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.

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+

This table shows the individual Income Tax rates for 2022 for single and married German taxpayers. Source: PWC

* 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 trickier 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.

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.

Tax status:

 

INCOME TAX

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.

Tax status:

 

INCOME TAX

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.

Tax status:

 

INCOME TAX

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.

Tax status:

 

INCOME TAX

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 status:

 

INCOME TAX

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 status:

 

INCOME TAX

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 status:

 

INCOME TAX

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 status:

 

INCOME TAX (DEPENDS)

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.

Tax status:

 

INCOME TAX

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.

Tax status:

 

INCOME TAX

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.

Tax status:

 

NOT TAXED

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!