Have you dabbled in cryptocurrencies and are not quite sure how crypto is taxed in Germany? Similar to most other countries, you need to pay the tax man if you made gains on your crypto. But luckily, you can keep all the profits yourself under special circumstances according to current tax rules from the German Federal Ministry of Finance, or Bundesfinanzministeriums (BMF). In this complete tax guide, you will learn everything you need to know about how crypto is taxed in Germany, how much tax you pay on your crypto gains, how to calculate your crypto taxes, how to reduce your taxes by hodling your crypto, how to file your crypto taxes to the BMF, and how to use a crypto tax calculator to generate all the tax reports you need.
Just a heads up! This guide is quite extensive due to the complex nature of cryptocurrency taxes. While we recommend reading this guide from A to Z the first time to make sure you don’t miss out on anything important, you can also use the menu navigation on the right side to jump to any specific crypto tax question later.
We are also updating this guide regularly based on the latest tax guidelines and statements from the BMF and the German Federal Central Tax Office, or Das Bundeszentralamt für Steuern (BZSt). All updates will be listed below so that you can quickly see if anything has been updated since your last visit:
Latest updates
- September 4, 2022: Staking section updated – corrected a previous error regarding the time of acquisition considered for selling coins previously deposited to a staking pool. Added new section Receiving cryptocurrency as a gift.
- July 22, 2022: The first version published
Let’s start with the most important question of all…
Do you pay taxes on crypto in Germany?
Yes, but it depends. Short-term gains and crypto income are taxed similar to ordinary income for German taxpayers. This means that any cryptocurrency sold during the tax year that you made profits on must be reported to the BZSt each year. However, if you hold your coins for one year or longer, the gains are completely tax-free.
In the next section, we will look closer at how crypto is actually taxed in Germany.
How is crypto taxed in Germany?
According to German law, all cryptocurrencies are considered a “digital representation of value” that is neither issued nor guaranteed by a central bank or public authority. This means that crypto assets do not have the legal status of money or currency, also called legal tender, but are instead treated as private goods from a tax perspective.
Because cryptocurrencies are considered private goods, they don’t attract Capital Gains Tax such as equities or stocks do. Instead, crypto gains are taxed as Income Tax, but only if you held the cryptocurrency for less than 12 months before you sold. Like in most other countries, all transactions where you dispose of a cryptocurrency are considered taxable events in Germany. This includes selling crypto for fiat currency such as Euro or US dollar, converting one cryptocurrency to another, or paying for goods or services with crypto.
If you wait one year before selling your coins, you don’t need to pay any taxes at all! This is great news for German crypto investors who have the patience to not sell too early.
In addition to taxes on cryptocurrency disposed of, you might also need to pay Income Tax on crypto received from staking, mining, airdrops, etc. We will explain these tax topics in more detail later in this guide.
Germany crypto tax rates
All short-term cryptocurrency gains are taxed as Income Tax according to your individual Income Tax rate in Germany. This means that depending on your total income during the tax year, you will pay anywhere from zero to 45% tax on your crypto gains.
| Income | Single taxpayers | Married taxpayers |
|---|---|---|
| 0% | €0 – €10,347 | €0 – €20,694 |
| 14 – 42%* | €10,348 – €58,596 | €20,695 – €117,192 |
| 42% | €58,597 – €277,825 | €117,193 – €555,650 |
| 45% | €277,826+ | €555,651+ |
* Geometrically progressive rates start at 14% and rise to 42%.
Please note that the tax rates above do not include the solidarity surcharge tax of 5.5% which is imposed on single taxpayers paying more than €16,956 in income tax as well as married taxpayers paying more than €33,912.
How to calculate capital gains in Germany
A capital gain occurs when you sell a cryptocurrency for more than what you originally paid for it. On the other hand, a capital loss occurs if the sales price is lower than the purchase price. All values used to determine a capital gain or loss for German taxpayers must be in Euro at the time when the transaction happened.
The general formula for calculating capital gain is:
capital gain = selling price – purchase price
The selling price is simply the value of the crypto sold at the time of the transaction. This value can be found directly from the exchange or from popular price aggregator sites. The purchase price can be more tricky to figure out since you need to look up what you originally paid for the coins that you sold. If you are not able to establish the purchase price, a conservative approach is to consider the value to be zero. However, this means that you need to pay tax on the full amount, and therefore more tax than you actually should.
