Crypto Tax in Germany 2026: Taxing Bitcoin, Ethereum, DeFi & NFTs Correctly

1. Legal basis: crypto as an “other asset”

According to the Federal Fiscal Court (BFH), judgment of 14 February 2023 – IX R 3/22, cryptocurrencies such as Bitcoin or Ethereum are “other assets” (andere Wirtschaftsgüter) within the meaning of Section 23(1) no. 2 of the German Income Tax Act (EStG). Gains are therefore subject to the rules on private disposal transactions and are taxed at the personal income tax rate (14–45%), not at the 25% flat-rate withholding tax (Abgeltungsteuer) that applies to shares or funds.

The circular of the Federal Ministry of Finance (BMF-Schreiben) of 6 March 2025 obliges all tax offices to apply these principles uniformly. It binds the tax authorities, but not the tax courts. Taxpayers can therefore still take different legal positions that are more favourable to them and have them enforced in court.

How this classification developed historically and which distinctions were disputed along the way is covered in our article on the tax classification of cryptocurrencies (in German). A compact overview specifically for Bitcoin is provided by Bitcoin and taxes (in German).

2. FIFO method: which coins are deemed sold?

If you bought cryptocurrencies at different times and prices, you must determine on a sale or swap which of the units acquired were disposed of – only then can the gain be calculated correctly. The basic principle is individual identification. If that is not possible, the holdings acquired first are deemed to have been sold first for the purposes of the holding period; for the valuation, the FIFO method (“first in, first out”) may be used for simplification.

Important: FIFO is generally applied per wallet or custody account, not across wallets or exchanges for the entire holding. If you move coins between several wallets, you must carry over the original acquisition dates and prices – otherwise, in an audit, there is a risk of an estimate under Section 162 of the German Fiscal Code (AO), which in practice regularly works to the taxpayer’s disadvantage. Complete, wallet-accurate documentation of all inflows and outflows is therefore a prerequisite for a robust tax return, not an optional extra.

If the taxpayer can clearly allocate the specific units disposed of to individual acquisitions using wallet software or a blockchain explorer (individual valuation), this allocation takes precedence over the general FIFO assumption. In practice, however, a reliable individual valuation is rarely feasible with reasonable effort for frequent trading, which is why most investors rely on FIFO per wallet.

3. Staking: exemption limit, receipt & holding period

Staking income falls under Section 22 no. 3 EStG (other income), not under Section 23 EStG. Staking has its own exemption limit of €256 per year: if it is exceeded, the entire amount is taxable, not just the part above the limit.

Valuation is based on the market price at the time of receipt. Rewards that have not been actively claimed are deemed received no later than 31 December of a year, provided an economic entitlement already existed. For the tokens received, a separate 12-month holding period starts from receipt. The BMF circular has expressly confirmed that no extended 10-year holding period applies to passive staking. In the case of active validator operation or masternodes, the classification may differ in individual cases.

Example: An investor holds ETH in staking and receives rewards over the year with a total value of €320 at the respective times of receipt. As the €256 exemption limit is exceeded, the full €320 must be taxed as other income – not just the €64 difference. If the investor later sells the reward tokens received within 12 months of receipt, the disposal gain is additionally taxable under Section 23 EStG; after the 12 months have expired, this gain remains tax-free.

4. Mining: commercial activity & cloud mining

For crypto mining, the classification depends on the circumstances of the individual case. A commercial activity under Section 15 EStG is likely if mining is carried out on a sustained basis, with the intention of making a profit and with participation in general commerce. If these requirements are not met, the income may instead be classified as other income under Section 22 no. 3 EStG.

Cloud mining: With cloud mining services, too, the specific contractual and activity structure is decisive. The BMF allocates such income to Section 22 no. 3 EStG at least where no other type of income applies. In addition to income tax, commercial mining is subject to trade tax (Gewerbesteuer) as soon as the trade income exceeds €24,500.

