Paying taxes on cryptocurrencies like Bitcoin in Germany

How to buy cryptocurrencies in Germany 

See the list below to find out more on the most popular cryptocurrency trading platforms. If you want to read more about how to buy cryptocurrencies in Germany like Bitcoin or Ethereum, go to our overview.

Do I have to pay taxes on cryptocurrencies in Germany?

Cryptocurrencies (e.g. Bitcoin, Ethereum and others) are legally not defined as “currencies” but as property (as in “object”) in Germany. Therefore, buying bitcoins is like buying art, music, or other items. Germany does not have any wealth tax so this means that merely owning cryptocurrencies is not taxable. However, selling cryptocurrencies could be taxable in certain circumstances (see below).

How much is bitcoin taxed in Germany

Do I have to pay taxes when selling cryptocurrencies in Germany?

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. 

However, you still have to declare any cryptocurrency sale that you made during the tax year (even if it is not taxable) in your personal income tax declaration. In order to prove when you bought cryptocurrencies and when you sold them, be sure to save all documents that show your transactions. These documents would be important when your local German tax office is requesting proof of purchase and proof sale.

Important to note is that different crypto wallets are regarded as separate properties. The one year time frame is measured for each wallet individually. 

When selling parts of bitcoin, it is also assumed that you sell the oldest part of the bitcoin. For example: You buy 0.2 Bitcoin and 6 months later an additional 0.3 Bitcoin. Another 7 months later, you sell 0.1 Bitcoin. You will not have to pay taxes on that sale, as it is assumed that these 0.1 Bitcoin are part of the first 0.2 Bitcoin you bought 13 months ago.

Paying taxes in Germany

Do I have to pay taxes in Germany when converting Bitcoin into other cryptocurrencies (e.g. Ethereum)?

Converting cryptocurrencies into real currencies (e.g. Euro or USD) or into other cryptocurrencies is regarded as a sale. In the case of converting Bitcoin into Ethereum, be careful to wait until you have owned the Bitcoin for at least one year. Otherwise, you would need to pay taxes on any profits at the time of conversion. 

The same goes for paying anything with your cryptocurrency debit or credit card (e.g. crypto.com). This purchase is then regarded as a sale of cryptocurrency and if any profits have been generated since the time of purchase, you will have to pay taxes on that. 

You do not have to pay taxes if you merely transfer cryptocurrencies between different accounts or wallets. However, some crypto trading providers (e.g. Revolut) do not offer the transfer of your cryptos and you would have to sell them and buy them again on a different crypto platform. 

Do I have to pay taxes when I give cryptocurrencies to someone as a gift?

Giving Bitcoins or other cryptos 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 (spouse, your children, your parents, your siblings, or friends). The tax rates for gifts range from 7% up to 50%. The tax exemption limits (e.g. 20.000 Euro for friends) are renewed after 10 years.

Can I claim a tax relief when my crypto wallet has been hacked and stolen?

If your crypto wallet has been stolen, you cannot claim any immediate tax relief. However, you should record any losses as you can set off these losses with any future crypto profits within one year.  

Do I need to notify the German tax office when I buy cryptocurrencies?

No, there is no obligation to declare any cryptocurrency purchase. 

However, if you receive bitcoin or other cryptocurrencies as part of your compensation (e.g. you are a freelancer and get paid in bitcoins), you have to declare this as income in your business tax declaration and personal income tax declaration. 

Cryptocurrency tax in Germany