According to the latest crypto tax guideline issued by the BZSt on May 10, 2022, the purchase price, or cost basis, can be calculated using individual identification when possible and as long as it can be documented. However, when this is not possible, the recommended accounting method is First in First out (FIFO) which means that the oldest coins are sold first.
A cryptocurrency tax calculator like Coinpanda supports both FIFO, LIFO, and HIFO cost basis methods and will calculate your capital gains for all cryptocurrency transactions automatically.
Germany tax-free crypto
The biggest advantage for German taxpayers is that any gain from crypto hold for more than a year is not taxed at all. It does not matter how much gain you actually made, only the holding period before the coins were disposed of.
Let’s look at all the different tax-free situations in Germany:
- If you hold your cryptocurrency for one year or longer
- If your total profits from short-term gains are less than €600 during the tax year
- If your total income from crypto (staking, mining, etc) is less than €256 during the tax year
Next, we will look at the different crypto tax rules in Germany in more detail.
Taxable transactions in Germany
For most crypto users in Germany, the most important thing to keep in mind is that crypto sold within one year is taxed as income according to the crypto tax guidance issued by BMF. However, there are also other transactions that might trigger income tax.
Let’s break it all down:
Selling cryptocurrency for fiat currency within 1 year
Cryptocurrency sold within one year after buying is taxed as income in Germany. This is because cryptocurrency is considered private goods in Germany and is therefore not taxed in the same way as for example stocks and equities.
Note that you are only taxed if the total short-term profit during the tax year exceeds €600.
Selling crypto for another crypto within 1 year
The latest tax guidance issued by the BMF clearly states that exchanging one cryptocurrency for another is a taxable event – as long as you held the coins for less than one year. This means that trading one crypto for another is taxed as income tax in Germany if your total profits exceed €600 during the tax year.
Further, the guidance states that the sales proceeds should be accounted for in Euro by looking up the fair market value of the cryptocurrency received. If you cannot value the crypto received at the time of the transaction, you can find the market value in EUR of the cryptocurrency sold instead.
Spending crypto within 1 year
Cryptocurrency used to purchase goods or services is considered similar to selling crypto and is therefore also taxed as income if the coins were sold less than one year after the initial acquisition.
Investing in an ICO or IEO
The BMF has clarified the tax treatment of ICOs and IEOs in the latest guidance from May 2022. Since this is essentially similar to exchanging one crypto for another crypto, such transactions are also treated similarly for tax purposes. This means that if you invest in token XYZ and pay with Bitcoin, you will have to calculate the profits on the Bitcoin disposed of. You will need to use the fair market value of Bitcoin on the date you made the investment. This value will also become the acquisition price, or cost basis, for the newly purchased tokens.
The transaction will be taxed as income if you made a profit and held the coins for less than a year. If you held the coins for more than a year, the profits are tax-free as already discussed.
Selling of staked cryptocurrency within 1 year
Good news for all DeFi enthusiasts in Germany – the tax-free holding period for staked crypto has been reduced from 10 years to one year. This means that depositing crypto to a staking pool will not change the holding time requirement since the one-year period is still calculated from the time of acquisition rather than the time of withdrawal from the staking pool.
The same rules apply to cryptocurrency deposited into decentralized lending protocols and also centralized lending platforms.
Tax on cryptocurrency mining rewards
The BMF has provided detailed clarifications on the topic of cryptocurrency mining in the latest guideline. What is important to know with regard to taxes is that hobby miners with an annual turnover of less than €256 do not need to report the income to BZSt in the annual tax return.
However, if the total amount exceeds this threshold during the tax year, the total amount is treated as ordinary income and is subject to income tax similar to short-term gains. You are also allowed to deduct any directly related expenses from the total profits such as hardware or electricity cost, so keep this in mind when working out your total profits during the year.
In addition, you are also required to register as a business and pay the associated one-time fee if your annual turnover exceeds €256.
Tax on cryptocurrency staking rewards
Cryptocurrency received as staking rewards is treated similarly to mining rewards. This means that you are only taxed on your staking rewards if the total amount during the tax year exceeds the threshold of €256. Similarly to mining, you are also required to register as a business if you receive staking rewards exceeding the threshold.
Tax on cryptocurrency airdrops
Airdrop of a cryptocurrency or token is often done as part of a marketing or advertising campaign. In some cases, you will need to register before a deadline to become eligible to receive tokens. You may also receive tokens just from holding another cryptocurrency in your wallet or on an exchange, or the airdrop might be given to people who perform specific actions such as sharing social media posts or inviting people to a Discord channel.
