Crypto Taxes in Germany: Complete Guide & Instructions [2024]

How does Germany tax crypto currencies? Clearly summarized, expressed in an understandable way and regularly updated. If you need a tax guide, this is it.

Expert verified
by
Mag. Georg Brameshuber

Key Takeaways

  • In Germany, cryptocurrencies count as “other economic goods” and the sale thereof as a “private disposal transaction.”
  • Profits from cryptocurrencies are taxed at the personal income tax rate.
  • Hold your crypto assets for one year and you won’t pay tax.
  • Be aware of the tax exemption limit of 600€ per year.
  • For crypto income, such as from staking or lending, there is an exemption limit of 256€ per year.

Written by
Florian Wimmer
Last Updated:
February 15, 2024
Chapter 1

Crypto Tax Basics

The basics of cryptocurrency taxation in Germany

Crypto taxation in Germany remains a critical topic for anyone involved in investing, mining, or trading digital currencies. The landscape of cryptocurrency taxation is complex and often confusing, but our comprehensive guide is here to navigate you through it.

In this guide, we delve into the multifaceted aspects of cryptocurrency taxation in Germany. We cover everything from fundamental tax laws to specific scenarios and strategies for tax optimization, ensuring you're well-informed.

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Are Cryptocurrencies Taxed In Germany?

Short answer: Yes.

Middle answer: Profits from cryptocurrencies are generally taxed in Germany. Crypto gains are tax-free if they are less than 600€ or the holding period is more than one year. Income from cryptocurrencies is also taxed. Crypto income is tax-free if it is below the exemption limit of 256€.

Long answer:

If you invest in cryptocurrencies and assets like Bitcoin and others as a private individual, you can trigger a tax liability. The prerequisite for this is that you have your residence or habitual abode in Germany (that is, you are in Germany for more than 180 days per year).

The counterpart to the private investor is the commercial investor. The prerequisite for this is, for example, that investments are made for third parties. The decision whether to be a private or already commercial investor always leads to discussions, as crypto tax advisor Georg Brameshuber elaborates:

“In principle, the question arises as to whether a commercial activity is being developed in the overall picture. Only a look at the individual case provides real certainty. However, both a high number of transactions and high-priced transactions do not necessarily lead to a commercial location.”

Since the majority of crypto users can be assumed to trade privately, this guide is aimed at private individuals.

In Germany, crypto assets are considered other economic goods. The sale counts as a private disposal transaction, profits must therefore be taxed at the personal income tax rate.

The amount of tax for cryptocurrencies depends on your income and marital status (single or married).

The classification as other assets brings a special advantage for investors in Germany: Profits remain tax-free up to the exemption limit of 600€ or when selling after the speculation period of one year (min. 365 days).

How Much Tax Do You Pay On Cryptocurrencies In Germany?

The crypto tax rate is based on the ordinary personal income tax rate. This amounts to between 14% and 45%.

<figure class="block-table">
   <table>
       <thead>
           <tr>
               <th>Tax Rate</th>
               <th>Unmarried Taxpayers</th>
               <th>Married Taxpayers</th>
           </tr>
       </thead>
       <tbody>
           <tr>
               <td>0%</td>
               <td>up to 10,908€</td>
               <td>up to 21,816€</td>
           </tr>
           <tr>
               <td>14-24%</td>
               <td>10,909€ - 15,999€</td>
               <td>21,817€ - 31,998€</td>
           </tr>
           <tr>
               <td>24-42%</td>
               <td>16,000€ - 62,809€</td>
               <td>31,999€ - 125,618€</td>
           </tr>
           <tr>
               <td>42%</td>
               <td>62,809€ - 277,825€</td>
               <td>125,619€ - 555,650€</td>
           </tr>
           <tr>
               <td>45%</td>
               <td>more than 277,825€</td>
               <td>more than 555,650€</td>
           </tr>
       </tbody>
   </table>
<figcaption>Personal Income Tax Rates Germany</figcaption>
</figure>

Why Do I Have to Pay Crypto Taxes in Germany?

Even though no one likes to do it, paying taxes makes perfect sense. With tax money, the state can build hospitals, roads and schools, it can support the poor and the unemployed, and it can distribute wealth more fairly.

In Germany, you have to take care of your taxes on your own, because there is a duty to cooperate. You can’t just wait for the state to come to you. Instead, you have to become active yourself and disclose all tax-relevant information completely and truthfully. 

Our Blockpit tax calculator for cryptocurrencies can save you a lot of work.

