holding time. The instalments will be itemised one by one when you sell, exchange or use your crypto assets. Any gains made, or any loss resulting from the transactions will be separately calculated.
If you make a profit, i.e. a capital gain, you need to calculate it by subtracting your acquisition price plus broker’s fee or other direct costs from the selling price you received. An alternative tax computation is that you subtract a deemed acquisition cost from the selling price. If you owned the bitcoins for a shorter time than 10 years, the deemed acquisition cost is 20% of the selling price. If you owned the bitcoins for 10 years or longer, the deemed acquisition cost is 40% of the selling price.
If you were repaid with a lower quantity of bitcoins than the quantity you held at the shutdown date 7 February 2014, this is a non-tax-deductible loss. In that case, the calculation of your actual acquisition cost requires a division to be made, to find out a tax-deductible and a non-tax-deductible portion of the acquisition cost. This means that you cannot subtract the full acquisition cost from the selling price.
Example: Back in 2013, Matthew made a deposit of 100 bitcoins in the Mt. Gox crypto exchange. The history of Matthew’s purchases of those bitcoins was as follows: he had paid €500.00 in 2011 for 50 bitcoins, and for the remaining 50 bitcoins, he had paid €50,000.00 in 2013. At the shutdown date 7 February 2014, Matthew held 100 bitcoins in Mt. Gox.
In 2024, in accordance with the rehabilitation plan, Matthew was repaid 10 bitcoins or 10% of the balance originally held. In 2025, he decides to sell the 10 bitcoins for €1,000,000.00.
The selling price is €500,000.00 for the 5 first bitcoins (reflecting the ratio of 50/100). The actual acquisition cost was €50.00 ((10/100) x €500.00), while the deemed acquisition cost is €200,000 (40%). For the remaining 5 of Matthew’s bitcoins, the selling price is €500,000.00 as well. The actual acquisition cost was €5,000.00 ((10/100) x €50,000.00), the deemed acquisition cost €200,000 (40%).
(B) Cash repayment
From a tax perspective, if you received the repayment from Mt. Gox in the form of money, i.e. cash, this is deemed to be a sale of your crypto assets. Your capital gain would equal the repaid amount minus the acquisition cost of your bitcoins and any costs you needed to pay. The tax authority considers that you transferred away all the past crypto asset holdings. As a result, the acquisition cost, which you can subtract, will be the entire actual acquisition cost.
An alternative tax computation is that you subtract a deemed acquisition cost from the selling price, i.e. the repaid amount. If you owned the bitcoins for a shorter time than 10 years, the deemed acquisition cost is 20% of selling price.
If you owned the bitcoins for 10 years or more, the deemed acquisition cost is 40% of selling price.
How to declare the capital-gains income to the Tax Administration
The time when Mt. Gox’s former customers received repayments was during 2024, at varying dates. Please enter the capital gain into your 2024 pre-completed tax return, if
- you received crypto assets, and you sold or exchanged them during 2024, or
- you received an amount of money.
How to declare income from virtual currencies and crypto assets in MyTax
Making an additional prepayment
You can request and pay additional prepayments. This is one way to solve the problem of having to pay a high back tax plus late-payment interest because of a capital gain subject to income tax. Additional prepayments continue to be accepted up to the end of the Tax Administration’s process of assessing your taxes for the 2024 year.
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