Need to know about crypto taxes in Germany? Cryptocurrency transactions are subject to Income Tax in Germany, but it pays to hodl. The German Federal Central Tax Office or Bundeszentralamt für Steuern (BZSt) has set out strict guidelines on how cryptocurrency buying, trading, and mining are taxed. This guide breaks down everything you need to know about crypto tax in Germany, how much tax you'll pay, how to file crypto taxes, and how to avoid crypto tax - legally - all ahead of the July 31st deadline. Find out more in our Kryptowährung Steuer Guide.
Yes. Crypto is taxed in Germany. The BSZt is clear that short-term capital gains from crypto held less than one year and any additional income from crypto - like mining or staking - is subject to Income Tax.
The tax rate you'll pay is the same as your regular Income Tax rate - up to 45% plus potentially the 5.5% Solidarity Tax. But if you hodl for a year, you'll pay no tax at all on your crypto gains.
One last thing before we start - the rules on crypto tax are in constant flux. At Koinly we keep a very close eye on the BZSt's crypto policies and regularly update this guide to keep you informed and tax-compliant.
Yes. The BZSt can track crypto. If you have an account with a European digital currency exchange, then it's likely that the Bundeszentralamt für Steuern (BZSt) already has your data.
When the European Union’s Sixth Anti-Money Laundering Directive comes fully into force on June 3, 2021, every company that provides financial services to cryptocurrency customers and businesses will have to comply with much tougher regulations about when and how they identify customers. Data is made available between EU member states in a bid to stamp out money laundering and illegal activities.
The new EU directive on data sharing - Dac8 - which will likely take effect later this year will give the Bundeszentralamt für Steuern the ability to check whether someone owns crypto. Under the proposed directive - it's likely the German tax office will have the authority to look into crypto companies' accounts and gain insight into crypto assets.
Unlike in many other countries, cryptocurrency is viewed as a private asset in Germany, as opposed to property - which has some distinct tax implications. It means crypto attracts an individual Income Tax, rather than Capital Gains Tax - but only in specific circumstances.
When you dispose of a private asset, like crypto, the tax rules change depending on how long you've held the asset for. If you've held your crypto for less than a year, you'll pay Income Tax on any profits from a disposal. Disposals include selling your crypto for EUR (or any other fiat currency), swapping your crypto for another cryptocurrency, or spending your crypto on goods and services. For short-term gains, each taxpayer is allowed up to €600 per calendar year tax free.
Meanwhile, if you've held your crypto for more than a year, you can dispose of your private asset completely tax free, so it pays to hodl!
As well as the above, there are some crypto transactions considered income - like mining or staking rewards - that you'll need to pay Income Tax on too. You'll only pay tax if you earn above the €256 threshold each year for additional income.
With that brief intro to crypto taxes in Germany out the way - let's take a quick look at the Income Tax rates to see how much you might pay.
In Germany your individual Income Tax rate is used to tax short term cryptocurrency gains. As well as Income Tax, everyone has to pay Solidarity Tax (Solidaritätszuschlag or 'Soli'). This surcharge is imposed as a percentage on all individual income taxes - but has been substantially reduced as of 2021. The Income Tax rates for the 2022 financial year are:
The German Income Tax rates for the 2023 financial year are:
Remember, the decisive factor for whether or not you'll pay tax on profits from selling, swapping, or spending crypto is the holding period. If you've held your crypto for more than one year, your profits are exempt from tax. If you've held your crypto for less than one year, your profits will be taxed at your regular Income Tax rate from the tables above.
The BMF has also recently clarified that this year holding period also applies to crypto that you've lent or staked - so provided you've held your asset for more than one year, even if you've staked or lent it, it is tax free. Previously many investors believed this holding period was 10 years.
If you've sold, swapped, or spent crypto within one year and made a loss instead of a profit, you won't pay tax on it. However, you should track these losses as you can offset these losses against your profits to reduce your overall tax bill. If you have no profits to offset losses against, the German Tax Act allows taxpayers to carry forward losses to future financial years to offset against future gains.