<div data-w-id="495a52c6-2af9-be9e-c05c-a2d621d078b4" style="opacity: 1;" class="cta-card-article"><div data-w-id="495a52c6-2af9-be9e-c05c-a2d621d078b5" style="transform: translate3d(0px, 0%, 0px) scale3d(1, 1, 1) rotateX(0deg) rotateY(0deg) rotateZ(0deg) skew(0deg, 0deg); opacity: 1; transform-style: preserve-3d;"><h2 class="display-2 color-neutral-100 mg-bottom-12px">Crypto Tax Made Easy</h2><p class="color-neutral-400 mg-bottom-40px">Prepare your crypto tax report in minutes. Compatible with for more than 100,000 crypto assets, wallets & exchanges. Full support for DeFi and NFTs.</p><div class="buttons-row"><a href="#" class="btn-primary white button-row w-button">Sign Up for Free</a><a href="/pricing" class="btn-secondary white w-button">Explore Integrations</a></div></div><div id="w-node-_495a52c6-2af9-be9e-c05c-a2d621d078bf-b8b5e999" data-w-id="495a52c6-2af9-be9e-c05c-a2d621d078bf" style="transform: translate3d(0px, 0px, 0px) scale3d(1, 1, 1) rotateX(0deg) rotateY(0deg) rotateZ(0deg) skew(0deg, 0deg); opacity: 1; transform-style: preserve-3d;" class="cta-card-article-image"><img src="https://assets-global.website-files.com/65098a145ece52db42b9c274/650d9831d87a9c1cef69aeb2_trackthemall.png" loading="eager" sizes="(max-width: 479px) 88vw, (max-width: 767px) 91vw, (max-width: 991px) 84vw, (max-width: 1439px) 49vw, 612px" srcset="https://assets-global.website-files.com/65098a145ece52db42b9c274/650d9831d87a9c1cef69aeb2_trackthemall-p-500.png 500w, https://assets-global.website-files.com/65098a145ece52db42b9c274/650d9831d87a9c1cef69aeb2_trackthemall-p-800.png 800w, https://assets-global.website-files.com/65098a145ece52db42b9c274/650d9831d87a9c1cef69aeb2_trackthemall-p-1080.png 1080w, https://assets-global.website-files.com/65098a145ece52db42b9c274/650d9831d87a9c1cef69aeb2_trackthemall-p-1600.png 1600w, https://assets-global.website-files.com/65098a145ece52db42b9c274/650d9831d87a9c1cef69aeb2_trackthemall.png 1633w" alt=""></div></div>

What Happens if I Don’t Pay Crypto taxes?

The Federal Central Tax Office (Bundeszentralamt für Steuern, BZSt) is responsible for ensuring that all taxpayers meet their tax obligations. Anyone who is unsure whether they have done so correctly in the past can always be proactive and request changes to previous tax returns from the tax office.

And if you are just starting to invest in cryptocurrencies on a regular basis, you should use crypto tax software like Blockpit right from the start.

This allows you to calculate your own crypto taxes within minutes and also track your entire portfolio clearly for years to come.

Although rather an exception, deliberate false statements can result in fines and prison sentences of up to 10 years.

More likely, however, are tax refunds, interest and late payment penalties.

Does the Federal Central Tax Office Know of My Cryptocurrencies?

Many believe that cryptocurrency trading is anonymous. In fact, it is the case that governments can track crypto users. It is hard to say how large these efforts currently are. However, the technology to do so exists.

For example, authorities can collect personal data by analyzing the respective blockchain using special software and, of course, by putting pressure on crypto exchanges to demand the surrender of crypto tax evaders’ data.

The far-reaching introduction of KYC processes (Know your Customer) during registration or Europe-wide efforts – EU Directive DAC8 or MiCA (Regulation on Markets in Crypto-Assets) – speak for increasing regulatory tendencies.

Do I Have to Pay Taxes on Crypto Gains From Years Ago?

Yes. You should keep a record of your cryptocurrency transactions for the last 10 years. After all, there is definitely a chance that you will be audited. And especially in the volatile crypto space, amounts can add up quickly. Serious tax evasion is when the evaded tax is above 50,000€.

The easiest way to do this is to have continuous documentation with Blockpit’s crypto tax calculator, in which the transaction date, value in euros at the transaction date, purpose of use and receiving address are clearly and automatically documented.

If you are not sure whether you have correctly declared the transactions of your cryptocurrencies and assets, it is best to proactively contact the BZSt, as there is a duty to correct incorrect declarations.

Table of content
Chapter 2

Taxation of Crypto Transactions

A breakdown of various crypto transactions and their taxation.

When Do I Have to Pay Crypto Taxes?

Simply put, you have to pay crypto taxes in Germany whenever there is a taxation claim. In the case of crypto, this claim exists in special individual and special cases.

Specifically, you pay taxes on other income from the sale of private assets or also for income from other services. This includes, for example, passive income from crypto like staking or lending.

You pay taxes:

  • If you sell crypto before the end of the one-year holding period (and make a profit of more than 600€). Example: if you buy on January 1st, 2023, a sale made up to and including January 2nd, 2024 is taxable. A sale made after January 2nd, 2024 is tax free.
  • If you earn your income commercially. Crypto tax advisor Georg Brameshuber has already explained above that the distinction private/commercial is not always clear. Crypto mining is most likely to be commercial: “In the case of mining, it can be assumed that average miners operating on a cost-covering basis have a density of operations that suggests a commercial enterprise.”
  • If you are paid in crypto by your employer.
  • If you earn crypto income. This means income from mining, lending, staking, forging, masternodes, margin trading and bounties. For the record, bounties differ from airdrops primarily in that the amount of reward given out for completing a particular action is not subject to chance. More on this below.