Example: A hobby miner runs a single graphics card in their own home and earns €900 a year from it. Without any market presence, without borrowed capital and on a small scale, classification as other income at the market price at the time of receipt may be more appropriate. If the same person instead operates a mining farm with several machines, debt financing and regular hardware expansion, this points more towards a commercial activity including a trade tax liability.

5. DeFi & liquidity mining

The BMF circular contains no explicit rules for DeFi activities; taxation follows general principles. In practice, three phases relevant for tax purposes can be distinguished in liquidity mining: the deposit into the pool (possible disposal of the tokens deposited), the ongoing collection of rewards (other income under Section 22 no. 3 EStG at the time of receipt) and the withdrawal from the pool (a further taxable event when the LP tokens are swapped back).

Example: An investor deposits ETH and a corresponding amount of a stablecoin into a liquidity pool and receives LP tokens in return. The deposit itself may already be treated as a swap and thus as a disposal of the tokens deposited if economic control changes. Pool rewards received over the term must be recorded separately at the time of receipt. When the LP tokens are later swapped back, a further taxable event arises that must be assessed in its own right – investors should therefore document deposit, reward and swap-back prices separately.

6. Airdrops & hard forks

In an airdrop, wallet holders receive new tokens, often as a marketing measure by a project. If the airdrop takes place without any consideration (for example without registration, a social media post or any other active step), according to common practice there is generally no taxable receipt under Section 22 no. 3 EStG. What then becomes relevant for tax purposes is above all the later sale as a private disposal transaction under Section 23 EStG, typically with acquisition costs of €0. Only in special individual cases may an additional gift tax review be advisable.

In a hard fork, an existing blockchain splits into two independent chains, as a result of which holders of the original coins automatically receive the new tokens of the split-off chain. According to the prevailing view, this is not a taxable receipt but an allocation of acquisition costs: the original acquisition costs are split between the two chains in proportion to their market values, and the holding period of the new tokens follows the holding period of the original coins.

Example: A user receives unsolicited tokens worth €200 without having provided anything in return. In that case there is generally no ongoing taxable receipt; if the user later sells the tokens within the holding period for €900, the sale must be assessed as a private disposal transaction. If, on the other hand, the user receives the tokens for a specific promotional service, the receipt itself may already be taxable as other income.

7. NFTs & VAT

The BMF circular explicitly excludes NFTs, as they are non-fungible tokens. The general principles of private disposal transactions under Section 23 EStG, including the one-year period, therefore apply to private NFT trading. Frequent buying and selling (“NFT flipping”) carries a risk of being classified as commercial. Irrespective of income tax, NFTs can also raise VAT (Umsatzsteuer) questions, which may already affect private individuals if they trade regularly.

Example: If you acquire an NFT for €500 and resell it after 4 months for €2,000, you make a taxable gain of €1,500 under Section 23 EStG, as the one-year period was not observed. After 12 months had expired, the same gain would have been tax-free.

We cover the VAT side separately in VAT on NFTs (in German).

8. Crypto derivatives: Section 20 EStG

If you trade crypto futures, options, CFDs or other leveraged products, depending on the product design you will generally not fall under Section 23 EStG but under Section 20 EStG (capital income). As a rule, the flat-rate withholding tax of 25% plus solidarity surcharge applies, the saver’s lump-sum allowance (Sparer-Pauschbetrag; €1,000 for single persons, €2,000 for married couples) is available, and there is no tax exemption after a holding period. The former €20,000 cap on losses from forward transactions was abolished by the Annual Tax Act 2024 and no longer applies in open cases.

Example: A trader makes a gain of €15,000 from crypto futures in a year and at the same time a loss of €25,000 from other forward transactions. Under the current legal position, the bottleneck is no longer the old €20,000 cap, but the correct allocation within income from capital assets and the proper certification or declaration of the losses.

9. Commercial crypto trading

Most private investors engage in private asset management, not in a trade or business. Commercial activity can, however, arise from systematic high-frequency day trading, the use of borrowed capital or margin trading, the provision of crypto services to third parties or “bank-like” conduct according to the BMF’s standard. Commercial crypto traders lose the tax exemption after the holding period and additionally pay trade tax.

