Importing and handling of eToro trades for tax purposes is a bit different than other exchanges. One of the reasons for this is that eToro offers both non-leveraged crypto trading and the ability to go long or short with up to 2x leverage (CFD trading). These two types of trading must be considered differently when it comes to tax calculations and will be explained in detail in this article.
Export your eToro transaction history
The first thing you will need to do is to export the entire transaction history from eToro as an XLSX file. The Excel file should contain five sheets in total – do not edit or delete any of these! This file will include all information about every trade and transaction you have made on eToro during the time period selected for the export. You are limited to exporting transaction history for up to one year in each file. You must export one file for each year if you have traded on eToro for several years.
It’s important to be aware that this file will also include data about transactions with stocks, commodities, ETFs, and non-crypto currencies. Only crypto transactions will be considered when uploading the XLSX file to your eToro wallet on Coinpanda.
Here is how to export the XLSX file from eToro:
- Log in to your eToro account and navigate to ‘Portfolio’
- Select ‘History’ in the top menu
- Click on the Settings icon (top-right corner)
- Click on ‘Account Statement’ in the popout menu
- Select your time frame and click ‘Create’
- Click the XLS icon in the top-right corner to download the file
- Upload the file to Coinpanda
Help, my eToro file does not upload!
If you experience that the Excel does not upload to Coinpanda, it is most likely that the file format has changed. We have noticed that eToro has changed the format several times during the last year, and we are continuously updating our integration whenever we become aware of this. If you experience issues with uploading the file, then please contact us so we can look into this!
eToro allows you to trade crypto in two ways:
- Non-leveraged trades (long only)
- Leveraged positions up to 2x (both long and short)
When you open a non-leveraged trade, you are essentially buying the cryptocurrency in a similar way as on other exchanges like Coinbase or Binance. If you have $500 in your account, and the price of bitcoin is currently $50,000, you can buy a maximum of 0.01 BTC. This bitcoin can now be transferred out of the eToro trading platform to your eToro wallet. After receiving BTC in your eToro wallet, you can send it to any other exchange or external wallets such as Binance, Ledger, or Exodus.
If you buy crypto on eToro and then send it to another wallet or exchange where you sell your coins later, you need to track the original cost basis from when the coins were purchased on eToro originally. Coinpanda tracks this automatically for you by analyzing the Excel file and extracting which transactions are non-leveraged trades and if they are transferred out of eToro or not.
You buy BTC for $500 on December 23rd and then transfer this to your Binance account (via eToro wallet) on January 5th. This will now show up in Coinpanda as two transactions as seen in the image below. As you can see, the BTC purchased takes on a cost basis of $500 and is considered similar to any other ordinary crypto purchase.
You buy 23 LINK tokens worth $800 on February 20th before you sell all the tokens almost 3 months later on May 10th, 2021. The price of Chainlink has gone up since you originally bought the coins and you end up with a total profit of $396. This will now show up in Coinpanda as two transactions as seen in the image below.
The XLSX file from eToro contains only transactions for closed positions. This means that active positions cannot be imported to Coinpanda and your current crypto holdings on eToro will not be reflected on your Coinpanda dashboard or in the wallet balance. Your wallet balance will either be empty or display USD only.
The reason for this is that as long as you have an active position on eToro, you have the option to either close the long position by selling your coins or to transfer the crypto you bought out of eToro. If you want all your eToro transactions to appear in Coinpanda you will need to either close all your positions first or transfer all cryptocurrencies you have bought to another wallet.
As already mentioned, eToro allows you to open margin positions with leverage up to 2x. You can go either long (buying the asset) or short (selling the asset). The tax treatment of margin/leveraged positions is quite different compared to buying crypto non-leveraged (spot buy). The short summary is that instead of calculating the realized gain/loss by looking up the initial purchase price according to the cost basis method used (FIFO, LIFO, ACB, Share Pool, etc), you need to consider the closed pnl for the trade or position in isolation.