You may be able to claim lost or stolen crypto as a loss with the BZSt. In order to claim this loss, you need to be able to provide certain evidence. This includes:
Like many other tax offices, the BZSt is yet to release detailed guidance on DeFi as a relatively new market... but that doesn't mean you won't pay tax on your DeFi investments. Instead, you need to interpret the current guidance on crypto tax from the BZSt and apply it to your DeFi transactions (or better yet, have an experienced crypto accountant do it for you).
We have an entire guide dedicated to navigating DeFi tax in Germany - but in brief, there are a couple of potential tax implications:
Although they're unique by nature, NFTs will largely be treated the same as any fungible coin or token in Germany from a tax perspective, although there may be different tax implications if you're an NFT creator.
Selling or swapping NFTs? Or even buying NFTs with crypto? It all depends on how long you've held the asset - if it's less than one year, any profit is subject to Income Tax, if it's more than one year, it's tax free.
Meanwhile, if you're minting and selling NFTs as an artist - this income may be considered income from artistic activity or commercial income and you will need to pay Income Tax, plus potentially Trade Tax. Since the BMF has released no guidance on this yet, we recommend you consult with a crypto accountant.
Whether you're mining Bitcoin, Dogecoin, or Monero, the tax implications are the same. The BZSt is clear that crypto mining rewards are additional income and subject to Income Tax, less expenses.
To calculate what you owe, take the fair market value of your coins on the day you received them in EUR.
You'll also need to calculate any expenses, for example, electricity or equipment costs. You'll pay tax at your normal Income Tax rate on any profit after subtracting your expenses.
You'll also pay Income Tax on any profit when you dispose of any mined coins if you've held the coins for less than a year.
Although PoS and PoW are vastly different consensus mechanisms - from a tax perspective, the rewards are treated the same. The BZSt says you'll pay Income Tax on staking rewards based on the fair market value of any coins in EUR on the day you received them.
An important thing to note regarding staking taxes that the BZSt has now clarified is the holding period for staked tokens. Originally, investors thought that they'd pay Income Tax on any profits from disposing of staked tokens held for less than 10 years. However, this has now changed to the standard one-year holding period.
This means you'll only pay Income Tax on profits when you dispose of staked tokens if you've held them for less than one year, otherwise, it's tax free.
You won't pay tax on crypto profits when:
You'll only pay tax, as 'other income' on crypto gains:
Although crypto tax (crypto steuern) can get complicated - from a simplistic perspective, there are only two potential tax implications in Germany when it comes to your crypto.
Here's a breakdown of the most common crypto scenarios and the type of tax liability they result in:
In Germany, if you sell bitcoins or any other cryptocurrency within twelve months of buying, you will need to pay Income Tax. When trading cryptos privately, it is regarded as any other private trade, for example, selling your car. In a private trade in Germany, you only have to pay taxes on any profits you generate with that trade and only if you sell that item within one year of buying it.
This means that whenever you sell something that you have owned for more than one year, you do not have to pay taxes on the profits you generated with that trade.
To avoid this, you would need to sell for under €600 or wait for a year to pass before you sell.
Hilda buys 0.1 Bitcoin in July for €1,000 and sells it in November for €1,800. As she sold her crypto within the same year as buying it and the profit exceeded the €600 tax-free cap. Hilda has effectively added €800 to her annual income. She will be taxed on this gain, according to her Income Tax bracket.
Trading one crypto for another (i.e. BTC → ETH) is a taxable event in Germany if a profit is made exceeding €600, and if that gain is made in the same year as the initial crypto purchase was made.
A stablecoin - like USDT or BUSD, is simply a class of cryptocurrency that offers price stability. That's because stablecoins are backed by a reserve asset, usually a stable fiat currency like USD or EUR. The sale of a stablecoin will attract tax if the value exceeds €600 in a single financial year.
ICOs (Initial Coin Offerings) or IEOs (Initial Exchange Offerings) refer to a situation where investors can purchase tokens/coins in a yet-to-be-released cryptocurrency/company. This purchase usually happens via an existing cryptocurrency like Bitcoin or Ethereum.