Example: Anyone who executes numerous trades every day with borrowed leverage via several automated trading bots generally crosses the line from private asset management. The consequence: all gains are subject to income tax regardless of the holding period, and trade tax is additionally payable once trade income exceeds €24,500 – a factor that many active traders overlook when calculating their net return.

10. DAC8 from 2026: automatic data reporting

From 1 January 2026, the EU directive DAC8 applies: crypto platforms in the EU automatically report their users’ transaction data to the tax authorities, including trading volume, gains and withdrawals. This makes retrospective audits for tax years from 2021 onwards considerably easier. If you have not yet declared crypto gains from previous years, you should clarify your data position now. A voluntary disclosure with penalty-exempting effect (Selbstanzeige, Section 371 AO) is generally only possible as long as no criminal proceedings have been initiated and the first reporting wave has not yet been triggered.

This affects not only German platforms, but all platforms based in the EU or serving EU customers. If you hold assets exclusively on non-EU exchanges or in self-custody wallets, you are not subject to automatic DAC8 reporting by the platform, but you remain obliged to declare your crypto income in full.

What exactly is reported, from when and on what legal basis is explained on our page on DAC8 and the reporting obligation from 2026. If you have not declared gains from previous years, you will find the requirements for, and grounds excluding, a crypto voluntary disclosure explained there — and the possible consequences under tax criminal law on the corresponding overview page.

11. Crypto assets in inheritance & gifts

Cryptocurrencies transferred free of charge are also subject to inheritance or gift tax. The valuation date is the time of the inheritance or of the execution of the gift, and the valuation is at fair market value (gemeiner Wert, market price) on that date – regardless of the price at which the deceased or donor originally acquired the coins. The personal allowances apply as for other assets.

For the recipient of the gift or the heir, the transfer does not start a new holding period: the holding period of the legal predecessor is credited. If the donor or deceased had already held the coins for more than 12 months, the recipient can dispose of them tax-free immediately. Details on allowances, valuation and planning options can be found in our guide to inheritance and gift tax.

12. Tax return: Anlage SO, KAP, G

Private spot trading gains and staking income belong in Anlage SO (other income), gains from crypto derivatives in Anlage KAP, and commercial mining or commercial trading in Anlage G. Losses should always be declared, even if no tax is payable in the year concerned: only then is a loss assessment notice (Verlustfeststellungsbescheid) issued, which allows the losses to be offset against future gains later.

For all forms, the tax office can at any time request a complete list of all transactions with date, acquisition costs, disposal proceeds and the valuation method used. If crypto tax reports from several tools or exchanges are combined, wallet addresses and transaction hashes should be referenced so that questions from the tax office can be answered quickly and transparently.

13. Offsetting losses from private disposal transactions

Losses from selling or swapping cryptocurrencies within the holding period are losses from private disposal transactions under Section 23 EStG. They may only be offset against gains from other private disposal transactions in the same or another year – not against income from employment, capital assets or letting.

If the loss cannot be fully used in the loss year, it is determined by a loss assessment notice and can be carried back to the immediately preceding year or carried forward indefinitely to subsequent years. In any case, the prerequisite is that it is fully declared in Anlage SO – even if no tax is payable in the current year for other reasons.

14. Legitimate tax optimisation

• Observe the holding period: a holding period of 12 months leads to full tax exemption for private assets.
• Offset losses: use tax-loss harvesting before the end of the year to reduce gains.
• Make use of the exemption limit: annual gains of up to €1,000 (private) or €256 (staking) remain tax-free.
• Deduct fees: trading fees and gas fees reduce the taxable gain.
• Plan your wallet structure: as FIFO is applied per wallet, a well-thought-out split of your holdings influences which coins are deemed disposed of on a sale.
• Consider a GmbH structure: from an annual gain of around €150,000, a corporate structure can become attractive for tax purposes.