Blockpit offers standardized only FIFO (First in - First out) and depot segregation (distinction between individual integrations) according to the current legal interpretation as a method of calculating the tax burden.
What is FIFO?
FIFO assumes that the assets that are received first are also those that are used first. Within an integration, the oldest assets are always "on top", so to speak, and are therefore always paid out or exchanged first.
Through the possibility of linking (merging) transactions between individual integrations, FIFO chains are also taken into account across multiple integrations.
Does this apply to all countries?
Yes, Blockpit calculates using the FIFO method for all countries.
Are there other calculation methods?
Different calculation methods can be used to calculate your own tax burden, depending on how this is regulated by law in your country.
Basically, if an asset is held in a "virtual wallet" (integration), which was acquired at different times, as well as at different daily rates, the decisive factor is which of these "tranches" are sold. In this situation, the taxpayer can theoretically make any allocation, as long as they can provide full documentation for the stock of the respective acquired asset.
However, it becomes problematic when assets are held and traded on exchanges. It can then be argued that this seamless documentation is forfeited, as exchanges store all customer assets collectively on hot or cold wallets. At this point, no unique identification of the "physical coins/tokens" is possible anymore. Therefore, Blockpit always uses the FIFO method.
Another method is LIFO (Last in - First out), in which it is assumed that the assets that were received last, are always used first.
Our Tax Optimization Feature allows identifying of holding periods as well as current positive and negative gains of all your asset tranches as well as their current integration location. Click here for more information!