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 is 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 in our Kryptowährung Steuer Guide.
How much tax do you pay on crypto in Germany?
In Germany, you'll pay Income Tax on short-term capital gains and from most crypto income like mining or staking. The tax rate you'll pay is the same as your regular Income Tax rate - up to 45% plus the 5.5% Solidarity Tax. But if you hodl for a year, you'll pay no tax at all on your crypto gains. Learn more in our Kryptowährung Steuer Guide.
This guide is regularly updated
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.
26 July 2022: Updated tax deadline.
31 May 2022: Updated BMF guidance and new tax forms.
3 May 2022: Updated to reflect new rules on staked crypto (now tax free after 1 year!)
15 February 2022: Updated to reflect impending EU Dac8 directive.
25 November 2022: Updated for the 2022 tax year.
18 May 2021: Welcome to your German cryptocurrency tax guide.
Can the BZSt track crypto?
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.
How is crypto taxed in Germany?
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.
German Income Tax Rate
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'), which is capped at 5.5% of income tax. This surcharge is imposed as a percentage on all individual income taxes. .
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.
Crypto losses in Germany
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.
Hacked or stolen cryptocurrency
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:
- The wallet address that the key belongs to
- When you acquired the key and when you lost it
- The cost of acquiring the stolen/lost cryptocurrency
- The fact that the wallet was controlled by you
- The amount of cryptocurrency at the time that you lost the key
- That you possess the hardware where the wallet is stored
- The transactions to the wallet from an exchange which is linked to your identity
Tax free crypto Germany
If you have owned crypto for over a year, the sale is tax-free regardless of the amount you profit when selling.
You won't pay tax on crypto profits when:
- If you sell, swap or spend your crypto after owning it for 1 year or more.
- If the total profits from your short-term investments are less than €600 per annum.
- If you earn less than €256 in additional income from crypto (and other sources) throughout the financial year.
When will you pay tax on crypto in Germany?
You'll only pay tax, as 'other income' on crypto gains:
- If you sell crypto in the same year you bought it and realise a profit over €600.
- If you sell crypto used in staking/lending protocols within one year.
- When you're mining, staking or otherwise earning an income from crypto.
Now that you know the basics, let's explore Germany's bitcoin & crypto tax rules in more detail...
Income Tax vs Tax Free
Although crypto tax (crypto steuern) can get complicated - from a simplistic perspective, there's only two potential tax implications in Germany when it comes to your crypto.
- Taxed: short-term profits (exceeding €600) when you sell, swap or spend crypto you've held less than one year, as well as earning crypto through things like mining or staking.
- Tax free: long-term profits from selling, swapping or spending crypto you've held more than one year, short-term profits under €600 and additional income less than €256, as well as a variety of other crypto transactions like buying crypto, hodling crypto and gifting crypto.
Here's a breakdown of the most common crypto scenarios and the type of tax liability they result in:
Taxed Crypto Transactions Germany
Selling crypto for more than €600 within 1 year
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 like 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 has 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 or exchanging crypto held less than 1 year
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.
Trading with stablecoins held less than 1 year
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.
Participating in an ICO/IEO
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 likes 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 from purchase.
Crypto margin trading and derivatives
Though they're often lumped in the same breath, margin trading, derivatives and futures all have different tax treatment. 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 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.
INCOME TAX OR 25% FLAT TAX
Spending crypto within a year
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.
Selling staked/loaned crypto within 1 year
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.
Getting paid in Bitcoin or cryptocurrency
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 are 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.
Sign ups and referral bonuses
Any crypto you get in return for signing up or referring users to a service is taxed as Income.
Receiving an airdrop in exchange for an action or service
The BMF have 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 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).
INCOME TAX NET EXPENSES
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.
Tax Free Crypto Transactions
Selling crypto held for over a year
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!
Gifting crypto to friends & family
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.
Earning less than €600 in short-term gains and income in a year
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.
Buying cryptocurrency with EUR
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.
Staked/loaned crypto sold after one year
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.
Receiving an airdrop when you didn't do anything in return
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 share a social media post) in exchange for the airdrop.
Transferring crypto between wallets
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.
The BMF have 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.
Receiving and redeeming utility tokens
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.
Want to learn about German DeFi tax? See our guide.
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!
