Crypto Taxes in Germany
Some sales of crypto are taxed in Germany. Learn how to calculate crypto taxes in Germany for individuals and businesses.
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This article is part of TokenTax's Cryptocurrency Tax Guide.
The German Federal Central Tax Office or Bundeszentralamt für Steuern (BZSt) treats bitcoin and other cryptocurrency as private money for tax purposes. Crypto is not treated as foreign currency, legal tender, nor as property under the German Tax Acts.
The Federal Ministry of Finance (BMF) has also ruled that crypto transactions made by individuals are not subject to Value Added Taxes (VAT) for all EU member states. The German tax year is the same as the calendar year ending 31 December, and the deadline for paying taxes is 31 July.
The tax treatment of crypto in Germany as private money means that sales under 600 Euros have tax exemptions for individuals. Small transactions like these fall under tax law 23 EStG. For example, if you purchased 100€ worth of Bitcoin and sold it a few months later in exchange for 200€, the 100€ earnings would not be taxable.
If you hold your crypto for over a year as an individual, you do not have a tax liability on your earnings. In other words, for long-term holdings over one year, any increase in the value of your cryptocurrency is tax free. For example, if you purchased 100€ worth of Bitcoin and sold it more than a year later in exchange for 400€, the 300 Euro earnings would not be taxable.
Crypto sold after being held less than a year is subject to income taxes. Section 23 of the German Income Tax Act details the tax treatment of speculative transactions made with private money since crypto is classified as ordinary intangible assets.
The tax treatment of crypto trading falls under Section 22 of the Income Tax Act in Germany. If you are trading cryptocurrency, your net amount gained or lost at the time of the sale is the relevant amount taxed as income. It is a taxable sale whether you are trading one cryptocurrency for another crypto or if you are trading crypto into fiat currency (like into EUR). You are also allowed to deduct fees as part of the cost basis as well.
However, if your crypto transactions are considered as financial instruments (such as swaps or futures), you may not be able to net your gains or losses against your passive crypto investments. Ask us more about your unique tax situation on our chat to untangle your trading activity.
In Germany, mining of crypto by individuals is taxed as other income under Section 23 of the Income Tax Act. Taxable amounts are the net profit on the crypto.
For example, if you are mining bitcoin, you are taxed on the sale price of your crypto at the time of disposition net the costs associated with mining it. Mining Bitcoin and other crypto as a company is subject to very different taxation rules covered in the business tax section of this article below.
Purchases of goods and services with crypto are treated the same as trading crypto in Germany. For example, if you acquire 8,000€ worth of bitcoin and purchase a motorcycle with that bitcoin when it’s now all worth 10,000€, you will be taxed on the 2,000€ net gain on that bitcoin as if it were income.
You could, however, avoid this tax if you held the bitcoin for a year before purchasing the motorcycle.
The required accounting method has not yet been clearly defined by the German tax authorities, but using the First in First Out (FIFO) accounting method has been common practice.
The German Tax Act clearly allows you to offset gains with past years’ losses and/or carry losses forward to offset gains in future tax years.
German income tax brackets range up to 45% for crypto traded by individuals. The married couple income tax brackets are simply double the single filer brackets.
|German income tax bracket||Tax rate|
|€9,409 – €57,051||14%|
|€57,052 - €270,500||42%|
Your crypto earnings are reported on the same income forms alongside your wages and any other sources of income.
German corporations are taxed depending on the type of legal entity, so their crypto holdings taxed similarly to other assets. These rules apply whether the company is an exchange platform, a crypto mining company, or simply a retail company accepting payments for goods and services in exchange for bitcoin.
If the company is a partnership, it is subject to income tax and its crypto holdings are taxed the same as for individuals. Limited liability corporations, public companies and other corporate entities are all subject to corporate taxes on their crypto holdings. Therefore, it is appropriate to consider the tax implications of legal entity choice for companies that plan on having extensive crypto holdings.
There are a few other key differences between the tax treatment of crypto for individuals and companies. Most importantly, there is no tax exemption for holdings of crypto over a year by a corporation as there is for individuals.
It is also a grey area as to VAT treatment of crypto payments to corporations, although many German tax lawyers advise that there should not be VAT on crypto exchanges for goods and services.
For more information on corporate taxation of cryptocurrency in Germany, Section 15 of the German Income Tax Act provides specific details. Additionally, Section 11 of the German Trade Tax Act may apply to cryptocurrencies. This section of the tax code discusses tax exemptions for de minimis corporate holdings.