The BMF has clarified that airdrops are taxed as income tax only if the airdrop has been received in exchange for a service. This means that if you received the airdrop without doing any specific actions, the airdrop is considered tax-free. However, if you provided a service of any kind such as sharing social media posts or creating content, the airdrop will be taxed as income tax.
Tax on received interest
If you are lending out your cryptocurrency on an exchange or DeFi protocol and are paid interest from the deposited collateral, you need to pay income tax on the amount received. You should use the fair market value at the time of receipt when calculating the value of the interest payments.
Other crypto income
Today, some employers are giving the option to their employees to have their salaries paid out in cryptocurrency instead of Euro. The BMF states that crypto received as payment for salary is considered a normal salary and is therefore taxed equal to other income paid in Euro directly.
Example 1
Benjamin bought 4 ETH for €600 in 2020. One year later he buys another 2 ETH for €2,000 in April of 2021. Now, Benjamin owns 6 ETH which he has paid a total of €2,600 for.
In February of 2022, Benjamin decides to sell his entire investment. He sells 6 ETH and receives €15,000 in exchange. His transactions can be seen in the below table:
| Type | Date | Amount | Price | Cost Basis | Profit/loss |
|---|---|---|---|---|---|
| Buy | 2020-06-08 | 4 ETH | €600 | €600 | – |
| Buy | 2021-04-17 | 2 ETH | €2,000 | €2,000 | – |
To calculate his capital gains Benjamin needs to calculate the two disposals separately to take advantage of the tax-free short-term gains when he reports his taxes.
- Price of 4 ETH sold: 4/6 * €15,000 = €10,000
- Price of 2 ETH sold: 2/6 * €15,000 = €5,000
| Type | Date | Amount | Price | Cost Basis | Profit/loss |
|---|---|---|---|---|---|
| Buy | 2020-06-08 | 4 ETH | €600 | €600 | – |
| Buy | 2021-04-17 | 2 ETH | €2,000 | €2,000 | – |
| Sell | 2022-02-28 | 4 ETH | €10,000 | €600 | €9,400 (tax-free) |
| Sell | 2022-02-28 | 2 ETH | €5,000 | €2,000 | €3,000 |
Now that Benjamin has worked out his capital gains, he simply needs to report the €3,000 gains on the annual tax return so that he will be taxed according to his Income Tax rate. The long-term gains of €9,400 are tax-free since he held the coins for longer than one year.
Tax-free transactions in Germany
Compared to many other countries, Germany is rather tax-friendly when it comes to cryptocurrency taxation and German taxpayers can enjoy several tax breaks on their crypto.
Buying cryptocurrency with fiat (Ex: EUR → BTC)
The BMF and BZSt do not consider buying crypto and paying with fiat currency a taxable event. This is because only the currency disposed of is considered for Income Tax purposes.
It’s important to keep track of all your purchases and complete transaction history so that you can calculate the purchase price correctly when you sell the cryptocurrency in the future.
Selling cryptocurrency after 1 year
Cryptocurrency held for one year or longer is always tax-free in Germany. That means if you have the patience to hold your coins for one year or longer before selling, you don’t even need to report your gains to the BZSt the next year!
Gifting cryptocurrency to another person
Gifting cryptocurrency to a friend or family member is considered equal to gifting any other type of private good in Germany and is tax-free up to the maximum threshold of €20,000 for friends and €500,000 for family members. The thresholds are based on the total value gifted during a period of 10 years.
If you gift cryptocurrency exceeding the threshold values, the gains are taxed according to rules for Schenkungssteuer where the tax rate varies based on your relation to the person who receives the gift.
Receiving cryptocurrency as a gift
You do not pay any taxes on receiving cryptocurrency as a gift from a friend or family member. The cost basis and acquisition date of the received coins are also transferred from the sender to the receiver. This means that if you are gifted cryptocurrency that was acquired less than 12 months ago, you need to wait until 12 months have passed to avoid paying taxes on the potential profits from selling the coins.
If you do sell coins that are held for less than 12 months, it’s important that you consider the original cost basis when calculating the realized gains or losses so that you report the correct values in your tax return.