<div fs-richtext-component="info-box" class="info-box"><div class="flex-info-card"><img src="https://assets-global.website-files.com/65098a145ece52db42b9c274/650c6f4cef4c34160eab4440_Info.svg" loading="eager" width="64" height="64" alt="" class="icon-info-box"><div fs-richtext-component="info-box-text" class="info-box-content"><p class="color-neutral-800">The BMF letter of 10.05.2022 takes the view that mining is in principle a commercial activity in accordance with Section 15 EStG (Income Tax Act, note), which is, however, subject to case-by-case examination. The same applies to forging, which is active staking with block creation.</p></div></div></div>

crypto taxes germany overview

When Do I Not Have To Pay Crypto Taxes?

<div fs-richtext-component="tax-status-tax-free" class="tax-status-pills tax-free"><div>Tax Free</div></div>

First things first: if you own cryptocurrencies for more than a year that you didn’t receive from capital gains (e.g. margin trading), then selling them privately is always tax-free, no matter how high your profit is.

In addition, simply put, there are two scenarios that exempt you from a tax burden:

  1. No tax-relevant events are realized. That is, there is simply no profit. (Why a tax return makes sense even in a loss scenario, you will learn a little further down).
  2. Your profits remain below certain exemption limits.

Tax-free crypto transactions in Germany

Those are the basics. Now let’s get more into the details. You won’t pay taxes in the following situations:

Crypto Gains Below 600€

<div fs-richtext-component="tax-status-tax-free" class="tax-status-pills tax-free"><div>Tax Free</div></div>

Your profits from cryptocurrencies are tax-free if they are less than 600€ per year. The 600€ is an exemption limit. This means that as soon as you exceed it by one euro, you have to pay tax on the entire profit (i.e. already from 601€).

The counterpart to the exemption limit is the tax-free amount. The tax-free amount describes a sum of money up to which no taxes are due. If you are above it, only the part of the profits that exceeds the tax-free amount will be taxed. Among other things, the tax-free amount applies to capital income.

Crypto Income Below 256€

<div fs-richtext-component="tax-status-tax-free" class="tax-status-pills tax-free"><div>Tax Free</div></div>

Other benefits that amount to a maximum of 256€ per year in total are tax-free. This includes income from mining, forging, staking, lending and operating a masternode as well as airdrops for consideration.

This is also an exemption limit, and if it is exceeded, taxes are due on the entire amount.

Crypto Losses

<div fs-richtext-component="tax-status-tax-deductable" class="tax-status-pills"><div>Tax Deductable</div></div>

For a loss to be relevant for tax purposes, it must be realized within the one-year speculation period. The principle is therefore identical to the taxability of potential gains, which are also exempt from tax after one year.

offsetting crypto losses from income tax

<div fs-richtext-component="info-box" class="info-box protip"><div class="flex-info-card"><img src="https://assets-global.website-files.com/65098a145ece52db42b9c274/650c6f4b151815fb0be48cec_Lightning.svg" loading="eager" width="64" height="64" alt="" class="icon-info-box"><div fs-richtext-component="info-box-text" class="info-box-content"><p class="color-neutral-800">If profits were made within the 2022 calendar year and losses were made within the 2023 calendar year, you can carry back the losses from 2023 to 2022. The transparent listing of the respective profits and losses is always at your fingertips with the crypto tax software Blockpit.</p></div></div></div>

Giving Away and Donating Cryptocurrencies

<div fs-richtext-component="tax-status-tax-free" class="tax-status-pills tax-free"><div>Tax Free</div></div>

You can give away up to 20,000€ per year tax-free (for example to acquaintances) and you do not have to observe the one-year limit. For spouses, the limit is even 500,000€.

However, a 10-year time limit applies to these allowances! The allowances can be used up within 10 years. Once the 10 years are up, the allowances for gifts are renewed.

Giving crypto-donations is also tax-free.

<div fs-richtext-component="info-box" class="info-box"><div class="flex-info-card"><img src="https://assets-global.website-files.com/65098a145ece52db42b9c274/650c6f4cef4c34160eab4440_Info.svg" loading="eager" width="64" height="64" alt="" class="icon-info-box"><div fs-richtext-component="info-box-text" class="info-box-content"><p class="color-neutral-800">Please note that the one-year limit is transferred to the donee in the case of a gift.</p></div></div></div>

Buying Cryptocurrencies

<div fs-richtext-component="tax-status-tax-free" class="tax-status-pills tax-free"><div>Tax Free</div></div>

Those who buy crypto with fiat (i.e., traditional money) do not have to pay taxes on it.

Account Transfers

<div fs-richtext-component="tax-status-tax-free" class="tax-status-pills tax-free"><div>Tax Free</div></div>

If you move crypto, i.e. transfer it from one crypto wallet to another or take it to a new exchange, this is also tax-free. In any case, it is important to keep an accurate record.

Transfers between your own accounts are tax free in Germany

Special Cases in the Taxation of Cryptocurrencies in Germany

As with many tax topics, there are some exceptions and special cases when it comes to crypto taxes. To make sure these don’t become an obstacle in your tax return, we’ll take a closer look at them here.

Exchange of Cryptocurrencies

<div fs-richtext-component="tax-status-income-tax" class="tax-status-pills"><div>Income Tax 0-45%</div></div>

If you exchange one crypto asset for another (e.g. BTC → ETH), you can trigger a tax liability. The requirement is that you make a profit of more than 600€ and realize this profit within 365 days from the original purchase.

