When you trade or transfer cryptocurrencies, fees are often involved. Koinly automatically factors in these fees to give you an accurate picture of your tax liabilities. Here’s a breakdown of how fees are handled in Koinly, including some practical examples.

Whenever a fee is incurred during a trade, Koinly adds the value of that fee to the cost basis of the asset you receive. This means that the fee increases the overall cost of acquiring that asset. If the fee is paid in a cryptocurrency, this can result in a taxable event, known as a disposal. Koinly will then realise any profit or loss on the cryptocurrency used to pay the fee.

Example: Fee Reduces Gains

Let’s say you buy 1 Bitcoin for $10,000 and the exchange charges you a $100 fee. Koinly will add the $100 fee to the cost basis of your Bitcoin, so your total acquisition cost becomes $10,100. When you later sell that Bitcoin for $15,000, your capital gain would be calculated as:

Capital Gain = Sale Price - Cost Basis

Capital Gain = $15,000 - $10,100 = $4,900

If the fee hadn’t been added, your gain would have been $5,000. By including the fee, Koinly helps reduce your taxable gain.

Here you can see the purchase of the BTC, complete with the fee to form the cost basis:

Here you can see the sale and how the fee has reduced the overall gain:

If the fee is paid in cryptocurrency instead of fiat, Koinly treats this as a disposal of that cryptocurrency, like any other sale. You will incur a gain or loss based on the market value of the cryptocurrency at the time of the fee payment, relative to your cost basis for that cryptocurrency.

Example: Fee in Cryptocurrency Generates a Gain

Imagine you buy 1 Ethereum for $1,500, and the platform charges you a 0.01 ETH fee. If the 0.01 ETH used to pay for the fee was previously acquired for $10 and at the time of the trade is worth $15, Koinly will calculate a gain as on any disposal: 15-10=5.

When transferring crypto between wallets or exchanges, Koinly accounts for the transfer fee in the calculation of your holdings.

The fee is added to the cost basis of the asset in the receiving wallet, increasing its overall value (the same as above). If the fee is paid in cryptocurrency, Koinly treats it as a disposal event, which may trigger a capital gain or loss, depending on the market value at the time of the transfer.

Trading fees won’t appear separately in your tax reports because they are already factored into the cost basis of the received asset. By increasing the cost basis, fees ultimately reduce the gains you need to report when you sell the asset. This helps ensure your taxable gains are minimized without requiring additional line items for fees.

Important: The “Cost” section in Koinly’s tax reports includes only transactions explicitly tagged as “Cost” and does not include fees. Trading fees are part of the cost basis calculation and are reflected in your capital gains.