Selling of staked cryptocurrency after 1 year
If you have been staking your crypto in a decentralized protocol and later decide to sell the coins, the gains are tax-free if you wait for a minimum of one year from withdrawing the coins to your own wallet and until they are sold.
Tax on cryptocurrency hard forks
Cryptocurrency received as a result of a chain split, also known as a hard fork, is not taxed at the time of receipt in Germany. Keep in mind that if you sell the coins within one year, you will pay income tax on the full amount since a cost basis equal to zero will be considered.
Crypto margin and futures trading
Many crypto users have dabbled into margin and futures trading with the hope of making big gains in the crypto market. Since these trading products allow buying crypto with leverage it is possible to make significantly higher gains, but this comes with an increased risk as well. When it comes to crypto taxes, neither BMF nor BZSt has released guidance on how such trading should be considered for tax purposes in Germany. However, we can lean on the already existing regulation and tax guidance that addresses margin, futures, and derivatives trading for traditional financial markets.
The key to understanding how such transactions are taxed is to first understand how the position is settled. Trading positions settled in a cryptocurrency will most likely be subject to Income Tax similar to selling cryptocurrency on an exchange. This means that if you make a profit, the full amount will be taxed as income according to your ordinary income tax rate. On the other hand, if you make a loss, the realized gain on the crypto asset will be classified as either short-term or long-term depending on the original acquisition date of the coins you lost.
Trading positions settled in a non-crypto asset are most likely subject to Capital Income tax similar to trading in traditional financial markets. This is because fiat-settled derivatives products do not involve any cryptocurrency since you are not actually buying the physical cryptocurrency. While Income Tax is a progressive tax based on your total taxable income, Capital Income tax is taxed at a flat rate of 25%.
Keep in mind that you are not taxed at the time you open or change the size of a margin or futures position as long as no crypto is disposed of. Instead, the time of taxation happens when the position is closed and the underlying asset has been settled in your trading account.
Because of the complex tax landscape surrounding margin, derivatives, and futures trading in the crypto markets, we highly recommend speaking to a tax professional in Germany that can help you with understanding how and what to report in your specific situation if this applies to you.
Taxes on lost or stolen crypto
Many people in the crypto world have been a victim of fraudulent actions or otherwise lost access to their cryptocurrency. The BZSt has not specified under which criteria you are allowed to claim a loss for your lost cryptocurrency. If this happened to you, we recommend contacting BZSt about this directly and providing the following information:
- When you acquired and lost the private key
- The wallet address that the private key relates to
- The cost you incurred to acquire the lost or stolen cryptocurrency
- The amount of cryptocurrency in the wallet at the time of loss of the private key
- That the wallet was controlled by you (for example transactions linked to your identity)
- That you are in possession of the hardware that stores the wallet
- Transactions to the wallet from a digital currency exchange for which you hold a verified account or is linked to your identity
If the BZSt approves the loss claim, the loss can be used to offset other income tax you have in the same tax year.
How to pay less tax in Germany
There are several ways to minimize the tax burden for German taxpayers. Here are the most common and effective ways to keep more of your crypto profits when filing your taxes in 2022:
Deduct cryptocurrency losses
Gains from crypto sold within one year are considered short-term gains, while losses from crypto sold within one year are considered short-term losses. Luckily, such losses are fully deductible against your gain and can make a huge impact on your tax burden.
Keep in mind that only your short-term losses can be used to offset your taxable income. Losses from cryptocurrency held for one year or longer do not count since long-term gains are tax-free.
If your short-term losses exceed your short-term gains, or if you don’t have any gains to offset at all, you can carry forward the remaining loss to future financial years.
Hold your crypto for a minimum of one year
Patient investors in Germany can enjoy tax-free disposals if they held the cryptocurrency for one year or longer before selling. There is even no limit to the size of the total gain that is excluded from income tax – the only criteria is that the coins must have been held for a minimum of one year.
Crypto tax software and tax-free gains
If you want to take advantage of the tax-free gains for crypto sold after one year, the best option is to use a cryptocurrency tax calculator to do all the calculations for you. Coinpanda is one of the most popular crypto tax solutions in Germany and provides a fully BZSt-compliant tax report that breaks down all your crypto transactions into short-term and long-term gains.
Sign up for a 100% free account today!
Trading fees
Most exchanges charge trading fees when you buy, sell, or trade cryptocurrency. Trading fees are considered costs that can be deducted from the sales price and are therefore fully deductible.