Cryptocurrency Swaps

<div fs-richtext-component="tax-status-tax-free" class="tax-status-pills tax-free"><div>Tax Neutral</div></div>

The terms “exchange” and “swap” are often used interchangeably. This is incorrect. A swap actually means an exchange of coins within a project, such as temporarily issued ERC20 tokens that are “swapped” into the project’s native blockchain token. A swap is thus tax neutral, unlike an exchange.

Purchases with Cryptocurrencies

<div fs-richtext-component="tax-status-income-tax" class="tax-status-pills"><div>Income Tax 0-45%</div></div>

The spending of cryptocurrency for goods (e.g., a computer) or services constitutes a sale transaction. Accordingly, crypto gains are also taxable if the crypto was held for less than a year.

<div fs-richtext-component="info-box" class="info-box protip"><div class="flex-info-card"><img src="https://assets-global.website-files.com/65098a145ece52db42b9c274/650c6f4b151815fb0be48cec_Lightning.svg" loading="eager" width="64" height="64" alt="" class="icon-info-box"><div fs-richtext-component="info-box-text" class="info-box-content"><p class="color-neutral-800">Let’s say you bought Bitcoin for 2,000€. The rising price ensures that your investment is now worth 5,000€. If you buy a computer with these Bitcoins, you have to pay tax on the profit (i.e. the difference of 3.000€) as if it were your income.</p></div></div></div>

Lost or Stolen Cryptocurrencies

<div fs-richtext-component="tax-status-tax-deductable" class="tax-status-pills"><div>Tax Deductable</div></div>

If you have lost assets due to a scam or hack, you can declare these losses in the tax return in the SO attachment. The tax office will check if this can be counted as a loss. There is no guarantee here and it always depends on the individual case.

Trading Stablecoins

<div fs-richtext-component="tax-status-income-tax" class="tax-status-pills"><div>Income Tax 0-45%</div></div>

Stablecoins are cryptocurrencies with high price stability (hence the “stable” in the name). Their price is pegged to classic fiat currencies, such as the US dollar (TrueUSD) or the euro (EURB).

The sale of stablecoins becomes taxable only when you trade them within a year (365 days) and make a profit of more than 600€ as a result.

ICOs and IEOs

<div fs-richtext-component="tax-status-income-tax" class="tax-status-pills"><div>Income Tax 0-45%</div></div>

Initial Coin Offerings (ICO) and Initial Exchange Offerings (IEO) are similar to the principle of a company’s initial public offering (IPO). The goal: Start-ups sell tokens in exchange for crypto assets and thus generate capital.

From a tax perspective, a purchase of ICOs and IEOs is comparable to crypto trades. Here, too, the values of the time of purchase and the time of sale are compared.

These events are only taxable if they are sold again within one year (365 days) and a profit of more than 600€ is generated.

Margin Trading with Cryptocurrencies

<div fs-richtext-component="tax-status-capital-gains-tax" class="tax-status-pills"><div>Capital Gains Tax 25%</div></div>

Margin trading refers to a trade with borrowed capital. The external capital is provided by a broker in return for a certain security deposit, the so-called margin. (A margin is in principle lower than the provided outside capital, note).

Traders can use leverage to multiply the margin they deposit and thus speculate on the rise or fall of an underlying crypto asset.

The advantage of this is that larger positions can be traded even with little capital.

As a rule, interest also accrues here. The classification as a forward transaction means that income from margin trading is subject to a flat rate of 25% capital gains tax.

However, the tax-advantaged one-year holding period cannot be applied to capital income.

Trading Crypto Futures

<div fs-richtext-component="tax-status-capital-gains-tax" class="tax-status-pills"><div>Capital Gains Tax 25%</div></div>

Futures trading does not involve buying or selling crypto assets. Instead, investors speculate on the rise or fall of an asset in the future.

Again, the classification as a futures trade comes into play. Income from trading with futures is accordingly subject to a flat 25% capital gains tax rate.

Here, too, the tax-advantaged one-year holding period cannot be applied.


But beware: if crypto assets are delivered with futures, this constitutes a private disposal transaction.

Airdrops

<div fs-richtext-component="tax-status-income-tax" class="tax-status-pills"><div>Income Tax 0-45%</div></div> <div fs-richtext-component="tax-status-tax-free" class="tax-status-pills tax-free"><div>Tax Free</div></div>

Airdrops and bounties are a popular marketing tool and at the same time a reward for users. With the BMF letter of May 2022, there are a few changes, by far the most important of which:

Income from airdrops as well as bounties will be defined as acquisition transactions.

However, there are differences in taxation. In the best case, recipients will even avoid taxation.

Let’s look at airdrop taxes first:

The important thing here is whether chance or a random element decides on the amount of the airdrop or whether the amount of the rewards to be received has already been precisely defined from the start.

If chance comes into play, then this element overrides the connection between performance and reward.

