How to Report Crypto Income in Germany: Your Complete Tax Guide

Understanding Crypto Tax Obligations in Germany

In Germany, cryptocurrencies like Bitcoin and Ethereum are classified as private sale assets (Privatverkäufe) under tax law. This means profits from crypto transactions are generally tax-free if you hold assets for over one year. However, short-term gains, mining rewards, staking income, and other crypto-related earnings must be reported to the German tax office (Finanzamt). Failure to properly declare crypto income can result in penalties, interest charges, or audits. With crypto transactions being easily traceable on the blockchain, transparency is crucial for compliance.

Types of Crypto Income and Tax Treatment

Different crypto activities trigger distinct tax implications in Germany:

• Trading Profits: Taxable if assets sold within 1 year of purchase. Taxed at your personal income tax rate (up to 45%) plus solidarity surcharge.
• Staking/Rewards: Treated as other income (sonstige Einkünfte) and fully taxable at acquisition value.
• Mining Income: Considered commercial activity if done systematically; taxed as business income with possible VAT obligations.
• Airdrops & Hard Forks: Taxable upon receipt at market value if received without payment.
• Crypto Payments: Salary or payment for goods/services in crypto is taxed as ordinary income.

Key exemption: No tax applies if crypto is held >12 months OR total annual profits from private sales are under €600 (Freigrenze).

Step-by-Step Guide to Reporting Crypto Income

1. Track All Transactions: Use crypto tax software or spreadsheets to log:
   • Acquisition dates and costs
   • Disposal dates and proceeds
   • Wallet addresses and exchange records
2. Calculate Gains/Losses: For assets held ≤1 year, compute profit as:
   Sale Price – Purchase Price – Transaction Fees
3. Complete Tax Form Annex SO: Report all taxable crypto income in the “Anlage SO” supplement to your annual income tax return:
   • Section 8: Private crypto sales (short-term)
   • Section 9: Other crypto income (staking, mining, etc.)
4. Submit by Deadline: File electronically via ELSTER portal by July 31st of the following year (or with tax advisor extension).

Critical Mistakes to Avoid

• Ignoring Small Transactions: Even minor trades or DeFi activities must be recorded.
• Misunderstanding Holding Period: The 1-year clock resets if you add to holdings (FIFO method applies).
• Overlooking Foreign Exchanges: German residents must declare worldwide crypto income.
• Forgetting Loss Offsets: Capital losses reduce taxable gains – track them diligently.
• Using Incomplete Tools: Ensure your tax software supports German-specific rules like the €600 allowance.

FAQ: Crypto Taxes in Germany

Do I need to report crypto if I haven’t sold anything?

Yes – staking rewards, airdrops, and mining income are taxable events even without selling. Only report disposals if assets were held ≤1 year.

How is crypto taxed if I hold for over a year?

Profits from assets held >12 months are 100% tax-free under Germany’s private sale exemption. No reporting needed unless you have other taxable crypto income.

Can I deduct crypto losses?

Yes, capital losses from crypto can offset gains in the same year. Unused losses carry forward indefinitely to future tax years.

What records must I keep?

Maintain detailed logs for 10 years: transaction dates, amounts, wallet addresses, exchange statements, and fiat values at time of transactions.

Are NFTs taxed differently?

NFT sales follow the same 1-year rule as cryptocurrencies. However, NFT royalties may qualify as recurring income with different tax treatment.

Do I pay VAT on crypto in Germany?

No – crypto purchases are VAT-exempt per EU rules. VAT only applies if you’re a business accepting crypto as payment.

Pro Tip: Consult a German Steuerberater (tax advisor) specializing in crypto for complex cases like DeFi, liquidity pools, or high-volume trading. The Bundeszentralamt für Steuern (BZSt) also provides official crypto tax guidelines on their website.