If you have a large number of transactions, deducting the trading fees can make a significant impact on your total tax liability. Most crypto tax solutions like Coinpanda do this automatically for you.
How to calculate crypto taxes in Germany
Calculating and reporting your crypto taxes to the BZSt can seem like a daunting task at first. Luckily, there are certain tools that can be used to make the process a lot simpler.
Calculating your crypto taxes manually
Here are the steps you must take to calculate your crypto taxes manually:
- Download the transaction history from all exchanges where you have bought, sold, received, or sent any cryptocurrency. This includes also transactions from or to your own wallets.
- Calculate the cost basis for every individual transaction where cryptocurrency is disposed of
- Calculate the proceeds and resulting capital gains for all transactions that are considered taxable disposals by the BMF and BZSt
- Identify all transactions subject to Income Tax in Germany
- Summarize the calculations to find the total taxable income amount during the financial year
Calculating your crypto taxes using crypto tax software
The best option for most people in Germany is likely going to be using cryptocurrency tax software to automatically do the required calculations. If you want to save both time and money, here is how you can use Coinpanda to sort out your crypto tax situation and generate all the required tax reports automatically:
1. Sign up for a 100% free account
It is 100% free to create a Coinpanda account and you don’t need to enter any credit card information to get started. The free plan lets you explore and use all features for free.
Sign up with Coinpanda for free now!
2. Connect all your exchange accounts and wallets
Coinpanda supports more than 500+ exchanges, wallets, and blockchains today. You can easily import all your transactions by connecting your exchange accounts with API keys or by uploading a CSV file with the transaction history. If you find that Coinpanda does not support an exchange you have used, reach out to us so we can add the integration – usually within a few days.
3. Wait for Coinpanda to crunch all the numbers
Get yourself a cup of your favorite beverage and wait for Coinpanda’s sophisticated calculation engine to crunch all the numbers for you. Coinpanda will automatically calculate the cost basis, proceeds, capital gains, and taxable income for all your transactions! This might take anywhere from 20 seconds to 5 minutes depending on how many transactions you have.
4. Check for any reported warnings
Coinpanda will automatically display a warning if it appears that one or more transactions are missing such that the cost basis calculations will not include the total purchase price. If you see any warnings, you should first double-check that you have in fact connected all your wallets and exchange accounts.
Do you still see any warnings? Fear not! We have written an extensive list of help articles that will guide you through the entire process of making sure your crypto tax reports are as accurate as possible. If you still need any help, the best way to get in touch with our customer support and tax experts is through the Live Chat.
5. Download your tax reports and tax forms
When you have successfully imported all transactions, the final step is to download the tax reports you need to file your taxes in Germany. Coinpanda’s tax plans start at $49 and you have lifetime access to all reports after upgrading.
Crypto tax deadline in Germany
The tax year in Germany runs from the 1st of January to the 31st of December similar to the calendar year. If you are completing your tax return for 2021, you need to file your taxes by the 1st of August, 2022 since the last day of July is a Sunday this year. Remember that filing after the deadline can lead to penalties and fees.
Records of your transaction history
While not stated directly by the BZSt, it is obligatory and good practice to keep records of all your crypto transactions for a certain number of years in case you ever get audited and the tax agency wants to see your complete transaction history. You should keep the following information for a minimum of 5 years:
- The date of the transactions
- Which cryptocurrency was sold or bought
- The value of the cryptocurrency in Euro at the time of the transaction
- What the transaction was for and who the other party was (such as an exchange or a wallet address)
Many cryptocurrency exchanges keep these records for a limited time only, so you should make it a habit to periodically export and save this information. It is vital to keep good records to make it easier to work out your capital gains and meet your tax obligations. Coinpanda’s tax product can create a capital gains report with all of this information for you.
How to file your crypto taxes to BZSt
All taxable income from cryptocurrencies, whether the income is profit from trading or crypto earned by other means, you need to declare this in the annual tax return to the BZSt each year. The taxable income should be reported as “Other Income” on a separate form different than your main income declaration form.
Once you have worked out your taxable income during the financial year, you have basically two options for filing your crypto taxes to the BZSt:
- Online using ELSTER
- Using paper forms
The most common and preferred way is filing your taxes online using ELSTER which is the tax platform by BZSt. Coinpanda can generate a fully BZSt-compliant tax report with all the information you need when filing your taxes using ELSTER.