<div fs-richtext-component="info-box" class="info-box protip"><div class="flex-info-card"><img src="https://assets-global.website-files.com/65098a145ece52db42b9c274/650c6f4b151815fb0be48cec_Lightning.svg" loading="eager" width="64" height="64" alt="" class="icon-info-box"><div fs-richtext-component="info-box-text" class="info-box-content"><p class="color-neutral-800">You enter an airdrop sweepstakes and can win rewards ranging from 5 to 200€. These types of airdrops are not taxable when received and are entered with an acquisition cost of 0€. However, if they are sold within the one-year holding period, they must be taxed.</p></div></div></div>

How airdrops are taxed in Germany

When the word airdrop is mentioned, many inevitably think of Bitpanda BEST Rewards. So do BEST Rewards now have to be taxed as well? We took a closer look at the situation.

Bitpanda BEST Rewards

<div fs-richtext-component="tax-status-income-tax" class="tax-status-pills"><div>Income Tax 0-45%</div></div> <div fs-richtext-component="tax-status-tax-free" class="tax-status-pills tax-free"><div>Tax Free</div></div>

The Bitpanda loyalty program is becoming increasingly popular and is often the first contact with a crypto rewards token or airdrop, especially for new crypto users. 

Accordingly, we at Blockpit also receive many questions about possible taxation. Crypto tax advisor Georg Brameshuber brings light into the darkness:

“The mere use of a platform should not lead to a taxable airdrop, for the following reason: the mere use of a platform is not an ‘active doing’ in the sense of a consideration character. Rather, it is simply the use of a service. Therefore, the allocation of Bitpanda BEST Rewards is not taxable because no consideration is provided. Accordingly, the following applies: inflow with 0€, no taxation.”

Bounties – An Airdrop of a Different Kind

<div fs-richtext-component="tax-status-income-tax" class="tax-status-pills"><div>Income Tax 0-45%</div></div>

Bounties differ from airdrops in that a service must be rendered in return for the receipt. This consideration can sometimes be very broad and can already be fulfilled with the upload of images, photos or videos on a platform or the mere naming of the operator in social media.

The provision of personal data can also lead to the interpretation as a bounty. For this, however, it is necessary that this data goes beyond the information required for the mere technical dispatch of the rewards.

In contrast to classic airdrops, the random element does not play a role here. Users therefore know exactly what they receive for completing a service.

This is how bounties are taxed:

Bounties are taxable at the progressive income tax rate when they are received. Any gain is also taxable if sold within 365 days. After waiting the one-year holding period, the sale is of course tax-free.

Non-Fungible Tokens (NFTs)

<div fs-richtext-component="tax-status-income-tax" class="tax-status-pills"><div>Income Tax 0-45%</div></div>

From a tax perspective, an NFT purchase or sale is a token exchange. This means that the gain is taxable in Germany at the progressive income tax rate and tax-free after a one-year holding period.

Georg Brameshuber:

“The classic NFT in the field of digital art is a miscellaneous economic good and should be treated exactly the same as all common crypto assets in the context of taxation as well.”

<div fs-richtext-component="info-box" class="info-box definition"><div class="flex-info-card"><img src="https://assets-global.website-files.com/65098a145ece52db42b9c274/650c6f473db41a468e9c5dc5_Bookmark.svg" loading="eager" width="64" height="64" alt="" class="icon-info-box"><div fs-richtext-component="info-box-text" class="info-box-content"><p class="color-neutral-800">Even in the May 2022 letter, the BMF has not yet explicitly commented on the taxation of NFTs. Therefore, we continue to assume taxation as a miscellaneous asset. Should this change, we will of course let you know here.</p></div></div></div>

Hard Forks and Soft Forks

<div fs-richtext-component="tax-status-tax-free" class="tax-status-pills tax-free"><div>Tax Free</div></div>

A fork describes a change or fork in a blockchain protocol. In principle, a distinction is made between directional hard forks and more modifying soft forks.

Examples of hard forks are Bitcoin Cash and Bitcoin Gold, which were created by a fork from the Bitcoin blockchain and henceforth exist independently.

Soft forks are more comparable to software upgrades. When all users agree on it, the new version replaces previous ground rules of the currency.

Learn more about it here: What are Bitcoin Forks

Which brings us to taxation:

With hard forks, the so-called footprint theory comes into play. This means that no tax changes apply to the original asset (old asset).

For the newly created asset, the following applies: The acquisition date of the original asset is transferred to the new coins. The acquisition cost is divided according to the ratio of the market values.

In most cases, however, the acquisition cost of the newly created assets is 0€ because no market values are identifiable at the time of the hard fork. The acquisition costs remain with the units of the virtual currency that existed before the hard fork.

DeFi (Decentralized Finance)

Today, it is impossible to imagine crypto without DeFi. Nevertheless, the term is difficult to delimit and still causes misunderstandings. Georg Brameshuber defines DeFi as follows:

“DeFi refers to the financial innovations in blockchain and crypto tech that have emerged since 2020, based on protocol environments.”

In connection with DeFi, terms such as yield farming, staking/lending, masternodes or liquidity mining/pools are also used. In the broadest sense, this refers to trading strategies that can be used to generate passive income from crypto (mostly in the form of so-called rewards).

