You will find several settings under the Advanced tab on the Settings page. We will in this article explain how changing these settings affects your tax reports.
The default settings are keeping all ON except for the first one as seen below:
Include fiat disposals in your capital gains
Coinpanda will include gain/loss for disposal of fiat currency in your tax report if this setting is turned ON. Since it's not clear from a tax perspective whether you need to report gains from selling fiat currencies, we recommend turning this setting OFF.
If you decide to turn this ON, be aware that you need to track cost basis accurately also for all fiat currencies traded. Not all exchanges provide this data from API so this will require some more manual work on your side to avoid paying too much tax.
Let's assume that your base currency is EUR and you have traded USD pairs on FTX such as BTC-USD or ETH-USD. Having this setting turned ON will result in all transactions where you are selling USD to be included in your capital gains summary and tax reports. Gain/loss for USD will therefore be calculated similarly to gain/loss for crypto.
Include crypto → crypto trades in your capital gains
If you turn this setting OFF, gain/loss from crypto to crypto trades (ex: BTC → ETH) will not be included in your capital gains summary and reports. This setting should always be ON unless you have a very special reason not to do so.
Include margin/futures gains in your capital gains
If you turn this setting OFF, gain/loss from margin, futures and derivatives trading will not be included in your capital gains summary and reports. This setting should also always be ON unless you want to fully exclude all margin/futures gains from your tax report.
Realize gains on transfer fees
Coinpanda will by default realize all transfer fees at market price and include the realized gains in your capital gains summary and reports. If turned OFF, no gains will be realized and the amount will simply disappear from your holdings.
It is not entirely clear from a tax perspective whether gains from internal transfers should be taxed. However, paying for a crypto transaction can be considered equal to paying for a product/service, hence most countries will most likely want to tax the transaction. Remember that you might also realize a loss on the fee such that you will actually end up paying less tax. We recommended keeping this setting ON unless you have discussed and clarified this with your accountant or local tax authority.
Realize gains on costs and margin trading fees
If turned ON, transactions tagged as deductible costs, margin trading fees, or funding costs will be realized at market price and included in your capital gains summary and reports. If turned OFF, no gains will be realized and the amount will simply disappear from your holdings. Similarly to transfer fees, we recommend keeping this setting ON unless you have a good reason not to do so.
PS! The amount will still be included in your Expense summary in the tax report even with this setting OFF. You might be able to report these costs as expenses in your tax return - always consult a tax professional or contact your tax authority directly about this!