Deribit Tax Guide
Summ has officially partnered with Deribit to to help users easily calculate their cryptocurrency tax obligations. Users can now upload via a CSV import following the instructions in this guide.
Summ We are proud to announce an official partnership with Deribit. Deribit allows you to trade margin and options which are very interesting from a tax perspective. In this guide we go into detail on how to calculate taxes on Deribit.
How to Calculate Your Deribit Tax
Margin trading, options, and income tax
In most countries you have both income and capital gains tax. Capital gains tax usually occurs when you dispose of cryptocurrency. However, with products like margin trading and options, in many jurisdictions the profit or loss from trading these products follow separate rules to usual trading activity. Depending on the specifics of the contracts you are trading, in many cases this is classified as trading income, and is treated similarly to income tax. In this case you will not be able to claim certain concessions usually available to capital gains tax, such as long term discounts.
What we do at Summ is break out the income earned on platforms like Deribit into a separate income category. You can then discuss with your accountant the best way to record this profit (or loss) on your tax return, based on your individual circumstances.
Capital gains when settling in crypto
Another thing to consider when trading on platforms like Deribit is what happens when you are settling in cryptocurrency. When you are trading Deribit BTC futures, and realise a profit, the profit is added to your balance in the form of Bitcoin. The market value at the time of receipt will form the cost basis for future sales (for example if you sold Bitcoin for Ethereum). However, if you were to realise a loss, this loss will be settled in cryptocurrency. If you had previously bought this cryptocurrency at a cheaper price then the current market value, then you also need to consider the capital gain when "selling" the cryptocurrency to settle your loss.
An astute reader would observe, that realising a loss can actually ultimately trigger a capital gain that is greater then your loss, and you would be "in the green" and owe taxes. In short, it is very important to keep up to date with your tax obligations, and set aside enough money at the end of the year to pay your taxes.
Example 1: Realising a profit on ETH
| Date | Instrument | Side | Amount | Cash Flow | Fee | Change |
|---|---|---|---|---|---|---|
| 4th January | ETH-12JAN21-880-P | Open Sell | 1 | 0.2 | 0.025 | 0.175 |
In example 1 we open a sell and are reward with 0.002 ETH. After fees we receive 0.175 ETH. Summ will convert this value back into your local currency and record a profit. However we also create a second buy transaction, which can be used as the future cost basis for the sale of this ETH.
| Date | Currency | Type | Quantity | Value |
|---|---|---|---|---|
| 4th January | ETH | Realized Profit | 0.175 | $220 |
| 4th January | ETH | Buy | 0.175 | $220 |
Example 2: Realising a loss on ETH
| Date | Instrument | Side | Amount | Cash Flow | Fee | Change |
|---|---|---|---|---|---|---|
| 4th January | ETH-12JAN21-880-P | Close Buy | 1 | -0.1 | 0.02 | -0.12 |
In example 2 we close a buy contract realising a loss of 0.125 after fees. Summ converts this value back to your local currency and records a realized loss. However we also need to consider settling the loss in ETH, and any capital gains or losses associated with this transaction.
| Date | Currency | Type | Quantity | Price of ETH | Profit (Loss) |
|---|---|---|---|---|---|
| 1st January | ETH | Buy | 1 | $1000 | - |
| 4th January | ETH | Realized Loss | 0.12 | $1200 | ($144) |
| 4th January | ETH | Sell | 0.12 | $1200 | $24 |
In the table above, after considering the capital gains on the settlement, the actual overall position is down $120.
As you can see keeping track of all this is very difficult. Fortunately Summ is one of the few tools to actually consider all these scenarios in great detail.
How to Upload Your Deribit Data Into the Calculator
You can easily upload your Deribit data into the calculator by following the below steps:
- Log into Deribit and click on your username in the top right corner and select 'Transaction Log'.
- Select the dates that you traded and download the logs.
- If you traded Ethereum products you will also need to click on Ethereum in the top left corner and repeat the above steps.
- In Summ select Deribit on the import page and upload your CSV file.
- On the report page you will see both capital gains and income tax calculations related to your trading activity.