The ability to generate rewards and thus passive income with crypto assets is becoming increasingly popular. Here’s how they are taxed:

Income from lending, staking, mining, forging and masternodes are defined as acquisition transactions in the BMF letter. Exactly how the acquisition costs are determined is also documented in the letter (see para 43 in the PDF of the BMF letter cryptocurrencies):

“The acquisition costs correspond to the market price at the time of acquisition of the units of a virtual currency or other token (derivation from Section 6 (6) sentence 1 EStG). If a stock exchange price is available, this is to be taken as the market price. If there is no stock exchange price, a price from a trading platform (e.g. Kraken, Coinbase and Bitpanda) or a web-based list (e.g. https://coinmarketcap.com/de) may be applied.”

If there is a subsequent sale of the rewards, it is taxable under the one-year holding period.

Staking Cryptocurrency

<div fs-richtext-component="tax-status-income-tax" class="tax-status-pills"><div>Income Tax 0-45%</div></div>

Income from staking is subject to taxation as part of private asset management according to Section 22 number 3 EStG. This means that Staking Rewards must be reported as other benefits in the tax return. Other benefits that in total amount to a maximum of 256€ per year are tax-free. This includes income from forging, lending, operating a masternode and airdrops for consideration.

Does the 10 year Holding Period Still Exist for Staking?

If you’ve been involved with crypto assets for a while, you’ve probably heard about the 10-year holding period for staking coins in Germany. The debate was already held a few years ago and is based on the wording of the law as stated in Section 23 (1) Sentence 1 No. 2 Sentence 4 EStG:

“In the case of assets within the meaning of sentence 1, from the use of which as a source of income, income is generated in at least one calendar year, the period increases to ten years.”

With the BMF letter cryptocurrencies of May 2022, there is now clarity on this topic as well: the extension of the annual period to 10 years was deleted by the BMF, much to the delight of Blockpit and the entire German crypto community.

Active and Passive Staking

Additionally, the BMF now also distinguishes between active and passive staking. Active staking means participation in block creation. The BMF letter mentions the term forging here. Those who engage in forging sometimes act commercially, similar to mining.

Far more important for most users, however, is the pure participation in staking pools without taking over the block creation. The so-called passive staking is in principle not seen as a commercial activity.

All further details and changes brought by the BMF letter can be found in our detailed Blockpit article BMF Letter Cryptocurrencies.

Lending Cryptocurrency

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Rewards from Lending are defined as acquisition transactions in the BMF letter. The acquisition costs are determined as follows:

“The acquisition costs correspond to the market price at the time of acquisition of the units of a virtual currency or other token (derived from Section 6 (6) sentence 1 EStG). If a stock exchange price is available, this is to be taken as the market price. If there is no stock exchange price, a price from a trading platform (e.g. Kraken, Coinbase and Bitpanda) or a web-based list (e.g. https://coinmarketcap.com/de) may be applied.”

If there is a subsequent sale of the rewards, it is taxable under the one-year holding period.

Also note the exemption limit for Other Benefits of a total maximum of 256€ per year. Lending is also included here.

Mining Cryptocurrency

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Rewards from mining are also defined as acquisition transactions in the BMF letter. The acquisition costs are determined as follows:

“The acquisition costs correspond to the market price at the time of acquisition of the units of a virtual currency or other token (derived from Section 6 (6) sentence 1 EStG). If a stock exchange price is available, this is to be taken as the market price. If there is no stock exchange price, a price from a trading platform (e.g. Kraken, Coinbase and Bitpanda) or a web-based list (e.g. https://coinmarketcap.com/de) may be applied.”

If there is a subsequent sale of the rewards, it is taxable under the one-year holding period.

Also note the exemption limit for Other Benefits of a total maximum of 256€ per year. Mining is also included here.

Exchange Fees

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Transaction fees, i.e. gas fees and the like, can be claimed as expenses and offset against your profits.

Blockpit’s crypto tax calculator for cryptocurrencies already considers transaction fees as incidental acquisition costs and thus they are already deducted from the profit. So you don’t have to declare them separately in your tax return.

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Chapter 3

Optimizing Your Crypto Taxes

Simple ways to optimize your crypto transactions and reduce your tax burden.

Can You Avoid Crypto Taxation?

Crypto taxes may not be evaded. Even though no one likes to do it, paying taxes makes perfect sense. With tax money, the state can build hospitals, roads and schools, it can support the poor and unemployed, and it can distribute wealth more fairly.

Tax evasion is also illegal and can result in a fine or imprisonment of up to ten years. In addition, the evaded taxes must be paid plus interest and late payment penalties.

However, what is already possible is to optimize your crypto taxes. You can read how this works in the next section.

Optimizing crypto taxes: How to reduce your tax burden

There are a few ways you can effectively optimize your crypto taxes, leaving you with more money.

HODL.

The easiest tax saving tip is to hold cryptocurrencies and assets like Bitcoin or Ethereum for over 12 months. No matter how much your gains are, you won’t have to pay taxes on them after a year.

If you want to trade more actively and regularly, you should split your accounts into different wallets. Get a wallet for long-term investments (HODL) and one for short term trading. This way you can neatly separate your cryptocurrencies and assets and avoid paying taxes unintentionally.

Profit + Loss = Fewer Taxes

In addition, you can minimize your tax liability by offsetting it against expenses. Possible expenses include transaction fees (gas fees) or wallet costs. This way, you can offset losses from trading cryptocurrencies against profits. Also deductible are the costs for a Blockpit license.