From a German tax perspective, this could amount to a crypto-to-crypto trade. The taxable event is triggered on the date of the ICO transaction when you receive the new tokens. When you sell the new tokens at a later date, the cost base of that transaction will be the value of the cryptocurrency that you paid for it on the date of the ICO/IEO.
You will only be taxed if you dispose of the new coins within a year of purchase.
Though they're often lumped in the same breath, margin trading, derivatives, and futures all have different tax treatments. It's important to note the BZSt has not released guidance on the tax implications of crypto margin trading, crypto derivatives, and crypto futures yet - however they have guidance on these products in traditional markets.
Margin trading? Profits from margin trades can only be classified as capital income if no crypto is delivered but the difference is settled. Meanwhile, if crypto is delivered, this would be viewed as a private sales transaction instead. These two have different tax treatments:
Capital income is taxed at a flat 25% rate (known as a withholding tax).
Private sales transactions are taxed at your regular Income Tax rate if the income is from an asset held for less than one year. More than one year and your profits are tax free.
It's also important to note for capital income that you can only deduct up to €801 per year in income-related expenses (for example trading fees) and the one-year holding period does not apply.
Meanwhile, for derivatives, the tax paid depends on the specific product. Similar to margin trades - it depends on whether the investor ends up acquiring the underlying crypto asset. If your product does not result in you acquiring crypto and instead you end up with the settlement of the difference, the profits will be viewed as capital income and taxed at a flat 25% rate.
Meanwhile, if you end up acquiring crypto at the point you close your position, this will be viewed as a private sales transaction and profits will be subject to the Income Tax rate.
It's important to note that for all of these transactions - you'll only be liable for tax at the point you close your position.
Another important thing to consider is there was a change in the law in 2021 that means for many futures transactions (and potentially some other derivatives products and margin trades) that losses can no longer be offset against income from capital assets without restriction. To elaborate, losses from futures transactions may only be offset against profits from futures transactions and income from options transactions - and there is a €20,000 loss offset limit.
We recommend you speak to a crypto accountant to help you navigate your tax burden when dealing with crypto margin trades, derivatives, or futures.
Purchases of goods and services with crypto are treated the same as trading crypto in Germany. For example, if you acquire €7,000 worth of ETH and purchase a gaming PC with that crypto when it’s now all worth €9,000, you will be taxed on the €2,000 net gain on that crypto as if it were income.
You could, however, avoid this tax if you held the ETH for a year before making your purchase. Gains after one year of purchase are tax free.
If you use a staking or lending protocol (or indeed a non-custodial wallet for staking as part of a PoS consensus mechanism), the tax rules change. Prior to April 2022, if you sold crypto used in a staking or lending protocol within 10 years, you'd pay Income Tax on that crypto. However, this has now been changed to a 1-year holding period. So if you sell crypto you've used in a staking or lending protocol within 1 year, you'll pay Income Tax on any profit from that crypto.
Whether you are freelancing or working for a company that pays employees in crypto, you can't escape Income Tax.
Any crypto - BTC or otherwise - received as income is taxed at market value at the time you received them so make sure you declare this income on your annual tax return or you might end up facing the tax hammer.
Any crypto you get in return for signing up or referring users to a service is taxed as income upon receipt.
The BMF has clarified that there are some specific circumstances in which private investors may be taxed upon receipt of an airdrop of crypto. This includes when you receive the airdrop in exchange for a service - such as sharing a social media post or personal information.
If you don't receive your airdrop in exchange for a service or action - this would not be subject to Income Tax.
The BMF is clear that many mining operations may be viewed as commercial operations and subject to Income Tax net expenses. This means that where individuals do pay Income Tax on their mining operations - they'll only pay tax on any profit they've made minus any expenses, for example, electricity costs, equipment costs, and so forth.
Mining rewards may not be subject to Income Tax when they do not exceed the legal threshold amount (Freigrenze) of €256 per calendar year as per Section 22 no. 3 sentence 2 German Income Tax Act (EStG).
Like mining, The BMF is clear that staking rewards may also be subject to Income Tax for private investors. This includes both staking as part of a PoS mechanism and staking pools.