This might sound complicated, but we can explain it using a simple example: You have only bought crypto on Coinbase until now, and then you decide to open an eToro account so that you can short bitcoin. On Coinbase you have bought BTC on one occasion only. These are all your transactions with bitcoin until today:
- Buy 0.1 BTC on Coinbase, March 15th, 2021 (spot buy)
- Sell 0.2 BTC on eToro, April 10th, 2021 (2x leveraged short position)
By following the FIFO principle, we need to calculate the initial purchase price of the 0.2 BTC sold on April 10th. But this cannot be done since you have only bought 0.1 BTC prior to this date, and not to mention that you still have 0.1 BTC in your Coinbase account after selling 0.2 BTC on eToro! As you probably now understand, we cannot apply the same calculation principle for short selling as done for spot trading since we are essentially selling coins that were never bought in the first place. The same goes for both short and long positions when you are trading on margin or with leverage.
We have written an in-depth article about the taxation of cryptocurrency margin trading on our blog if you want to learn more about this topic: How to Report Taxes on Cryptocurrency Margin Trading
Coinpanda will consider the closed profit and loss from leveraged positions on eToro if you import an Excel file that contains such trades. That means if you went long 2x on eToro and made a profit of $250 after closing the position, this will be imported as a trading gain transaction of $250 in Coinpanda and the total amount will be considered as realized capital gains.
However, if you went 2x long and the trade resulted in a $400 loss, this transaction will be imported as a trading loss of $400 and the total amount will be considered as a realized capital loss.
This is how this will look like on Coinpanda:
If you only made these two trades on eToro during a single tax year, then you will report a net capital loss of $150 which can be used to offset other capital gains (and possibly other income).
eToro transaction fees
One feature that separates eToro from other trading platforms is that you are not paying any fees directly when buying or selling cryptocurrencies. Instead, eToro operates with what they call spread which is the difference between the Buy and Sell price. What this means is that your position will be at a loss immediately after buying the cryptocurrency, and this loss will equal the spread that you paid.
This spread is also referred to as the broker fee by eToro, which means it could actually be seen as a fee directly associated with the transaction rather than the buy and sell spread similar to other spot exchanges. Transaction fees are generally considered deductible costs and can be included in the cost basis of the asset bought and will therefore offset your capital gains.
Whether or not the tax authority in your country will consider the spread on eToro as a transaction fee or simply as a spread instead is not clear. When uploading the eToro XLSX file to Coinpanda, the spread for every transaction will always be included as a transaction fee since we believe this is the most accurate tax treatment for these costs. However, if you believe these costs are not tax-deductible, you can simply delete all the values in the Spread column in the Closed Positions sheet before uploading the XLSX file to your eToro wallet on Coinpanda.
During the last couple of years, eToro has become a wildly popular trading platform also for cryptocurrency traders. Whether you have made a gain or loss from your trading, it’s important to understand the tax implications and how to calculate and report your capital gains correctly.
Because eToro offers both non-leveraged trading and leveraged positions, transactions on eToro need special consideration when it comes to tax calculations. In this article, we have explained that non-leveraged trading should be considered similar to ordinary trading on any other exchange by calculating the capital gains according to cost basis rules such as the FIFO principle commonly used. Leveraged positions, on the other hand, must be considered quite differently and the FIFO principle cannot be used in the same way.
Coinpanda is one of very few crypto tax software solutions that can do tax calculations for trading on eToro correctly today. All you need to do is export an Excel file from eToro that contains all your historical transactions, and then upload the file to the Coinpanda platform.
You can sign up for a 100% free account, or first read more about how the software can help you with reporting your crypto taxes. Coinpanda supports more than 65 countries today including the US, Canada, Australia, the UK, and almost all other European countries.
Important message regarding eToro
We have received numerous reports from our users that several other popular crypto tax companies are handling eToro files wrong. From the evidence we have seen, it seems like they do not differentiate between non-leveraged and leveraged positions which will most likely result in huge errors in your final tax numbers. If you are currently using or have used another tax solution for eToro in the past, we encourage you to check this in detail and understand the possible tax implications.