<div fs-richtext-component="info-box" class="info-box protip"><div class="flex-info-card"><img src="https://assets-global.website-files.com/65098a145ece52db42b9c274/650c6f4b151815fb0be48cec_Lightning.svg" loading="eager" width="64" height="64" alt="" class="icon-info-box"><div fs-richtext-component="info-box-text" class="info-box-content"><p class="color-neutral-800">You can enter the cost of your blockpit tax license in the field “Income-related expenses in connection with the sale transaction”. You’ll find it on line 46 of Anlage SO (2023). Here you can also enter the acquisition costs for wallets, gas fees and even internet costs.</p></div></div></div>

Pay Attention to the Exemption Limits

Don’t forget about the exemption limits. Cryptocurrency gains are tax-free if they are below 600€ per year. Other benefits that total no more than 256€ per year are also tax-free. This includes income from mining, forging, staking, lending and operating a masternode as well as airdrops for consideration.

Establishing of a trading limited liability company

Should you trade in crypto derivatives and futures, the tax benefits of a trading limited liability company (GmbH) might be interesting. The purpose of such a company is to trade stocks, options or futures. Profits are taxed at about 30% (corporate and trade tax). There are also advantages in offsetting losses.

Special case wash trading: what you need to know

Realizing losses for tax purposes (within 365 days from inflow) is a popular way to reduce one’s tax burden. Some traders often buy the same cryptocurrencies and assets again after a short time. However, this process has nothing to do with the term “wash trading” often mentioned in the media, which represents a form of market manipulation through artificial market activity:

There is a relatively clear demarcation there as to how “wash trading” or, more neutrally formulated, portfolio optimization can be classified. It runs along the line of whether the taxpayer is taking an economic risk and fully sharing it with all the operations he or she is setting. If that’s the case, then there is no design abuse.

crypto tax optimization Germany

FiFo or LiFo: Which Accounting Method Will Be Used for My Tax Return?

According to German interpretation, the first-in-first-out (FiFo) method is the most suitable to reliably determine the acquisition costs of cryptocurrencies and assets.

This means that the crypto assets acquired first (first-in) are also the first to be resold (first-out). The difference serves as the basis for taxing subsequent proceeds and profits.

In the past, the LiFo method (last in first out) was also often presented as an option. Blockpit always pointed out the risk that this interpretation would sometimes not be accepted by the tax authorities. The BMF letter of May 2022 now confirms that LiFo cannot be applied as a fallback method.

When determining the order of use of disposed assets, the principle of individual consideration applies as a matter of principle. However, in the fast-moving and transaction-rich crypto world, an individual consideration is hardly feasible. In this case, the legislator is accommodating crypto users.

This means that the FiFo procedure applies to the order of use. The same applies to the determination of value, where the average method is actually to be applied. For reasons of simplification, the FiFo method also applies here: FiFo comes into play.

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Chapter 4

Automating & Filing Your Tax Report

What you need to know about the Finanzamt, filing your crypto tax report and using Blockpit

How Do I File My Cryptocurrency Tax Return?

You submit your crypto tax return as part of your annual income tax return to your local tax office. You can do this manually using tax forms or electronically using Elster. You can find all the details in the following section.

Where Do I Fill In Cryptocurrencies on My Tax Return?

Profits from the sale of cryptocurrencies and crypto assets (disposals) go into the “Anlage SO” form. You determine the exact amount like this:

Disposal price (selling price) - (acquisition costs + disposal costs)

You must then pay tax on the surplus. Depending on the classification, the tax rate is between 0% and 45%, and the gain is included in the total taxable income.

In Germany, the tax return can be submitted to the tax office manually or electronically using Elster – Annex SO (Other Income). Important for your information is also the main form ESt 1 A.

If you have processed forward transactions, you also need the KAP investment form.

<div fs-richtext-component="info-box" class="info-box"><div class="flex-info-card"><img src="https://assets-global.website-files.com/65098a145ece52db42b9c274/650c6f4cef4c34160eab4440_Info.svg" loading="eager" width="64" height="64" alt="" class="icon-info-box"><div fs-richtext-component="info-box-text" class="info-box-content"><p class="color-neutral-800">Choosing the right forms is one thing. Filling them out correctly with the precisely calculated amounts in the corresponding lines is something else entirely. Blockpit generates a legally compliant tax report showing you exactly where you have to enter which contributions in your tax return.</p></div></div></div>

Do I Have to Declare My Complete Crypto Holdings or Only My Profits in My Tax Return?

You don’t have to declare how much cryptocurrencies or assets you own on your tax return.

However, you must declare gains for crypto assets that you hold for less than one year (365 days) and that exceed the 600€ exemption limit when sold.

Similarly, you must declare crypto income that exceeds the 256€ exemption limit as other benefits.

Basically, we recommend to record all these transactions and to be able to show them in case of need (e.g. also when “cashing out”).

You know how it is, better safe than sorry.

In addition to the name of the cryptocurrency, like Bitcoin, Ether or Solana, you also enter the date of purchase and sale, the selling price, the acquisition costs (purchase price) and income-related expenses here. Gains and losses from other sales transactions (for example, sales of art, gold or coins) must also be entered in the “Anlage SO” form.