Staking rewards under the legal threshold (Freigrenze) of €256 per calendar year per Section 22 no. 3 sentence 2 German Income Tax Act (EStG). This refers to all additional income, however, so your staking rewards plus any other additional income from other avenues.
In Germany, if you've owned crypto for over a year - the sale is tax free regardless of the amount you profit by selling them. Furthermore, you don’t need to declare them in your tax return!
Giving Bitcoin or other crypto to your family or friends as a gift is regarded as any other gift in Germany. Gifts are tax-free up to a value of €20,000 for friends and up to €500,000 for spouses. Any higher value is taxable under the “Schenkungssteuer”, which has different tax rates depending on who you gift it to (i.e. spouse, your children, your parents, your siblings, or friends). The tax rates for gifts range from 7% up to 50%. The tax exemption limits are renewed after 10 years.
In Germany, if you sell bitcoins or any other cryptocurrency within twelve months of buying, up to €600 earned with crypto trading is tax-free. This is according to rule 23 EStG, where private sales that do not exceed €600 are tax exempted.
Like in most parts of the world, there are no taxes on buying or HODLing cryptocurrencies in Germany. However, keeping accurate records of the purchase is very important so that you can calculate the cost basis of the transaction when you decide to sell or 'dispose' of your crypto.
Koinly is not just crypto tax software, but a crypto portfolio tracker too - the perfect tool to keep records of your crypto purchase and sale dates.
In Germany, crypto can be sold tax free if it was held for over 1 year. Previously, if you've used crypto in a staking/lending protocol, you'd need to hold this crypto for 10 years for it to be tax free. However, this has now changed to the same 1 year holding period as of April 2022.
In the context of an airdrop, a trader receives crypto without having purchased it or provided any other service for them. The cryptocurrencies are not transferred to the user from the legal sphere of a third party. Rather, they come into 'existence' only in the user's assets. The cryptocurrency is created directly in the wallets of the users, and the wallets must fulfill certain criteria. In this respect, airdrops resemble a lottery win or a chance find (so-called windfall profits).
In the absence of a purchase transaction, taxation in accordance with Section 23 (1) No. 2 of the German Income Tax Act (EStG) is not possible in the case of a subsequent sale. If the user does not provide services, other income as defined by Section 22 No. 3 EStG is also not applicable. Therefore the sale of airdrops is tax-free, provided the recipient did nothing in return (like sharing a social media post) in exchange for the airdrop.
Moving crypto between different exchanges, wallets or accounts is not a taxable event and doesn't trigger income tax. Having said that, it's important to keep track of these movements. Try an automated crypto tax software like Koinly to keep track of your cost basis.
While transferring crypto may be tax free, transfer fees may not be. You can learn more about transfer fees and how to deal with them in our guide.
The BMF has clarified that for private investors, you do not need to pay Income Tax upon receipt of crypto as a result of a hard fork. However, if you sell this crypto within one year of receipt, you'll need to pay Income Tax if it's valued at more than €600.
The BMF's updated guidance makes it clear that the type of token is important when considering the tax implications. In the instance of utility tokens, receiving and redeeming utility tokens would not be subject to income tax. For example, if you received Brave's BAT tokens and used them to tip a content creator, this may not be subject to Income Tax. However, as many utility tokens hold real-world value - this would not always be the case.
Now you know how crypto is taxed in Germany, let's take a look at how to calculate and file your crypto taxes - as well as how to pay less tax!
Once you've identified all your various taxable transactions, you need to calculate your total profits and income for the financial year and file these figures with the BZSt. There are 4 ways to tackle this:
The BMF guidance states that FIFO is the preferred method for calculating your crypto taxes if units cannot be specifically identified. This means you sell the coins you bought first and use this to calculate your subsequent proceeds and profits.
The German tax year runs from January 1 to December 31. Technically, the tax deadline is on the 31st of July each year. However, if this falls on a weekend it will fall on the next working day.
The BZSt wants to know about your crypto activity in terms of income and profits made from crypto trades, swaps, and sales. You'll need to declare this in your annual tax return (Einkommensteuererklärung), in the same way, you need to report your regular income, gains, and losses.