How to calculate your crypto taxes
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's 4 ways to tackle this:
- Use a crypto tax calculator like Koinly to create a report of crypto activity. Send the report to your accountant to complete your tax return. Super accurate, super easy.
- Use a crypto tax calculator like Koinly to create a report of crypto activity. Add the necessary data to your tax return and file it yourself. Accurate, and easy, if you know what you're doing.
- Get your accountant to work out your crypto activity by supplying transaction histories, statements, etc. Let them work it out and file for you. Not very accurate, lots of admin.
- Work out your activity yourself, and file yourself. Best of luck to you.
German cost basis method
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.
German Tax Deadline
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 to the next working day. If you are completing your tax return for 2022, it needs to be filed by the 31st of October 2022.
How do you report crypto tax in Germany?
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 to 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).
German Crypto Tax Filing Forms
To file your German crypto tax declaration, you'll need 2 forms, one for general income, Hauptformular ESt 1 A, and one for your crypto income, Anlage SO.
Hauptformular ESt 1 A (General Tax Form) - 2021
WHO NEEDS TO FILE THIS?
Any German resident who has earnt income or made capital gains (not just from crypto).
WHAT INFORMATION IS NEEDED?
This form requires you to enter your regular income tax information.
Hauptformular ESt 1 A (general tax form): This details your regular income such as a salary and your German bank account information.
Anlage SO (for other income) - 2021
WHO NEEDS TO FILE THIS?
Anyone who has traded in cryptocurrency in the last financial year.
WHAT INFORMATION IS NEEDED?
This form requires you to enter all your crypto income totals (income and gains).
Anlage SO (Other income tax form): You must declare your profit from trading in cryptocurrencies in Annex SO (Other Income).
Keep records of crypto investments
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:
- the date of your crypto transactions
- the value of the cryptocurrency in Euro at the time of the transaction (which can be taken from a reputable online exchange).
- what the transaction was for and who the other party was (even if it’s just their cryptocurrency address).
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.
How to pay less crypto tax in Germany
There are a few ways you can reduce your tax bill in Germany...
- HODL to benefit from tax free disposals after 1 year.
- Utilise tax free thresholds under the German Income Tax Act (€600 on short-term investments and €256 in additional income).
- Track, harvest and offset losses against gains to reduce your overall tax bill.
- Be strategic with the assets you use in DeFi investments.
- Gift crypto to your spouse if they're in a lower tax bracket.
- Deduct expenses like gas fees, ledgers, tax software preparation costs and mining expenses.
What happens if I don't file my cryptocurrency taxes?
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 offence with a maximum sentence of five years, as well as a monetary fine.
Use Koinly to do your German crypto taxes
While the task of preparing your crypto taxes can seem quite daunting - especially if you traded on multiple exchanges - there are tools like Koinly which can make your life really easy.
Here's how it works with Koinly so you can see for yourself:
1. Connect your exchanges and wallets
Most exchanges have API's that can allow Koinly to download your transaction history automatically. You can also import CSV or excel files with your transaction history if you prefer that (or if your exchange does not have an API).
2. Preview your tax summary
Koinly does a number of things under the hood in order to calculate your capital gains and income.
First, it fetches the market rates at the time of your trades, then it matches transfers between your wallets and exchange accounts and finally it calculates your capital gains. You can easily configure the accounting method used for the gains (it supports FIFO, LIFO, HIFO, Spec ID and a number of other methods). The default in Germany is FIFO as recommended by BMF guidance.
All this is automated so the only thing you have to do is head over to the Tax Reports page to see a summary of your gains:
Note that you can also use the Dashboard to stay on top of your taxes as you carry out trades. This can help you make good tax-friendly trades and avoid surprises at tax time! It also helps with record-keeping.
3. Download your tax reports
The final step is to download your tax reports. The tax report you want is called the Complete Tax Report.
Got more on your mind? Here are our most frequently asked questions about crypto taxes in Germany.
Is cryptocurrency legal 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".
Is crypto mining legal in Germany?
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.
Where can I find the Germany cryptocurrency regulation?
You can find the BMF guidance right here - although it's a lot of jargon!
Is binance legal in Germany
What about crypto day trading steuern?
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.
Are crypto futures legal in Germany?
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.
What about stablecoin steuern?
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.