When Is the Filing Deadline for the Crypto Tax Return?

Generally, a tax return is always filed for a year that has already passed. So if you want to do your crypto taxes for 2023, you can do it in 2024 at the earliest.

The German tax year starts on January 1st and lasts until December 31st.

The submission deadline for the 2023 tax return is 02.09.2024. This deadline applies to both online and paper submissions.

If you have your tax return prepared by a tax advisor, you even have until 31.07.2025.

Of course, it’s better if you don’t wait until the very last minute. If you file late despite the two additional months, you will have to pay a higher late filing surcharge.

Common Challenges with Crypto Tax Returns in Germany

The crypto jungle certainly still has one or two challenges to offer. Be it exchanges without complete transaction history, opaque DeFi platforms or complex margin and futures trading.

To prevent problems, make sure you have proper documentation already during your crypto activities.

Blockpit is a software solution that can connect to a variety of exchanges and wallets and automatically import transactions. All other transactions can be added manually.

Crypto Tax Software: Use Blockpit to Automate Your Crypto Tax Return

If you’ve ever filed a tax return, you know how many hours can go into research, documentation, and preparation.

With Blockpit’s legally compliant tax reports, you not only save yourself a lot of time, you also get a comprehensive overview of all your crypto transactions and ultimately exactly what you really need: a legally compliant PDF that you can easily submit to the tax office.

To give you a better idea of the whole thing, we show you the most important screenshots from a sample Blockpit tax report here. 

Want to have a look at every detail? Here’s the full PDF of our crypto tax sample report.

Crypto Tax Report Overview

This is what it looks like, the Blockpit tax report as a handy PDF that you can submit directly to the German tax office. Right at the beginning, it gives you an overview of your other income, any capital gains, and inflows related to cryptocurrencies.

Blockpit Crypto Tax Report Overview 2023

“Anlage SO” for Cryptocurrencies

Anlage SO (other income) is relevant for profits from the sale of cryptocurrencies and assets. 

Blockpit’s crypto tax calculator not only calculates the amounts to be declared for you, but also enters them in the correct field right away.

Blockpit Crypto Tax Report 2023 Anlage SO 1
Blockpit Crypto Tax Report 2023 Anlage SO 2

“Anlage KAP” for Cryptocurrencies

Income from capital assets is noted in Anlage KAP. This includes, for example, forward transactions, which are taxed with a flat rate final withholding tax of 25% plus the solidarity surcharge.

Blockpit Crypto Tax Report 2023 Anlage KAP

Individual Transaction List

With the exact listing of all your transactions, you always have the complete history of your crypto year in view. Great for a manual check and of course also as a documentation aid in case of any follow-up questions.

Blockpit Crypto Tax Report 2023 Individual Transaction List

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FAQ

When Do Taxes Apply to Cryptocurrencies?

If you invest in cryptocurrencies and assets such as Bitcoin or Ethereum as a private individual, you can trigger a tax liability. The prerequisite for this is that you have your residence or habitual abode in Germany (that is, you are in Germany for more than 180 days per year).

Crypto assets are considered other economic goods in Germany. The sale counts as a private disposal transaction, profits must therefore be taxed at the personal income tax rate. The amount of tax depends on your income and marital status (single or married).

In Which Cases Are Cryptocurrencies Tax-Free?

If you own cryptocurrencies for over a year that you did not receive from investment income (e.g. margin trading), then selling them privately is always tax-free, no matter how high your profit is.

In addition, simply put, there are two scenarios that exempt you from a tax burden:

  1. no tax-relevant events are realized. That is, there is simply no profit. (Why a tax return makes sense even in a loss scenario, you will learn a little further down).
  2. your profits remain below certain exemption limits.

How Long Is the Holding Period for Cryptocurrencies?

The holding period for cryptocurrencies is one year. If you own them for more than one year and did not receive them from capital gains (e.g. margin trading), then selling them privately is always tax-free, no matter how much your profit is.

What Is the Tax Rate on Crypto Profits?

The crypto tax rate is based on the ordinary personal income tax rate. This ranges from 14% to 45%. A solidarity surcharge is also applied.

What Is the Exemption Limit for Cryptocurrencies?

Your cryptocurrency gains are tax-free if they are less than 600€ per year. The 600€ is an exemption limit. This means that as soon as you exceed one euro, you have to pay tax on the entire profit (i.e. already from 601€).

Other benefits that amount to a maximum of 256€ per year are tax-free. This includes income from mining, forging, staking, lending and operating a masternode as well as airdrops for consideration.

Do Crypto Exchanges like Binance or Coinbase Report to the German Tax Office?

A blanket answer is not possible on this topic. Providers differ in the services they offer (exchange or marketplace) and the legal systems they are subject to. Here is a detailed list of some of the largest crypto exchanges with relevant information.

Can I Pay Taxes in Cryptocurrencies?

No, so far this is not possible in Germany.

Sources & References
Update Log

02/2024: Update for 2024 / New tax forms

Disclaimer: The information provided in this article is for general information purposes only. The information was completed to the best of our knowledge and does not claim either correctness or accuracy. For detailed information on crypto regulations, we recommend contacting a certified legal advisor in the respective country.