If you’ve sold, traded, spent, or earned cryptocurrency in the last financial year, you will need to declare your crypto totals on your Income Tax Return. You will need to declare this as 'other income' on a separate form from your main income declaration form.
Once you or your accountant has calculated your German crypto tax (we have an app for that!), the easiest way to file your taxes is via 'ELSTER', the BZSt's online tax platform (Elektronische Steuererklärung).
You also have the option of declaring your crypto activity on paper and posting your tax forms to your local tax office (Finanzamt).
To file your German crypto tax declaration, you'll may need 2 forms, one for general income, Hauptvordruck ESt 1 A, and one for your crypto income, Anlage SO.
Any German resident who has earned income or made capital gains (not just from crypto).
This form requires you to enter your regular income tax information.
Anyone who has traded in cryptocurrency in the last financial year.
This form requires you to enter your crypto income & gains.
Most tax offices around the world require residents to keep detailed records of cryptocurrency transactions for 5 years. Germany is no different. It's advisable to keep the following records:
Koinly can help with record keeping. By syncing your wallets and exchanges to your Koinly account, you will have one central dashboard from where to record and view all of your crypto activity. Portfolio tracking is available on a free Koinly plan.
There are a few ways you can reduce your tax bill in Germany. Read our how to avoid crypto taxes guide, but here are some quick tips:
The BZSt is focused on ensuring all taxpayers meet their tax obligations. If you’re not sure whether you’ve correctly reported your crypto taxes over previous years, it’s best to be proactive and amend your previous tax reports.
Tax evasion in Germany is a criminal offense with a maximum sentence of five years, as well as a monetary fine.
Whether you prefer to use heavy hitter exchanges like Binance and eToro, or you're all about self-custody and use wallets like MetaMask and Ledger - Koinly can help. Just connect your exchange, wallet, or blockchain and Koinly will get calculating. Here's how it works in 7 steps:
Got more on your mind? Here are our most frequently asked questions about crypto taxes in Germany.
Yes, cryptocurrency is legal in Germany. The BaFin crypto regulations and KWG (German Banking Act) state individuals and businesses may buy, sell, and trade cryptocurrencies. However, cryptocurrencies are not recognised as a form of legal tender in Germany. Instead, they're seen as "units of account".
Yes, Bitcoin mining and other crypto mining is legal in Germany. However, if you're operating on a commercial level you may need a BaFin license.
You can find the BMF guidance right here - although it's a lot of jargon!
Yes, Binance is allowed to operate in Germany and is a safe and popular crypto exchange for German crypto investors.
Day trading on a regular and repetitive basis - especially where it is a main source of income - may be considered a commercial activity by the BZSt and therefore you may not benefit from the same tax breaks crypto as a private asset enjoys. You should speak to a crypto accountant for personalised advice on whether your crypto day trading activities may amount to commercial activities.
You may have noticed that Binance and many other crypto exchanges removed futures and other derivatives products from their site for German investors (as well as across many other European countries). Much of this restriction is proactive - the EU and other EEA countries have been putting pressure on crypto exchanges to offer responsible investment opportunities, and crypto futures often don't fit that description due to a lack of in-depth understanding from customers. However, this restriction doesn't mean crypto futures are actually banned in Germany and some exchanges still offer these products.
Despite being pegged to another asset - stablecoins are treated exactly the same way as other cryptocurrencies or NFTs from a tax perspective - so the taxation (or lack thereof!) all comes down to how long you've held the asset and the specific transaction, as well as how much you've earned in a year. You'll pay Income Tax on profits when you sell, swap or spend stablecoins you've owned less than a year, as well as earn an income in stablecoins. Meanwhile, you'll pay no tax at all when you sell, swap, or spend stablecoins you've owned more than a year, or if you earn less than €600 in a year in capital gains (or €256 a year for additional income through staking, etc.).
The information on this website is for general information only. It should not be taken as constituting professional advice from Koinly. Koinly is not a financial adviser. You should consider seeking independent legal, financial, taxation or other advice to check how the website information relates to your unique circumstances. Koinly is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly, by use of this website.