Foreign Currency Gains at IBKR – What You Need to Know

You sell a stock and receive 10,000 USD. Two months later, you use that money to buy Apple shares – same dollar amount. No gain, no loss? Wrong: If the dollar has risen in the meantime, your 10,000 USD are now worth more euros than when you received them. That's a taxable foreign currency gain – and most IBKR users only find out about it when filing their tax return.

How Do FX Gains Arise?

Whenever you receive dollars – e.g. from a stock sale or currency conversion – and later spend them, a currency gain or loss can arise. What matters is the difference between the exchange rate when the dollars flowed in and the rate when they flowed out.

Simple Example

📥 January: You buy 10,000 USD at rate 1.10 (you pay €9,090.91)
📤 June: You use the 10,000 USD to buy a stock – the rate is now 1.05 (value: €9,523.81)

Result: €432.90 foreign currency gain – taxable, even though you only bought stocks

Why Even a Stock Purchase Triggers FX Gains

This is the point most people miss: you don't have to consciously exchange currency. As soon as you buy a stock with your USD holdings, dollars flow out. For tax purposes, that's a disposal of your foreign currency – and if the exchange rate has changed since you acquired those dollars, a gain or loss arises.

Legal basis: Every outflow from an interest-bearing foreign currency account counts as a disposal-equivalent transaction (Rn. 131 BMF, § 20 Abs. 2 Satz 2 EStG). Whether the dollars are actually converted back to EUR or not is irrelevant.

Your Dollars Are an Independent Asset

From the tax authority's perspective, your USD holdings at IBKR are independent economic assets – like stocks or ETFs. That means: the FIFO method applies here too. When dollars flow out, the first-acquired dollars are assumed to be used first. BubbleTax runs this currency FIFO automatically for you.

The FIFO requirement for foreign currencies is anchored in two places: in Rn. 131 BMF for interest-bearing accounts (§ 20 EStG) and directly in the law in § 23 Abs. 1 Nr. 2 Satz 3 EStG for non-interest-bearing accounts.

Which Exchange Rate Counts?

The tax authorities accept the official ECB reference rate. BubbleTax uses this rate automatically for every single transaction – you don't need to look anything up or convert manually.

Legal Classification

For IBKR accounts (interest-bearing), foreign currency gains fall under § 20 Abs. 2 Nr. 7 EStG (capital income). For non-interest-bearing accounts, § 23 Abs. 1 Nr. 2 EStG applies (private disposal with 1-year holding period). BubbleTax detects the account type and automatically applies the correct calculation.